Transatlantic Trade and Investment Partnership

Is the TTIP a friend or foe for Europe?

ABSTRACT
The economies of European Union and the United States of America are two of the
most integrated economies of the world. The TTIP - Transatlantic Trade and Investment
Partnership - aims to further strengthen this integration by suppressing trade barriers in a series
of economic sectors. However, this partnership doesnt come with no controversy, movements
against the TTIP demand the end of negotiations claiming the partnership doesnt bring benefits,
will weaken security, environmental and labor regulations, while national sovereignty will be
affected. On the other hand, the European Commission refutes all the negative aspects while
standing out the enormous economic growth and benefits of the TTIP, that in conclusion, far
exceed any possible disadvantage or concern that might be raised. In the meantime, negotiations
continue and will do so for a longtime, as bringing all parties to an agreement will be an
achievement of utopic proportions.

Submitted to Professor Miguel Homem Ferreira of Tutorial Class TAB32 on 24/04/2015

Tiago Reganha 12354

Introduction

The economies of European Union and the United States of America are two of the
most integrated economies of the world, representing nearly 50% of the GWP (gross world
product). This integration excels not only in the trading of goods and services but also in
capital/stock investment. 1. In 2012, the EU had a trade surplus with the USA of 11,2 billion
euros. The EU is, with no doubt, the biggest investor in the USA and vice-versa. Data estimates
that EU & USA companies acting on each other grounds represent more than 14 million jobs
created. 2.
It is due to statistics like this that is currently being negotiated between the European
Union and the United States of America a treaty with the purpose of suppressing trade and
commercial barriers in a series of economic sectors, with the objective of simplifying the trade
between the two economies. The treaty also seeks to facilitate the cross-Atlantic investment.
This treaty has the name of: Transatlantic Trade and Investment Partnership, or TTIP
(Parceria Transatlntica de Comrcio e Investimento) 3
TTIP has also many contestants, ONGs, companies, citizen groups, academics,
journalist, among others. The main reasons of controversy being the non-Public negotiation, the
lack of democratic control from the National Parliaments and the European Parliament, and that
the published estimates only having the most optimist scenario and only on a 10-year period 4.
This paper focuses on answering the three main questions that this three paragraphs raise: The
disadvantages of the TTIP, from an antagonistic point of view; the benefits of the treaty, from a
positive point of view; and finally, to observe both advantages and disadvantages so I can
answer the question: Is the TTIP a friend or foe for Europe?

1 Business Europe (report - April 2014) - The Transatlantic Trade & Investment
Partnership: Why TTIP matters to European business. Available at
http://www.businesseurope.eu. Date of access 22nd of April de 2015.
2 Bierbrauer, Elfriede (2014) - Sobre o Parlamento Europeu: Relaes econmicas
UE-EUA. Europarl. Available at: http://www.europarl.europa.eu/. Date of access 19th of
April 2015.
3 European Commission (March 2014) - What is the Transatlantic Trade and
Investment Partnership (TTIP)? Available at http://ec.europa.eu/. Date of access 21th
April 2015.
4 Wallach, Lori (November 2013): Tratado Transatlntico: um tufo que ameaa os
europeus. Le Monde diplomatique. Available at: http://pt.mondediplo.com/. Date of
access 22nd of April 2015.
1

