The debate: Should we fear the trade deal the EU and US are cooking up?

The EU-US Transatlantic Trade and Investment Partnership (TTIP) has been in the works for three years yet debate still rages about what effect the deal will have on people either side of the Atlantic.

So what are the key points you should know about and is it a good or bad idea? We asked two commentators to give their views on a number of issues:

Matt Carthy, Sinn Féin MEP for Ireland Midlands/North West: 

TTIP – Why you should be afraid!

The recent leaking of documents related to TTIP negotiations have rightly raised public fears. They reveal that the United States negotiators are demanding that the EU allow American companies a say in framing EU safety regulations – an unprecedented development which should concern Irish consumers, farmers and small businesses.

Most Irish citizens would find it unacceptable that the Dáil would have to justify proposed Irish legislation to large corporations. Yet, this is exactly what TTIP is about.

The latest leaks highlight the secrecy and lack of democratic accountability surrounding a deal which will have severe and far-reaching consequences for Ireland. Yet public and political understanding in Ireland of what is actually at stake remains incredibly low.

It weakens democracy 

The controversial TTIP proposal for an ‘investor court’ would allow corporations to sue sovereign governments for implementing measures that impact on potential profits. This opens up the Irish State to previously unimagined liabilities. It would severely limit the ability of the Irish Government to legislate freely when it comes to public services. It would also have enormous implications for the Irish Constitution.

I have personally received legal opinion from an eminent senior council which confirms that if the EU Commission continues with this proposal, it would require a referendum in Ireland. TTIP supporters argue that such a court simply protects investors but domestic courts already provide ample legal recourse for everybody, including companies, who feel wronged.

The commission’s proposal is to provide corporations, and they alone, access to a court which can disregard legislation and constitutional protections.

It undermines the rights of workers 

The US has a much lower standard of rights for their workers than exists in the European Union. EU workers are entitled to 25 days annual leave but in the US workers have zero statutory requirements. Without strong rights for workers, prices and wages can be dictated at a much lower rate. The inclusion in TTIP of the aforementioned investment court,​​ which would ​allow investors to sue governments, compounds these concerns.

It is bad for agriculture and food safety

Irish farmers would be among the first to feel the negative brunt of a bad TTIP deal. A final agreement is likely to include vast increases in quotas for US meat to Europe, putting Irish family farmers into direct competition with US industrial farms who do not meet the same regulatory standards and who do not have the same animal health and environmental standards to adhere to.

The resultant lower production costs for US producers will put Irish and other European farmers at a severe disadvantage. Even the government-commissioned Copenhagen Economics Report acknowledged that Ireland’s beef sector could contract by up to €45 million as a result of TTIP.  In fact it could be much worse. The stated aim of TTIP is to remove unnecessary barriers to trade through ‘regulatory convergence’.

However, these ‘barriers’ are some of our most prized standards and changes to them may well have hugely negative consequences. For example, proposed EU regulations to ban 31 pesticides containing dangerous chemicals which are linked to testicular cancer and infertility were recently scrapped due to threats by the US regarding TTIP negotiations.

Regulations on genetically modified foods and the use of chemicals in food production are vastly different in the EU compared to the US. Under TTIP, practices currently regarded as a health risk by Irish food producers and consumers could become common practice here.

It will lead to privatisation of public services 

A stated aim of TTIP is to liberalise all sectors of the economy except those subject to explicit exemption. So far such exemptions apply only to the judiciary and police. Some corporations have made no secret of the fact that they see TTIP as a vehicle to get private access to public utilities such as water, health, education and postal services, leaving these vulnerable to outsourcing and eventually privatisation.

It is crystal clear that TTIP will prevent a re-nationalisation of services, once privatised.

It is bad for the environment

TTIP proposed to limit the power of governments to regulate for sustainable environmental practices. In fact, this is one of the main reasons proponents are pressing so hard for a deal to be concluded. This raises serious concerns that legislative efforts to ban fracking and other environmentally dangerous practises will be undermined.

A moratorium on fracking is currently in place in Ireland until the completion of a scientific survey by the Environmental Protection Agency. A similar moratorium in Canada led to the state being sued for CAD$250 million as a result of regulations enshrined in the North American free trade agreement, which is similar to TTIP.

Irish Government must protect Ireland’s interests 

The most disappointing aspect of the entire TTIP debate has been the attitude of the outgoing Irish government. They have seen their role as one of PR agents for the European Commission rather than defenders of Ireland’s interests.

They have selectively used reports such as that produced by Copenhagen Economics to set out a best-case scenario even though that report clearly states that potential gains from TTIP will disproportionately benefit foreign multinationals often at the expense of Irish-owned firms. The exports of six out of the eight sectors are expected to fall as a result of TTIP.

This is according to the government’s own commissioned report. TTIP is dangerous. We need a strong and vigilant Irish position to protect Ireland’s interest. We cannot allow ourselves to be sleepwalked into a bad deal with huge social costs.

