Free trade with the US, some perspectives on TTIP
I wrote a tweet in Polish a couple of days ago about the free trade agreement between EU and US now under negotiation. Or to be more precise the Transatlantic Trade and Investment Partnership (TTIP). I have tweeted about it before because I believe it represents a significant potential for future growth – and hence prosperity – in Europe.
My message was inspired by a conference in Stockholm where broad support was expressed for TTIP from very different Swedish actors brought together by our Minister if Trade, Ewa Björling. Quite soon I received a number of questions and comments, exactly the kind of dialogue that I guess most of us want to initiate through our tweets. I tried to respond directly even though the 140 character limitation makes it challenging to provide all the information available and get the nuances right.
Hence, some further comments here in this blog-format.
Support for TTIP – what does that mean in a situation when the agreement is not ready? It means support for the idea, for the process, for the ambition to achieve a far-reaching deal. Without that kind of commitment very few free trade agreements would ever have been possible to conclude.
And a far reaching deal could mean a lot to our economies. Custom tariffs may be fairly low (though 17% for American shoes…) but since we trade a lot they still add up to huge sums. And differences in technical standards, rules and regulations are often creating serious barriers for trade between our continents. I recently talked to one company that had considered entering the American market but withdrew since it was so complicated to get the products approved – compared to the EU where the internal market makes life much easier.
Through TTIP we can jointly set standards that have the potential to become global. At the conference in Stockholm, the CEO for Ericsson Hans Vestberg made an interesting comparison. There are now 6,5 billion mobile subscriptions in the world. If this sector where standards now are global instead would have had national standards differing from each other we would probably only have had some hundreds of millions subscriptions because the development of the telecom sector would in that case seriously have been slowed down.
The negotiations need to be adapted to the production and trade reality of today. As far as possible, TTIP is to take account of changing trade patterns and global value chains. A large part of trade today takes part within value chains. This means that the production of goods and services is fragmented and separated in different parts of the world. Value chains underline the need and importance of open markets, not least the importance of imports. Though not a new phenomenon, value chains have become increasingly visible. Reduced costs for trade, transport, international standards and new communication and technology solutions have fostered international production networks and increased specialisation. Moreover, value chains highlight the need for services, the glue of the value chain. Services such as research and development, commercial services and marketing, transports, and logistics are central. Another important issue in the service area concerns digital services, as international trade today builds on the possibility of sending data between countries. Barriers to data transmission increase costs for companies and affect their competitiveness. No transfer, no trade, as this report from the Swedish National Board of Trade points out: http://www.kommers.se/In-English/News-archive/No-transfer-no-trade-/ . This is why the area of services is a key part of the TTIP negotiations.
Of course there are limits for the TTIP negotiators on both sides. TTIP must not lead to reduction of e.g. environment, food, health or safety standards - neither in the EU nor in the US. That is not in anybody’s interest. And even if we have different systems in many areas we often share the same ambitions in terms of safety in the broad sense.
But how can we know anything about the TTIP process since everything is secret? First of all, everything is not secret. The EU should strive for much more transparency, but we are not moving in darkness.
There is a clear mandate to the negotiations: http://europa.eu/rapid/press-release_MEMO-13-564_en.htm . The EU Commission, who negotiates on behalf of the 28 EU Member States, meets and consults with all kinds of stakeholder organisations, and publishes information, positions, and reports on their website: http://ec.europa.eu/trade/policy/in-focus/ttip/resources/#documents . The European Parliament has set up a group to monitor these negotiations that include the Chairs of all the Parliament’s committees – including on the environment and consumer protection.
In order to negotiate an agreement that is beneficial for us, the communication and information sharing is vital. The European Commission is engaged in outreach activities such as public consultations on investor protection in TTIP: http://trade.ec.europa.eu/consultations/index.cfm?consul_id=179 . There are several seminars and round-table discussions being organized in the Member States, not least here in Warsaw. The Swedish Embassy is also keen on increasing the dialogue regarding TTIP and we welcome comments, questions and meetings on this subject.
In the end of the process, the results of the negotiations will be examined, debated and approved (if agreed) by both the European Parliament and Member States. The final decision will therefore be fully democratic.
Which are the supporters of the TTIP process in Sweden – apart from Government? Private sector representatives for sure. At the conference strong statements came not only from the big industries but also from e.g. the food processing industry and the farmers’ organisation. The trade unions have also expressed support for TTIP. Karl-Petter Thorwaldsson from the biggest one, LO, stressed the old tradition of his organisation to be strongly in favour of free trade. In a joint letter the three major trade unions have presented their generally positive view including two key reservations: no harm should be done on labour rights and investor protection must not limit the possibilities for democratic decision-making: http://www.lo.se/english/news/swedish_trade_unions_policy_on_negotiations_on_a_free_trade_agreement_between_eu_and_usa
The main critical voice at the conference came from Mikael Karlsson, chairman of a major environmental NGO (Svenska Naturskyddsföreningen). He pointed out that if the environment standards are upheld the economic effects will be lower than what the most optimistic calculations often used are showing.
A couple of days ago, an opinion poll was presented showing that 61% of Swedes are positive and around 20% are negative. I believe that suppport is firmly based on the broad based experience in our country that our standard of living has benefitted tremendously from free trade. But I also believe, though not having any figures to base it on, that these 61% also are strongly in favour of the limitations clearly stated by our Government. Standards might need to be simpler but not lower in terms of environment protection or health – just to mention a few key areas related to this process.
The agreement is to be designed in accordance with the world trade system and give a boost to the multilateral trade negotiations. The aim should be that TTIP is designed as a stepping stone, not a stumble block, to further multilateral trade liberalisation.
Which would be a blessing to all of us. Not only us meaning Europe and the US but to the global community. Including – which is of crucial importance to remember – to our efforts to eradicate world poverty