I Against TTIP
Most of the TTIP contestants believe that the main objective of TTIP isnt to stimulate
the trade by removing the trade tariffs, pointing out that they are already minimal. The main
objective of TTIP is the supression of regulatory barriers that restrict the profit margins of
transantional companies. However, this barriers represent one of the most valuable instruments
for the protection of social standards and environmental regulations 5.
The TIPP revels little to no evidence of job creation and economic growth. Actually, this
agreement will bring more profit and power to eh big companies, with potentially catastrophic
consequences for the populations6.
The impact of the treaty on the interests of other countries, especially the countries from
the emerging markets, represents problem. The strengthening of links between the EU and the
USA may be seen as an attempt to marginalize the emerging economies such as China, Brazil,
India and South Africa (BRICS). The lowering of tariff barriers between the EU and the USA
will possibility lead to a reduction of exports from these countries.
This resistance alerts for the lack of transparency of the democratic procedures, which
prevent citizens from following the negotiation and securing the protection of their interests,
unlike the transatlantic companies, which receive special access to information and
opportunities to influence the negotiations7. It is mandatory that all the documents of the TTIP
negotiation be public, so allow a public scrutiny and debate about the TTIP, assuring that the
treaty policies are of public interest. That the process is followed democratically, involving the
European parliament, that debates are promoted on National Parliaments, unions and all the
interested parts8.

5 Corporate Europe Observatory (July 2014): TTIP: debunking the business propaganda over
investor rights. Available at: http://corporateeurope.org/. Date of access 24th of April 2015.

6 Hilary, John (February 2014) - The Transatlantic Trade and Investment Partnership
(TTIP): A charter for deregulation, an attack on jobs, an end to democracy. Rosa
Luxemburg Foundation. Available at: http://rosalux-europa.info/. Date of access 24th
April 2015.
7 Todhunter, Colin (April 2014): The Transatlantic Trade and Investment Partnership
(TTIP): A Brief History of an Agenda for Corporate Plunder. Global Research. Available
at: http://www.globalresearch.ca/. Date of access 23rd of April 2015.
2

Regarding the environment, the treaty will increase the pressure on the environmental
issues, due to the increase of production, consumption and increase of Atlantic goods transfer.
This increase in production will also threaten natural resources and the preservation of
biodiversity. CO2 emissions will also increase, contradicting the reduction agreements that the
EU itself took on (Kyoto protocol). On the short-term, the TTIP threatens to weaken
environmental standards, known to be high in the EU.
Furthermore, the agreement represents a series of risk for the European consumers: The
access to a food market that doesnt respect the EU security standards. The concept of food
safety in the USA is based on the certainty of no damage, and not on a precautionary principle
as it is in the EU. The neutralization of data protection norms. In the EU, the right to privacy
and personal data protection are fundamental, with high sanctions for the infringements. In the
USA, privacy is simply a matter of consumer defense restricted to a very limited number of
areas. Chemical products prohibited in the EU, but used in products in the USA (like in
cosmetics), will now be able to be sold on European shelves 9.
There is also the worry that the TTIP may lower the labor standards that are identified as
barriers to trade. For instance, collective labor agreements may be questioned for representing
a restriction to the business model of competitors. In the USA, many states adopt an antiunion
legislation that is called right to work that weakens the unions funding, allow companies to
lower salaries, retirements and workers healthcare plans. Transatlantic companies may see the
TTIP as an opportunity to relocate their protection to regions where salaries and labor rights are
lowers, creating a race to the bottom in the attempt to lower labor costs 10.
Probably the biggest threat that the TTIP presents is the guarantee that transatlantic corporations
will be able to sue directly the states where they act, for losses suffered under their jurisdiction
due to their public policies. The clause Investor to State Dispute Settlement (ISDS) represents a
danger to the sovereignty by raising the transatlantic capital to a legal level equivalent to a state.
According to the TTIP, by this clause, American and European companies will have the power
8 Hilary, John (February 2014) - The Transatlantic Trade and Investment Partnership
(TTIP): A charter for deregulation, an attack on jobs, an end to democracy. Rosa
Luxemburg Foundation. Available at: http://rosalux-europa.info/. Date of access 22th of
April 2015.
9 BEUC Factsheet - Transatlantic Trade and investment Partnership (TTIP). Bureau
Europen des Unions de Consommateurs. Available at: http://rosalux-europa.info/.
Date of access 3rd of April 2015
10 Corporate Europe Observatory (March 2013): BusinessEurope and the European
Commission: in league against labor rights? Available at: http://corporateeurope.org/.
Date of access 24th of April de 2015.
3

to question decisions made by the states, demanding compensations every time this decisions
have adverse effects on their operations and profit margins 11.

