The European Business Summit is probably the ideal place to express dissenting views on TTIP, since in many ways it is the gathering of the two real contracting parties to TTIP: Business Europe and its counterpart the AmCham. In my opinion TTIP is currently too big to fly.
In Europe, the eurozone recovery is blocked by the debt overhang and the credit crunch. Without debt mutualisation and restructuring, there won’t be a recovery. In America, the excessive concentration of wealth and income inhibits growth, and transatlantic trade will suffer as a result.
Let me raise some questions about the feasibility of
TTIP which to me, after nine rounds of negotiations, looks more and more like
Howard Hughes’ famous sea plane, the Spruce Goose, which was so big and heavy
that it took off, but never flew, and since 1947, has become a tourist
attraction in Minnville, Oregon.
question is about growth and jobs, which has been the mantra of the past seven
years in the EU, so far without success. Can TTIP provide a solution? The most
likely answer is this: ‘we don’t know’! The trade-growth relationship is indeed
complex and it goes both ways. Trade liberalisation exerts a long-term
transformative function, but for large economies, such as the EU and US,
domestic demand in the short term matters more. Today, the redistribution
factor has become as central as competitiveness in the pursuit of growth. IMF
and OECD studies have confirmed the deflationary character of growing
the eurozone recovery is blocked by the debt overhang and the credit crunch.
Without debt mutualisation and restructuring, there won’t be a recovery. In
America, the excessive concentration of wealth and income inhibits growth, and
transatlantic trade will suffer as a result.
precisely, not only will TTIP-led growth be modest (0.5% over 10 years from the
end of the negotiations), but it won’t benefit all member states equally: there
will be losers and winners. Divergence within the eurozone, whose stability is
already undermined, will worsen and inequalities within countries will rise.
But, contrary to the US, the EU still has no central budget for coping with
divergences across states, whilst national solidarity systems are put under
stress by tax competition, another key fault-line of EU governance, which does
not exist in America.
question is about the method. Is trade negotiation − by definition a very
secretive process − the right way to build what Trade Commissioner De Gucht
called a “transatlantic internal market”, considering the highly political
character of the harmonisation of norms, regulatory cooperation and ISDS?
Suspicion is harming the negotiations, and talks of ‘myths’, or ‘orchestrated
disinformation’ from the Commission are very defensive tactics.
why should the EU negotiate a transatlantic market with the US while it has not
yet completed its own single market in key strategic sectors such as energy,
telecommunications, digital, financial services and the defence industry? All
previous FTAs, concluded by the EU have been negotiated with weaker partners,
but the US, because it is united, is stronger than the 28 member states of the
EU put together. The asymmetry here is blatant and the high professionalism of
DG Trade negotiators will not suffice to redress the systemic imbalance between
the two partners. And what about the risk of having two international
currencies competing over the same internal market? Another source for
by the way, is the EU negotiating with the US or with the twelve TPP trade bloc
countries? Doesn’t this aggravate the asymmetry? Do European companies realise
that they will eventually be competing on the US market, not only with the US,
but against Chilean, New Zealand and Vietnamese firms?
question – and here we are entering into the systemic and geopolitical
dimensions of TTIP – is what impact an EU-US coalition, within the WTO, would
have on the multilateral trading system. We were the architects of the
Bretton-Woods system. Should we take the responsibility of undermining it
further, instead of shoring it up? More than ever, our multipolar world calls
for a multilateral system of governance.
question stems from Hilary Clinton’s definition of TTIP as an ‘economic NATO’.
Who is then the enemy? If it is China, we are then no longer talking ‘peace and
love’ but rather ‘trade and war’. Well, I would strongly advise against
containing China through trade for three reasons:
and Beijing both share the responsibility for “China’s peaceful rise”. For the prosperity
and stability of the world, we should not isolate China.
not Soviet Russia; it has the capacity to answer back. It has the people, the
money and the long-term vision. And above all, China has the largest and
fastest growing domestic market in the world, and the CCP intends to use that
growth to climb up the technology ladder and develop their
the capability to respond by promoting an Asian trade and currency bloc −
despite the strategic tensions on its islands and borders − which would split
and fragment the global economy, and lead to a dangerous East-West
I’ ll stop
here and conclude with three recommendations:
1. Don’t stop TTIP negotiations,
suspend them and open them up to a coalition of the willing – including China –
using open plurilateralism as a pragmatic proxy for multilateralism.
2. Tackle the redistribution issue both
in the US and the EU as the missing priority of the economic policy agenda. In
the EU, this means a transfer union for the eurozone, corporate tax
harmonisation and a drastic strengthening of the EU-28 globalisation adjustment
fund. If Europe does not do its homework with regard to internal cohesion, it
will soon stop being a global trade player.
3. Remember that geography matters,
too. Europe is not just an Atlantic power; it is also a Eurasian one. The best
way to strengthen the Atlantic partnership is through common EU defence within
NATO, and the best way to play the Eurasian card and to contribute to the
stabilisation and prosperity of Russia and Central Asia is to respond to Xi
Jingping’s twin offer of a free trade area with China, and a Eurasian
infrastructure and Silk Road trade deal.
* Pierre Defraigne is Executive
Director of the Madariaga-College of Europe Foundation.