Saturday 11 October 2014 11:49 am

EU-US trade deal: Business vs NGOs

The proposed EU-US free trade deal known as the Transatlantic Trade and Investment Partnership (TTIP) has become a subject of hot controversy across Europe and the US.

TTIP even made its way into the campaign for Scottish independence, with the SNP claiming the deal would open up the NHS for privatisation. The debate intensified last week as negotiators from both sides met in Washington DC.

NGOs who have been the most hostile to the agreement came out swinging demanding that regulatory cooperation be withdrawn from the agreement. The declaration, whose signatories included War on Want and Friends of the Earth, argued that such cooperation would lower European standards on a host of goods.

Business groups hit back, with the American Chamber of Commerce and BusinessEurope issuing a statement:

By ensuring that regulators are better aware and understand what their transatlantic counterparts are doing, TTIP can help avoid and overcome unnecessary regulatory differences that often make trade prohibitively expensive.

Coordination between regulators has become a hot button issue for TTIP proponents with many businesses seeing it as almost as important as lowering tariffs.

The EU Commission, for the moment, appears to be siding with the business community. Trade commissioner-designate Cecilia Malmström responded to NGOs concerns last week:

It cannot be about lowering standards, but about avoiding extra costs – the costs entailed, for example, in the duplication of factory inspections and unnecessary divergences of approach

Support for TTIP has strengthened amongst the Commission in light of research into the massive benefits trade liberalisation between the US and the EU could bring to citizens.

The London-based Centre for Economic Policy Research paper entitled 'Reducing barriers to Transatlantic Trade', found the EU economy would benefit to the tune of €119bn a year – equivalent to an extra €545 for a family of four in the EU. The US could see gains of €95bn, with UK national income increasing by £4-10bn annually.

The potential for huge gains from TTIP should perhaps come as no surprise considering the US and the EU together account for nearly half of world GDP.

Sam Bowman, research director at the Adam Smith Institute, said:

For all the talk of emerging markets, the US and Europe are still where the money is economically and will be for many decades.

Many policy researchers and analysts argue Europe can ill-afford to drop the baton in its badly-needed quest for competitiveness.

Bowman told City A.M.:

TTIP is the best thing in international trade for years. Unlike the ambitious, but ultimately doomed, Doha trade talks, which aim to lower trade barriers in dozens of countries at once, including many that have no fundamental attachment to the idea of free trade, TTIP focuses on two parties that are both basically on board with the benefits of trade.

Both the US and EU have tariff and non-tariff barriers to trade for political reasons (ie to protect special interests), it's true, but both are also pretty fundamentally of the view that trade enriches everyone. Indeed, as much as we like to bash the EU, this is one of the cornerstones of the vision behind the Union.

Bowman's comments on the EU's attitude toward free trade echoed a recent survey of members of the Institute of Directors, which showed trade was one of the only areas of competence IoD members believed the EU was suited to manage. Furthermore, IoD members "routinely list overseas regulation as among the principle reasons for not undertaking greater export activity".

According to Bowman, many of the complaints from Europe's NGOs may be largely irrelevant to the actual deal that could be concluded in 2017.

Most of the objections to TTIP are silly – national health services are (unfortunately) exempt, and private firms are already able to sue governments if they wish (we call this "the Rule of Law" in the civilized world). If we manage it, we can make everyone substantially better off. Free trade has probably been free marketeers' most successful idea – if TTIP goes ahead, it will be nice to see it making one more gain.

While this result may fall short of the free trade ideal, it may alleviate some of the most intense opposition seen by the likes of the Green party, who have claimed TTIP could be the "undoing decades worth of EU progress on issues like worker’s rights".