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2 December 2013

EU-US trade partnership no quick fix for the crisis

The ETUI Monthly Forum debate, held on 28 November, on a future Transatlantic Trade and Investment Partnership provided no clear answers to important questions on the social impact of such an agreement between the US and the EU. Whereas the economic experts used econometric models in an attempt to prove that the TTIP would have substantial benefits in terms of growth and jobs, trade union commentators and representatives remained sceptical about these trade negotiations.

The forum was opened by Professor Joseph François (Centre for Economic Policy Research, London) who outlined some recent changes in the characteristics of world trade. Regional production networks and the importance of cross-border trade in parts and components have created new challenges to the international trade system. Based on econometric studies for the EU Commission, the trade economist showed how non-tariff barriers to trade such as regulatory divergence and ‘actionability’ (the degree to which a non-tariff measure can potentially be reduced) are significant elements hindering global trade. The potential benefits of a successful TTIP are substantial but, according to Joseph François, many difficulties will need to be overcome.

Dr Ulrich Schoof, Project Manager for the ‘Nachhaltig Wirtschaften’ (sustainable economy) programme at the Bertelsmann Foundation, described the research being conducted under his supervision and arrived at a similar analysis. He too saw the economic benefits to be derived from a trade agreement but his models indicated also that benefits in terms of change in real per capita growth would be much higher in the US (13% change) than in the EU (5% change). According to the Bertelsmann Foundation researcher, a TTIP deal would not increase economic disparities among the EU’s 27 member states. All EU member states would benefit, albeit some more so than others. The main losers would be countries like Norway and Turkey.

Speaking on behalf of the ETUI, Martin Myant, Head of Unit for European Economic, Employment and Social Policy, questioned the econometric methods used by both studies and concluded from the figures produced by these studies that in reality “the gains look fairly small” (0.48% GDP increase by 2027 according to March study Francois). He drew attention also to the fact that the two studies offer totally different predictions in terms of the sectors likely to benefit from a trade agreement. Professor Francois accepted that his model cannot give an exact answer. It is useful rather because it ‘flags up what we need to know’.

On behalf of the ETUC, confederal secretary Judith Kirton-Darling commented that whereas non-tariff barriers are viewed only as costs, there might be good social and environmental reasons for these barriers, a point picked up in the discussion by other trade union representatives. She also pointed out that these non-tariff barriers, especially where they take the form of regulatory measures, had been put in place via a democratic decision-making process and could not be undone by technocratic decisions. She criticised the studies, in addition, for failing to consider the job displacement effects of a possible EU-US deal.

In the Q&A session, questions were asked about the external costs to society of the TTIP, the impact on climate emissions of further trade growth, the risks of social dumping and the hype about these kinds of deals creating jobs.

Professor François replied that the TTIP is “not about getting rid of regulatory rules”. He stressed also that the European Commission will be starting a new process in the form of a sustainability assessment of the TTIP, a process in which trade unions and civil society should be very much involved. Last but not least, “this is not a short-run solution to quickly get us out of the crisis”, he concluded.

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