14 ottobre 2014

The Future of EU-US Relations: Political and Economic Reflections on the Transatlantic Trade and Investment Partnership (TTIP) Agreement (English version)

Roundtable debate, Washington

Good morning everyone. I am delighted to welcome you all to this roundtable debate and I thank you for being here.


The project that FEPS has launched, together with some partners organizations – which I would like to thank for their precious collaboration –, with the aim of accompanying the negotiation process of the Translatlantic Trade and Investment Partnership is, in my opinion, extremely important. Indeed, it could change the international economic scenario. Yet, it would be a huge mistake to underestimate its scope by considering it a merely economic and trade agreement. For this reason I am very pleased to acknowledge the presence here today not only of experts and scholars, from Europe and the United States, but also of many representatives of citizens’ interests.


Let me state immediately that we regard these negotiations with a positive attitude. We are aware that they arouse fear, doubts and misgivings. Nevertheless, it is their potential that we would like to underline. Trade agreements, such as the TTIP and its Pacific equivalent Trans-Pacific Partnership (TPP), could offer an extraordinary opportunity to enhance global cooperation and set high standards for future trade negotiations.


However, this would only be true if this type of trade agreements put at its core sustainable development and shared benefits. In other words, agreements such as the TTIP should be ‘people-centred’, respect democracy, ensure state sovereignty, protect workers’ fundamental rights, and address climate and environmental challenges, among others.


We know that the European Union is currently conducting several negotiations for free trade agreements. I think that this multi-pronged activity is very important for two main reasons. Firstly, we shall not give the impression that this transatlantic agreement amounts to a Western alliance against the rest of the world. Secondly, and as consequence of what I just said, we consider the TTIP as a means of re-launching a multilateral approach, and perhaps of re-launching a multi-lateral negotiation as the one that was opened in Doha in 2001, but which has unfortunately stalled over major issues.


One of the reasons for public opinions’ mistrust of such kind of agreements, and therefore also for the stalemate of multilateral negotiations, is to be found in the fact that, so far, several existing trade agreements have typically neglected the social and environmental dimensions that I mentioned earlier and have often put commercial interests ahead of other values such as the right to a healthy life and the protection of the environment, just to name two.


TTIP discourse as it is set up right now has represented no exception to this past trend. The debate on TTIP to date has often neglected the complexities of multi-level polity and how transnational processes of economic integration are understood and defined at political level. Instead, the debate on TTIP has mainly focused on the alleged advantages of free trade.


This narrow approach presents two problems. First, there is no theoretical basis for the argument that free trade stimulates domestic production and employment. According to free trade theories, trade liberalization will increase welfare through a better allocation of production and consumption in every country. It will increase domestic competition and lower prices for consumers. It will also stimulate exports and employment as the mirror of the cheaper imports.


However, it is widely recognised that these theories simply ignored risk, and assumed that the economy is at full employment, so that workers displaced by globalization would quickly move from low-productivity sectors to high-productivity sectors. But where there is a high-level of unemployment, and especially where a large percentage of the unemployed have been out of work long term, there can’t be such complacency.


A discussion of TTIP on the basis of the alleged benefits of free trade implies that globalization is presented as an ongoing and inexorable process of economic change. This conception of globalization is then associated with the near perfect capital mobility and with a variety of neoliberal economic imperatives. It implies and assumes a world of rigorous tax competition, of an intense struggle for competitiveness secured principally on the basis of cost reductions, welfare retrenchment, labour market flexibility and the removal of supply-side rigidities. In other words ‘market-conforming deregulation’.


The idea that such policies lead relentlessly to sustained growth of wealth and to an optimal allocation of resources has been blatantly contradicted by the huge economic crisis that from 2008 has hit the global economy and in particular the Western world and Europe. A crisis that has highlighted the need for stronger public action and regulation both at national and international level.


This brings me to my second point. Negotiations to date have not focused on the creation of a new trade regime that puts the public interest first. Instead, using the words of Nobel Laureate Joseph Stiglitz, they have focused on creating a “managed trade regime that puts corporate interests first”.


No trade agreement should put commercial interests ahead of broader national interests, especially when non-trade related issues, such as financial regulation, intellectual property, and other regulations, are at stake. It is indeed true that harmonization of regulation could benefit society at large, but only when harmonization translates into strengthening regulation to the highest standards everywhere. However, when corporations call for harmonization what they really mean is a race to the bottom towards deregulation.


But most of the regulations, even if they are imperfect, are there for a specific reason: to protect workers, consumers, the economy and the environment. Overall, if the rules that will be put in place are more friendly to corporation and less friendly to the environment and consumers they will not only most probably impede economic growth but will also have serious repercussion for social wellbeing and the environment.


This leads me to my concluding point. It is of the essence that the debate on TTIP moves away from the old and false rhetoric of free trade. We should stop embedding the discourse on TTIP and of enhanced economic cooperation in the logic of free markets, and we should stop seeing this as a purely economy issue. This will make the difference between creating a transatlantic new deal where sustainable development and empowerment takes centre and an agreement where gains of trade will mainly end in the hands of a few private individuals.


From this point of view, an agreement between the European Union and the United States – which are the two large areas of the world where the democratic tradition and the protection of individual and collective rights are stronger – could represent a point of reference. It would introduce a series of criteria from which to draw inspiration for the setting of global regulations, in order to avoid the kind of wild globalization which has prevailed so far. A globalization which has encouraged the logic of competition, leading to wage restraint, reduction of workers’ rights, decline in the standards of environment and health protection.


Today, European and American progressive forces have a great responsibility; they shall do their outmost to ensure that the present negotiations represent a real turning point, compared to the current neoliberal model of globalization.