II In favor of TTIP
Contrary to the contestant parties, the European Commission points out that TTIP will benefit
all transatlantic society, from economic growth to job creation, which are the main goals of this
partnership. New business opportunities for big, medium and small companies will, besides
growing investment, help to create wealth12.
An independent study by London-based Centre for Economic Policy Research (CEPR), suggests
that the EU economy may benefit by 119 billion euros per year the equivalent to 545 euros
for the average European family while the USA may benefit by 95 billion euros per year 13.
This profit will come in the way of cheaper goods and services. By abolishing the bureaucracy
that heighten the costs of trade among the transatlantic partners, it will be allowed access to a
bigger variety of products and services for the companies and consumers, at a more competitive
price14.
The European Commission makes sure to point out that the EU outlying countries will also
benefit from the agreement, they will significantly increase the export of intermediary products
to a more open and integrated market that, apart from the EU, will also include the USA.
11 Hilary, John (February 2014) - The Transatlantic Trade and Investment Partnership
(TTIP): A charter for deregulation, an attack on jobs, an end to democracy. Rosa
Luxemburg Foundation. Available at: http://rosalux-europa.info/. Date of access 21st of
April 2015.
12 Europarl (comunicado de imprensa - comrcio externo/internacional - July 2014) Acordo comercial UE/EUA: Eurodeputados apontam vantagens e riscos no debate
com a Comisso. Available at: http://www.europarl.europa.eu/. Date of access 20th of
April 2015.
13 European Commission (April 2014) - Questions and answers - Transatlantic Trade and
Investment Partnership (TTIP). Available at http://ec.europa.eu/. Date of access 22nd of April
2015.

14 Business Europe (report - April 2014) - The Transatlantic Trade & Investment
Partnership: Why TTIP matters to European business. Available at
http://www.businesseurope.eu. Date of access 22nd of April 2015.
4

The TTIP will be a XXI century agreement the amplification of negotiations wont
just benefit multinational companies, but also small and medium companies (by directly
exporting or as suppliers for big companies). Furthermore, considering the importance of the
EU and the USA economies, if this line of ambition goes on, the TTIP may lead to the
establishment of norms in a series of areas, including product safety, environment, investments,
public contracts and proprietary rights, etc, empowering a global free market 15.
It isnt known when negotiations will be concluded, but estimates point the conclusion date to
be in late 2017. The EU commission defends that the earliest the partnership takes place, the
faster we can reap its benefits16.
The TTIP wont neutralize, revoke or change the EU regulations automatically. Any
change of EU laws, norms or regulations would need the approval of the member states of the
EU and the EU Parliament. It wont also affect any political choice, or public policies adopted
by the EU or by its member states. For instance, in the area of the environmental and
sustainability policies, the states will continue to be free to adopt measures to support ecological
consumption and production, if this is in line with the global political objectives of the EU and
if it is not against any other international obligation.
The study of environmental impact of the European Commission considered that, in general, it
will be modest, predicting a slight raise in the CO2 global emissions. This study also suggests
that other negative secondary effects of the TTIP like the increase of residues, reduction of
biodiversity and the increase in natural resource exploration will be clearly compensated by
the benefits of a greater trade of environmental goods and services.
Furthermore, the TTIP will include a chapter of sustainability that will promote the
implementation of environmental protection measures17.
The transatlantic partnership wont be a concern to the democracy of the Union in its decision
processes. The TTIP is negotiated in agreement to the EU laws that have been put in practice by
its democratic elected national governments.
Regarding the transparency of the negotiations, they are being followed up close by the
member states and by the European parliament, through regular report elaborated by the
15 Business Europe (report - April 2014) - The Transatlantic Trade & Investment
Partnership: Why TTIP matters to European business. Available at
http://www.businesseurope.eu. Date of access 22nd of April de 2015.
16 New Scientist (April 2014) - TTIP: How the world's largest trade deal affects you. Available
at http://www.newscientist.com/. Date of access 23rd of April 2015.

