“Trans-Atlantic Trade and Investment Partnership”

Impact on Society and Environment

Economic Impact of TTIP on the EU

According to a working paper (No.14-03) of the global development and environmental institute of the Tufts University, Medford MA 02155, USA the Trans-Atlantic Trade and Investment Partnership would foster European Disintegration, Unemployment and Instability. It uses the well reputed United Nations Global Policy Model (UN GPM) for its predictions while the European Commission relies in its statement about growth prospectcts on the Computable General Equilibrium Model (CGM) as also used by the World Bank.

Models basing on CGM like CEPR which is used by the European Comission point to positive although negligible gains in terms of GDP (gross domestic product) and personal incomes (Ecorys (2009), CEPR (2013), CEPII (2013) and Bertelsmann Stiftung (2013)). They suggest an increase of GDP however not of its growth rate. Effects seen in the long term like f.i. on employment are however influenced by the growth rate rather than a one time effect.

Even worse these models base on some implausible assumptions: One of them is ‘full employment’. It says that higher unemployment would be overcompensated by reduced wages leading to higher employment. This has not proven to be true in reality. More competitive sectors of the economy can not absorb all the resources, including labor, which are released by sectors contracting fastly that do not bear competition. The growth of the expanding sectors will be slower. An assembly line employee of an automobile factory can not simply take a new job at a software company as long as his or her salary is low enough.

The gains predicted by the CGM models are based on the effect of eliminating consumer and environmental regulations which are just seen as trade barriers (non-tariff barriers). It does not pay respect to the fact that consumer and environmental regulations help to preserve the market and competitiveness of European companies. However these gains would emerge at the expense of intra-EU trade reversing the process of European economic integration. Replacing intra-EU trade by transatlantic trade would make the countries of the European Union clearly more vulnerable to the macro econmoic conditions in North America.

CGM models have been used to predict only positive effects for trade agreements of the USA with a.o. Latin American countries. Though many of these studies have been claimed to be manipulated [1]. The use of a different model like the Global Policy Model employed by the United Nations (UN GPM) with success in large areas of the world would lead to very different consequences like a working paper by tufts.edu shows us [2].

Unemployment pressure and international competitiveness will take wages and under pressure. Those countries with the strongest labor protection would suffer the most. Lower value added manufactures in the EU are relatively uncompetitive. The paradox about the outcomes of the UN GPM model is that there would be an increase of net exports in almost every other region of the world which does however not imply economic growth. It can be seen as an outcome of a rearrangement in trade volumes due to the EUs low competitiveness in lower value added manufactures. The model estimates the relationship between GDP growth and employment growth over several decades based on ILO data.

Should these predictions come true, they were terrific! More jobs would be lost than in the crises years 2010 and 2011. Whatever should be the case this model predicts clear overall losses in net exports, overall economic activity, employment and labor income. We definitely need to avoid this.

The paper also suggests that any viable strategy to reliable economic growth in Europe would have to build on a strong (even though indirect) effort to support wages and labor income because otherwise people would not have more money to spend. An increase of labor share could be achieved by charging an adequate, graded tax for capital incomes and multinational companies. With TTIP in force a devaluation of the euro would be the only option left over for stimulating growth. That has already been working badly. Moreover doing so would likely make other countries and currencies follow opening up a race to the bottom where nothing is gained. Such a steep nominal devaluation would make the countries of the EU accumulate external debits even if other countries would omit defensive devaluations as prices for imports, raw materials and energy would stay high.

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Impact on Society and Environment

TTIP is about to undermine environmental (GMO, fracking, nuclear power, food safety), labour and health standards in the European Union: attac about TTIP, European Citizens’ Initiative against TTIP avaaz: STOP TTIP petition; links: at iatp.org and globaltimes.cn.

TiSA, the so called Trade in Servies Agreement was designed to become a consecutive treaty of GATS, the General Agreement on Trades and Services. Until lately all texts of the contract have been kept entirely secret being stored in a protected room or building. Fortunately Wikileaks has brought relevant documents to the public, hopefully in time. TiSA should have been put into effect without any citizen to know about it.

