The Transatlantic Trade and Investment Partnership (TTIP) is the source of huge debate in Brussels and a number of other European capital cities. Very simply put this trade agreement, which is still being negotiated, aims at facilitating in a very significant manner the trade of goods and services between the EU and the United States. The aim is to practically remove all tariffs on goods traded between the two continents as well as achieve regulatory conformity between the two continents. The desired end result is increased trade in goods and services and the creation of thousands of new jobs on both sides of the Atlantic.
It all sounds very good and that’s how such a proposal should be viewed. However the proposed deal (known as TTIP) has run into some significant stormy waters. Indeed it is now running the risk of sinking completely. Whether this will actually happen was the focus of the debate of a seminar organised recently by the American embassy and MEUSAC.
The panel debate immediately started off with a cracker. In reply to my question as to where TTIP stands, MEP Alfred Sant replied in his usual sharp manner: “TTIP is dead.” Such a categorical statement stunned the audience into a momentary silence. Sant then went on to explain why, in his view, TTIP will never be concluded.
Opposing ambitious deals with big goals seems to be the hip thing to do and I fear little reason is guiding the current protests
Among other things, he cited the recently released Commission study which showed that while Malta will benefit overall from an eventual TTIP, Malta would be the country registering the least additional growth in GDP as a direct impact of TTIP. What is however also true, and this is also explained in the same study, is that given the current low levels of trade and investment between Malta and the United States, the expected increase as a percentage of GDP is obviously going to be low.
A concluded TTIP is also expected to impact in a positive manner on the wages of both the skilled and unskilled workers in Malta by at least 0.9 per cent. A number of important economic sectors of the Maltese economy are also expected to benefit positively such as for example the pharmaceutical sector. Overall lower import prices are also expected to impact positively the general welfare of the Maltese population. Similar and admittedly more pronounced positive impacts are expected right across the 27 EU member states assuming the UK would have indeed left the EU.
So with positive benefits expected to ensue, why is TTIP facing unprecedented resistance? The factors are various, however I will not hesitate to say that unfortunately there are a number of assertions that are based more on fiction than fact.
One of the first arguments put forward by opponents of the TTIP is that acceptance of US standards will lower EU standards in critical areas such as health and safety and the environment. While such concerns are indeed legitimate they totally ignore the repeated stated and written assurances of the chief negotiators from both sides that a lowering of any standards is not acceptable and if anything an increase in standards is being sought.
Opposing ambitious deals with big goals seems to be the hip thing to do and I fear little reason is guiding the current protests. Our welfare state is based on free trade. We can afford it because of and not in spite of free trade. It is therefore difficult to understand how people who clearly want to benefit from the welfare state are so strongly against free trade.
Add to all this the incredible complexities brought about by the elections in the US itself as well as in key places such as France and Germany and there is no doubt that the situation is toxic. This has also impacted the already agreed (but not ratified) trade deal with Canada all of which is making the EU look increasingly lame at a time when it needs to show strength. The Prime Minister of Canada put it very succinctly when he said that “if the EU is not capable of striking a deal with Canada then with who does it think it is it capable of striking one?”
I very much suspect that over the next few months we will witness some significant twists and turns and indeed the stated goal of concluding TTIP by 2016 will probably not be achieved. Sant declared TTIP to be dead and indeed it may be so. But it may also be true that it will be called by some other name because fundamentally TTIP is about free trade.
As our own personal experience of EU membership has shown us it is only through free trade that real sustainable economic growth and hence jobs can be created. Much as some may profess otherwise, there is so far no other credible alternative to free trade. I would however agree that maybe we should no longer call it by the rather irritating name of TTIP.
Stefano Mallia is business and EU advisory partner at Grant Thornton.