TTIP – New Approaches to Security and Prosperity

Discussion among others with US-Ambassador John Emerson at the German-American-Conference organized by the Atlantik-Brücke „TTIP – New Approaches to Security and Prosperity“ on September 11th in Berlin

Nine-eleven

It is worth to underline the strong ties between Europe and the US especially on a day like today.

On 9/11, 2001 not only the two Towers of the World Trade Center were attacked. Nine-Eleven was an assault on the model of free democracy with strong civil society and an open economy.

To strengthen transatlantic relations is not only a question of values. It is in our mutual interests – in Europe’s as well as in the interest of US.

This is the strongest argument for the Transatlantic Trade and Investment Partnership.

If 800 million people living in the most developed democratic societies, who produce 60 % of world’s GDP, set standards for free trade, these standard can become global standards.

I will concentrate on this aspect because the economic arguments for the agreement are rather weak.

The overblown promises of economic growth are evaporating already. The European Commission and the Federation of German Industries (BDI) have had to retract their rosy prognoses.

The real relevant question is: Does TTIP strengthen or weaken democratic governance in a time of comprehensive globalization?

Transparency and Rule of Law

Democracy means rule of law – means share of power, transparent law-making, public court-ruling.

1. The TTIP debate has been highly polarized. Because previous free trade agreements have been hashed out behind closed doors with zero transparency. In Germany 139 civil servants can read the consolidated negotiation results – but no Member of Parliament. This lack of transparency will exacerbate popular mistrust in government, Europe and the United States. Why do democracies insist on behaving like autocracies?
2. If, as suggested, TTIP should be a stellar example for trade between big democracies, why do we need secret courts outside our democratic system to resolve investment disputes? Public court is a pillar of legitimation in democracies. Why do proud democratic continents – the US with its judicial system including the Supreme Court and Europe with its European Court and the German Bundesverfassungsgericht – want to sink to standards of China’s Secret Courts?

Standards

Much of the public’s frustration and disillusion with the European Union has to do with the feeling that democratically elected officials are shorthanded in the political process. The lack of transparency and loss of regulatory and legislative power in TTIP is playing into this frustration. If we want to set an example for fair and free trade between democracies, it has to be not only free but also fair, transparent and democratic.

1. As it is, a lot of the contentious issues remain unresolved or are being left out of the deal, e.g. public procurements, cultural properties, consumer protection and protection of health, data protection and security, Investor State Dispute Settlement.
2. Two issues complicate negotiations: one is the buy American clause and other the federal system. In Europa such clauses violate the regulation in the Single Market.
3. The proposed regulatory cooperation is another concern. It threatens to open up the regulatory process to lobby-interests even before legislators or civil society have become involved. In concert with threats to sue over regulation under the ISDS clause, this will lead to a regulatory freeze, an inability for legislators to effectively do their job
4. Another issue that’s been raising red flags is: what happens once the deal is done and ratified? Apparently, TTIP will be what they call a “living agreement”. Once ratified, it will be amended by the Regulatory Cooperation Body (RCB) without further ratification by the national parliaments. Depending on the nature of these amendments that can be a shady practice.

Globalisation

Back to the strategic question

1. Considerations of TTIP’s geopolitical consequences have merit. But advocates tend to oversell the strategic importance and overlook (or downplay) unintended negative consequences, for example for developing countries. TTIP will redirect trade flows and lower market shares of developing countries. Positive spill-over effects for these countries are less likely, as they require cutting tariffs for third countries as well, including developing countries in the relevant TTIP fora, and reforming the WTO.
2. Do we repeat the mistake of the IMF and World Bank, where Europe and the US discriminated against the BRICs-Countries as long, as they started do build their own development bank? Is it in the interest of the German Export-Industry, to exclude China from TPP?
3. American liquid natural gas (LNG) – once the U.S. start exporting. The argument goes that the LNG from across the pond will “help to diversify European energy imports and reduce reliance on Russian gas”. However, reliance on LNG will substitute one dependency for another. In energy security, we should focus on renewables, energy efficiency and energy saving.

Conclusion

We need a better deal! Europe and the U.S. should champion free trade and rule of law. Free trade and fair trade should not be two distinct concepts.

This is not a ‘take it or leave it’ type situation. A better deal is possible: instead of a deal that sets off a race to the bottom, we need a deal that raises ecological and social standards.

We do not need a “market-compatible democracy” – to quote the chancellor.

If we take our values and interests seriously we need an agreement that is compatible with transparent lawmaking, public rule of law and compatible with social, consumer and environmental standards and that is an offer to the world not a new fence.