April 24, 2015
Translated from Russian by Kristina Rus
What will the EU get from the Transatlantic free trade zone?
In 2015 a Treaty establishing the Transatlantic trade and investment partnership between the US and the EU should be signed. It is anticipated that the contract will be the largest agreement on free trade, and its ratification would be beneficial for both Europe and America. At the same time, its adoption has certain risks, about which many prefer to remain silent.
Negotiations on a Transatlantic trade and investment partnership (TTIP) have been conducted since 2013, and they are now in the final stage. The signing of the Treaty and its ratification by the European Parliament and the U.S. Congress is planned for mid-2015. The agreement claims to provide conditions for development, employment and prosperity on both sides of the Atlantic. Supporters of the Treaty argue that the United States will create the largest trading block, while the EU will be able to accelerate its economy.
According to the forecasts of the Center for Economic Policy Research (CEPR), this agreement will provide the EU with additional growth in real GDP by almost 0.5 percent by 2027, and for US it will be about 0.4%. At the same time, in their conclusions researchers overlooked one important factor – time. With the increase of 0.5% in GDP by 2027 the annual rate of growth for the U.S. will average only 0.03% and for the EU – 0,04%. This figure is very low, and to argue that TTIP will stimulate the stalled economy of the European Union would be an exaggeration.
Interestingly, the IFO Institute for Economic Research and Bertelsmann International Fund are much more optimistic. According to them, the additional growth in real GDP per capita in the next 10-20 years will be about 5% for the EU, and around 13% for the US. These forecasts give reason to assume that this Treaty will improve the welfare of residents and will contribute to the development of the EU economy. However, the above results depend on many economic and geopolitical conditions over a long period of time, which causes justified skepticism.
In addition to doubts about the positive consequences for the EU economy, another fact draws attention – extreme secrecy of this agreement.
Among the deputies of the European Parliament, only seven people have received the right to have a few hours in the presence of officials of the European Commission to read the text of the Treaty without the ability to use electronic devices, watches or even a pen.
According to a member of the EU Parliament, member of the “European United left/Left-green North” Marina Albiol, “disclosure of information about the document can be followed by administrative sanctions and even criminal liability” what raises serious questions about in whose interests the text is hidden from the public and if this agreement harms the interests of EU residents? In turn her colleague from the faction, Lola Sanchez, criticizing the inaccessibility of the text of the Treaty, spoke clearly: “This contract is designed for multinational corporations, and the U.S. banned the European Union from publishing it.”
A study conducted last year by Tufts University (USA), clearly demonstrates how TTIP could affect the EU economy. Using a UN model of global politics (United Nations Global Policy Model), the authors of the study concluded that the signing of the agreement the EU will carry huge losses in exports and income from employment, resulting in job cuts. According to the researchers, the economy of Northern Europe will suffer greatest losses (GDP loss of 2.7%) and France (1.9%), Germany (1.4%) and the UK (0,95%).
The Nordic countries will loose 223 000 jobs, Germany (-134 000), France (-130 000) and southern Europe (-90 000), where at the moment there is, according to Eurostat, highest unemployment rate in the European Union. Overall, according to the authors, the EU will lose about 600 000 jobs that really will hurt the income of the employed population. In France, the decline in income per worker will be 5.5 thousand Euros per year, in the countries of Northern Europe – 4,8 thousand Euros, in the UK – 4,2 thousand Euros, and Germany – 3.4 thousand Euros.
At the same time this is not the worst thing which the EU citizens may face. In the EU there are significant restrictions on the production of genetically modified foods (GMOs) that will be eliminated with the signing of TTIP. Consequently, the European market will be flooded with cheap genetically modified American products, the production of which in the U.S. has been already streamlined due to the lack of the aforementioned restrictions. According to statistics, the average cost of meat in America is about 30% lower than in the EU, and with the abolition of restrictions the shelves of the Old World will be overstocked with it. Initially, of course, it will be profitable for ordinary consumers – buying cheaper products will allow them to spend more money on other needs. However, dumping on the part of American manufacturers will ultimately lead to bankruptcy of the European food companies, and, consequently, to the loss of jobs and incomes. In addition, the question remains about the impact of these products on human health, so we cannot exclude an increase in the number of various diseases in the next generation of Europeans.
The main political forces that make up the majority of MEPs – Christian Democrats, liberals and Social Democrats – are supporting the signing of this agreement. The opposite position is shared by the representatives of the extreme left and right parties, and a group of Green, remaining in the minority.
However, this does not mean that the agreement will definitely be signed. In the history of the EU there are precedents when under the influence of protests the ruling establishment changed its decision.
One such example is the failure to sign the Anti-Counterfeiting Trade Agreement (ACTA) by the European Parliament in July 2012, aimed at the enforcement of copyright on the Internet, lobbied by the US. At the moment numerous demonstrations and pickets against the ratification of TTIP are held in the EU, and more than a million residents of the European Union, in accordance with the “European citizens’ initiative”, signed up against this contract. It is therefore possible that in the case of TTIP, the majority of MPs will listen to the views of their constituents, and will not follow the leash of the United States, for which this Treaty is undoubtedly more profitable.