As these documents reveal TiSA would not only become a threat to data protection and privacy. Even worse it would prevent an effective control and regulation of finance markets. Every new regulation would have to become subject to a “justification”. The desired finance market transaction tax could easily be prevented like this (see also: Greece, the Euro and the Debt Disaster; second part.). As long as a majority of the newly printed money flows directly into speculation as a result of the policy of low interest rates such a finance market transaction tax would directly be necessary in order not to indirectly expropriate all those who save or earn money (salaries will not rise as a result of speculation). TiSA even dwarfs the scandal around Swift where the USA have arranged financial data of Europeans to be disclosed to the USA in the name of the War against Terror. In the future all financial data including transactions and the balance would be forwarded to the US.

Many European citizens will not be less concerned by the planned privatizations of the basic supply and infrastructure like f.i. of water. Regulations which prevent companies from bringing temporary workers from developing and low wage countries into the European Union should be abolished in order to provide an alternative for outsourcing.

So called “investor state dispute resolutions” could abolish our democracy and national sovereignty as we know it today: companys can thereby sue against any law affecting their future profits. What may sound harmless or justified has already caused many human right violations if not even crimes against humanity in development countries. Fortunately Mr Jean-Claude Juncker, president of the European Commission, has asserted that he will not permit such arbitration courts to be set in force by TTIP and CETA (see for the next section).

Even the WTO opposes TTIP as other countries may either be excluded or pressed with similar conditions; support: AlternativeTradeMandate.org.

read about investor-state dispute resolutions (ISDS) as they are current legal practice.

Investor State Dispute Resolutions and the Transatlantic Free Trade Agreements

Jean-Claude Juncker who has been known as a proponent of the planned transatlantic investment treaties has now asserted a courageous statement: "My commission will not allow that the judicature of the courts of the EU member states will be hobbled by special regulations for lawsuits of investors. The rule of law and equality must also be valid in this context." (according to the Krone-newspaper on 2014-12-17, translated from German to English). He accomplished further: "In the treaty that my commission will propose at the end of the negotiations nothing will infringe the access to domestic administration of justice. Neither will we give secret courts the final say."

However Frederik Erixon the director of the European thaught factory ECIPE had claimed before that the EU trade policy and the capacities at the European Commission to sign significant trade agreements would be at risk. He fears that abolishing investor-sate dispute settlements would be the end of the negotiations because the same critics could trespass to other parts of the treaty 2.

However there is a reasoned cause for severe concern due to some past cites of Jean-Claude Juncker:

„We decide something, float it, wait for some time what happens. If there should be no severe clamor and no rebellion because most of the people do not even understand what we have decided there then we continue - step by step until there is no way back.“ - Juncker in 1999 about deepening the EU.

„When things become serious you simply have to lie.“ - Juncker 2011 according to the news agency dapd about the delicate rescue measures in the Euro crises.6

The statement of Mr. Jean-Claude Juncker was given at the „eleventh hour“. There had been a dispute with Germany before, which had suspended its consent to CETA because of the secret arbitration courts:

However when it comes to TTIP and CETA many politicians seem to simply set basic democratic rules out of force. Federal Chancellor of Austria, Werner Faymann has told towards the readers of the Krone newspaper that he will never allow special rights for investors to sue against states while his chief negotiator Mitterlehner never had an objection against investor-satte dispute resolutions; he takes a very different stand. Thereon federal spokesman Eva Glawischnig from the green party told at a press conference that it would be extremly harmful to lie at people. 4

Even a European Citizens` Initiative (ECI) with more than a million signers and minima quora in different member states has been dismissed by the European Commission on 2014-09-11 due to flimsy pleas: An ECI could only contribute to decree a law but not to stop a law. The negotiations would just be a preparation to a legal act; the preparations could not be challenged, only the legal act itself. As a consequence 290 citizens organizations are currently sueing back at the EuGH, the European Supreme Court in Luxemburg since 2014-11-10. 5

Last but not least we wanna mention that when ACTA had been negotiated the European Parliament had passed a resolution with 633 against 13 votes comprising all fractions to fight for a disclosure of the negotiations. The parliament would be deeply concerned that there was no lawful base for the negotiations about ACTA as required by the Lissabon treaty signed on 2009-12-12. The European Commission would in deed have been committed to inform the Parliament about all ongoing negotiations. Note that ACTA had been quasi literally part of the original secret draft for TTIP and CETA; however later on it was reported having been discarded. ACTA prescribes the surveillance of internet users, a three-strikes-policy to switch off the internet connection for the whole household if any originator offences should be detected by the surveillance and an unreasoned searches of all electronic storage devices at border guards which contradicts basic citizens rights. 6

Read about Precedent Cases of Investor-State Dispute Resolutions (ISDS) (also: affecting Canada and Germany).

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