The anti-TTIP lobby has portrayed the free trade agreement as destructive and dangerous, but in reality it has the power to create markets, jobs and even geopolitical stability, argues Sanford Henry.
Sanford Henry is a member and former visiting fellow of the Royal Institute of International Affairs (Chatham House) and specialises on the history of transatlantic trade. He is also a Fellow at British American Business, currently writing a book to be published this year: Only Trade Works. He is writing in a personal capacity.
With the European Union wracked by a multitude of crises and the United States heading into a frenetic election year, momentum towards the Transatlantic Trade and Investment Partnership (TTIP) agreement has been frustratingly slow, irritating State Department diplomats and EU officials alike.
But recently the twelfth round of negotiations was completed in Brussels, and both sides appear to be upbeat. An intensification of discussions by both sides’ lead negotiators in Washington this week should sustain this positive impetus.
The allure of TTIP is clear: hundreds of billions of dollars’ worth of new growth on both sides of the Atlantic at a time when Western economies, despite low inflation and energy costs, remain anaemic. Independent analyses anticipate millions of jobs, more foreign direct investment, cheaper products and opportunities for service sector expansion – especially for SMEs.
But the anti-TTIP lobby has proved impressively well organised, portraying TTIP as a destroyer of jobs, environmental standards and public services. This is far from the truth: the agreement would secure common safeguards, nurture traditions and exempt most public services such as healthcare.
Both sides have been hamstrung by the opacity of the negotiating mandates and positions. And the investment aspect of TTIP, especially its investor-state dispute settlement mechanism, has been so rigorously attacked that we risk ending up with a TTP – a TTIP shorn of investment, which is really the meatiest part of the idea.
The US presidential election has already put trade back on the agenda, though not necessarily in a positive way. Several Republican candidates have hinted at deploying aggressively protectionist policies to shield US industries.
The leading Democratic candidate, Hillary Clinton, has not offered public backing for TPP. We can therefore assume that TTIP would also be a step too far, given the support she needs from heavyweight labour unions to secure her nomination. This is even more likely given her resounding defeat in the Democratic primary in Michigan to an anti-trade vote stirred up by her principal opponent Bernie Sanders.
But paradoxically for Mrs Clinton, more than 20 years ago her husband managed to usher the landmark NAFTA agreement through a Congress in which Republicans were in the majority. Clinton should instead use TTIP to isolate Sanders and burnish her centrist, reformist credentials, rather than falling into a reactionary trap.
Meanwhile, the Republicans, now in sight of July’s quadrennial nominating convention in Cleveland, Ohio, should not allow a regressive, offensive television personality with little trade policy experience to continue to embarrass America at this crucial time in trade negotiation where transatlantic jobs and growth are on the horizon.
Unfortunately, the live debate around Britain’s membership of the EU is also proving a distraction. Proponents of ‘Brexit’ make a flawed argument when they suggest that America will gladly and quickly sign a free-trade deal with a Britain outside the EU. They should look back to NAFTA, when the Conservative government in the UK asked to be part of the treaty. Bill Clinton said no – he wanted a deal with the EU. The same surely applies today: America will push on with TTIP, and a separate deal with the UK will be something of a delayed afterthought.
Another critically important element of the TTIP discussion is Turkey, which entered into a Customs Union with the EU in 1995. Since that time, Turkey’s economy has quadrupled in size.
If TTIP is going to succeed, and if it is going to have the transformational effect its proponents hope, it must include Turkey. Otherwise, the EU-Turkey Customs Union deal will prevent Ankara from imposing dues on US goods but will allow US authorities to do so to Turkish goods.
This imbalance would be disastrous for US-Turkey bilateral ties, potentially destabilising to NATO and would most likely draw Turkey permanently away from its European anchor towards the Gulf, China and Africa.
It would also have negative knock-on effects for the sclerotic EU, which needs an infusion of economic vitality from Turkey’s young, growing population and its strategic position as an energy hub. No wonder Turkey wants to renegotiate the Customs Union accord: inclusion in TTIP could boost its economy by $30 billion, or around 3%.
TTIP’s importance, then, goes well beyond the simple issue of businesses making money. It is a concept with profound geostrategic implications with the potential to revive transatlantic political and economic leadership worldwide.
It could bring jobs, investment and stability to communities in Europe hit by long-term unemployment and where, ironically, anti-American populists from the left and the right have won support by denouncing TTIP rather than proposing solutions of their own.
The history of transatlantic trade is a history of prosperity, diversity, partnership and enterprise. At no time have such virtues been more readily in demand, and at no time do these virtues have greater potential to transform lives for the better – not least in this digital age when we are all interconnected.
US President Barack Obama has now entered the final year of his mandate. His advisors have reportedly drawn up a list of foreign policy priorities and aspirations to draw his administration to a favourable conclusion. None would be more transformational than securing TTIP.
It’s no time to shy away from confronting the challenge of TTIP. Indeed, it’s time to work anew for a comprehensive accord – one that could be President Obama’s legacy to peace and prosperity worldwide.