Time to acknowledge that TTIP is dead, but a Jobs, Economic Growth and Investment Partnership is still needed
Paul Hamill / Jan 2017
Cartoon by Peter Schrank
With the election of Donald J. Trump and vindication of his anti-globalization message, many have noted how difficult, if not impossible, new trade agreements will be with the United States. These same commentators have called for US-EU Transatlantic Trade and Investment Partnership (TTIP) to be put on hold for now. In reality, TTIP is dead and it died in Brussels – it was just buried in Washington.
TTIP died in Brussels by its over-complexity, lack of any significant buy-in from member countries, seemingly covert negotiations, the lack of public discussion on the merits, and not basing the agreement between the EU and the United States on creating jobs for both.
The incoming Trump Administration could actually offer a reset for the transatlantic relationship by allowing both the EU and US to move on from TTIP, but also renegotiate a more effective partnership by focusing on mutual investing and the creation of jobs on both sides of the ocean.
The fundamental drivers behind the TTIP are even stronger today than when German Chancellor Angela Merkel suggested the agreement after the collapse of the Doha world trade talks in 2006.
The United States and European Union together represent 60% of global GDP. An agreement between the two would represent potentially the largest regional free-trade agreement in history. The European Commission has noted that an agreement would boost the EU's economy by €120 billion, the US economy by €90 billion and the rest of the world by €100 billion.
Geo-politically, an agreement between the EU and US would complete the ties between the world’s two leading economies under the umbrella of liberal democracy, setting the rules both economically and politically around the world – projecting influence and joint values globally.
Significantly, as both the EU and US are similar economies, there will be less undercutting for jobs, and instead there will be a race for innovation and growth. Reducing non-tariff barriers is the basis of any agreement – as much as 80% of the total potential gains comes from cutting costs imposed by bureaucracy and regulations, as well as from liberalizing trade in services and public procurement. According to an independent study, the increased level of economic activity and productivity gains created by an agreement will benefit the EU and US labour markets, both in terms of overall wages and new job opportunities for high- and low-skilled workers.
To take these key goals forward, Brussels and Washington should openly acknowledge that TTIP is dead, but that they both see value in creating wider economic growth and greater employment opportunities together. To do this successfully, the problems that killed TTIP should be acknowledged and addressed.
First, both sides must fully understand that the complexities of TTIP created a deep gap between the aims of the partnership and what ordinary citizens believed TTIP would result in. This included the non –governmental process of the Investor–State Dispute Settlement (ISDS). It is vital that a new approach to these issues be sought.
Second, the heavy-handed and secretive negotiating strategy from Brussels and Washington, which resulted in a multitude of fake news stories and a deliberate misinformation campaign, should be abandoned for an open and inclusive process. This would bring businesses, trade unions and civil society groups into real discussions on the process, details and final agreement. This will also need a wide public engagement strategy based around the core issues on both sides of the Atlantic.
Third, on the European side, national governments need to lead the process, rather than follow the Commission’s lead. This will stop capital cities blaming Brussels for awkward realities, and make the connection between the agreement and people of Europe much closer.
Fourth, and most importantly, the United States and Europe must base the agreement on creating jobs, economic growth and increasing cross-investment - the Jobs, Economic Growth and Investment Partnership – JEAP. An agreement between businesses and governments, either just based on their narrow interests or wider geopolitical issues, can no longer be undertaken. Agreement must be about bringing direct benefit to the citizens of the United States and European Union. Both sides must ensure that lowering costs and increasing investment must result in economic growth as well as a vast increase in wages and jobs for both side of the Atlantic.
2017 will see many challenges facing both the European Union and the United States. These challenges can be firmly addressed with a re-commitment to a partnership through JEAP.