Sinn Féin opposes TTIP under its current mandate and we will challenge any efforts that attempt to reduce the standards we have come to expect on food, the environment, the rights of workers and consumers. The incoming Irish government should do the same.

Dr Pat Ivory, Ibec director of EU and international affairs: 

A well balanced TTIP agreement can support growth and jobs

The growth of emerging markets and rapid technological development means the EU and the US today face increasing competition from Asia and other global players. The already strong trade and investment ties between the EU and US make it both logical and strategic to enhance this relationship to face these global challenges.

The EU and US account for over half of global GDP and one-third of world trade. Ireland, an open competitive economy with deep business links in Europe and the US, is in prime position to gain from TTIP.

A range of different sectors, including life sciences, software, computer services and food and drink sectors, can benefit from a well-balanced TTIP, supporting the development of large and small businesses. In fact, studies show that Ireland could gain twice as much as other European countries – with estimated gains from a successful TTIP of 1.1% in GDP, 2.7% in exports and 1.6% in investment.

However, TTIP is more than a trade agreement; it is also a statement of intent. It says that the EU and the US remain strong global leaders in developing the standards and rules that will operate in world markets. We cannot ignore globalisation, with agreements being made on trade and investment with Asia and the Pacific and elsewhere. Someone is going to dictate the rules of global trade, why should Irish and European businesses, consumers and workers not have a say and be left behind?

Transparency and the democratic process

Some have criticised the TTIP negotiations for lack of transparency and for being undemocratic. Though the EU and the US maintain positive relations, it is natural that both sides have strong offensive and defensive interests. While we all, business included, like to see as much detail as possible we must recognise that TTIP is in a negotiation process.

Negotiators need room to do their job, otherwise nothing will ever be achieved. Furthermore, in comparison to previous trade and investment negotiations, there is significant public information available on TTIP. Much of this can be viewed online, including the EU offers and negotiating mandate.

Ibec and its industry sectors have made Irish business views well known to the EU, which also consults widely with trade unions, consumer groups and civil society. The EU and US chief negotiators also hold public sessions during each round of TTIP negotiations where interested groups, including business, can ask questions and put forward their own positions.

TTIP will ultimately be ratified by the European Council and parliament before it can come into force, so national governments as well as MEPs will have the final say. In summary, the criticism that the TTIP negotiations lack transparency and are undemocratic is simply not supported by evidence.

Employment and job creation

There is much evidence to support the view that good trade and investment agreements simulate economic growth. Of course many factors, including the growth of technology, can affect where people work over a period of time. There is no conclusive research that says free trade agreements result in unemployment; sometimes jobs decline in one area while jobs grow in other sectors. TTIP can definitely support employment and job creation in Ireland.

In an open economy, Irish businesses already compete with US and European businesses. TTIP can particularly improve competitiveness for Irish SMEs making it easier to export and that has the potential to create jobs across the regions. Independent economic studies also predict that a successful TTIP could increase Irish real wages by as much as 1.3%.

Health and public services

There has been a lot of talk in the UK and Ireland about the privatisation of public services under TTIP, particularly in the health sector. EU and US negotiators have made clear that they are not interested in negotiating on mandatory privatisation in trade agreements. The truth is national governments will have the same power to keep services under public control or to privatise elements post TTIP as they do now.

Better alignment of regulation and standards

Critics of TTIP have also somehow equated regulatory alignment with lowering standards in health, food safety and other areas. Despite having the world’s most advanced regulatory regimes, EU and US businesses still have to comply with two separate systems governing, for example, product labelling, testing or inspection of premises. The vast majority of these regulations are different because they were devised independently and not because of divergent public policy.

Better alignment of regulations and standards can reduce the cost burden on business, making us more competitive in an increasingly challenging global environment. The benefits of better regulation would be even important to small- and medium-sized businesses, which have more limited resources than larger organisations.

Investment protection

There has also been much discussion on the inclusion of investment protection in TTIP. Investment protection clauses already exist in 1,400 bilateral agreements signed by EU member states since the 1960s. These have not circumvented the ability of governments to legislate in the public interest.

Investment protection is essentially about designing a framework for conflict resolution in the case of illegal expropriation or discriminatory treatment against foreign investors. Such a mechanism does not require a state to revoke a law or to pay compensation to a foreign investor when “in the normal exercise of their regulatory powers they adopt … regulations that are aimed at the general welfare”. The European Commission has proposed a revised mechanism – the investment court system.

The proposal enshrines the right of governments to legislate and regulate. It also increases transparency through open hearings and making comments available online. While investment protection remains a topic under negotiation, it is clear that an amended and modernised mechanism will be necessary.

Irish investment in the US has fallen in the last two years; a strong TTIP is an opportunity to recover our position as one of the top-10 sources of FDI in the US.

A balanced TTIP has the potential to increase trade, create jobs and keep Ireland competitive, with benefits for business, workers and consumers. It is important that we have an open, evidence based discussion on TTIP and not one driven by ideological rhetoric.

What do you think? Tell us in the comments below