17 European Commission (April 2014) - Impact Assessment Report on the future of

EU-US trade relations. Available at http://trade.ec.europa.eu/. Date of access 24th of
April 2015.
5

Commission. In an effort to involve all interest parts, public information sessions are having
place after each round of negotiations, allowing that it is discussed the progress of the treaty 18.
Once finalized the negotiations, the agreement will have to be analyzed and approved formally
by the EU member states and by the European Parliament. National Parliaments will also be
called to rectify the agreement. This means that the democratically elected representatives have
the last word both while the negotiations take place and when it is finalized. The commission
has also chosen to publish online a series of positions papers about specific sector, which
define what is trying to be achieved by the negotiations 19.
Although the significant progress, there is still some space for more transparency, more
specifically in the documents. However, like in any other convention, the negotiation strategy
details are confidential.
Social security and labor rights will continue to remain as they are, and wont be effect
by the TTIP. Today, even with-in the EU there are still many differences in the social security
systems and labor rights among the member states, and the agreement wont have impact on
those systems.
The European commission, the member states of the EU and the European parliament
believe that the Investor to State Dispute Settlement (ISDS) clause is an important tool to protect
the EU investors. The fact that a state can be legally forceful, doesnt necessarily mean that it
guarantees that its foreign investors are rightly protected. A government can expropriate an
investing company or approve laws that make their investment useless, with-out having to
compensate the affected party. However, the European Commission recognizes that
improvements can be made and has developed new regulations for the transparency of the
ISDS20.

III - Conclusion

18 Webb, Dominic (April 2014) - The Transatlantic Trade and Investment Partnership (TTIP).
Available at: http://www.parliament.uk/. Date of access 22nd of April 2015.

19 European Commission (April 2014) - Questions and answers - Transatlantic Trade

and Investment Partnership (TTIP). Available at http://ec.europa.eu/. Date of access
22nd of April 2015.
20 European Commission (April 2014) - Questions and answers - Transatlantic Trade
and Investment Partnership (TTIP). Available at http://ec.europa.eu/. Date of access
22nd of April 2015.
6

Considering all arguments, the TTIP is, in general, an advantage to the European Union.
The benefits and arguments of part II not only shown that the benefits for the EU are far greater
than the possible damages or disadvantages, but it also answered all the problems and concerns
raised in the part I.
With the TTIP, the EU will again be at the center of the global trade, stopping from
lagging behind the USA and China, and beginning to act with one voice as the most powerful
economic zone of the globalized world (EU-USA)
This agreement could be the key to nurture economic growth and free the EU from the
economic crisis it faces. However, it is clear that getting all parties to agree is nearly Utopic and,
to my belief, it wont be finalized anywhere near 2017.

Bibliography
BEUC Factsheet - Transatlantic Trade and investment Partnership (TTIP). Bureau Europen
des Unions de Consommateurs. Available at: http://rosalux-europa.info/. Date of access 3rd of
April 2015.
Bierbrauer, Elfriede (2014) - Sobre o Parlamento Europeu: Relaes econmicas UE-EUA.
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Business Europe (report - April 2014) - The Transatlantic Trade & Investment Partnership:
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Corporate Europe Observatory (March 2013): BusinessEurope and the European Commission:
in league against labor rights? Available at: http://corporateeurope.org/. Date of access 24th of
April de 2015.

Corporate Europe Observatory (July 2014): TTIP: debunking the business propaganda over
investor rights. Available at: http://corporateeurope.org/. Date of access 24th of April 2015.
Europarl (comunicado de imprensa - comrcio externo/internacional - July 2014) - Acordo
comercial UE/EUA: Eurodeputados apontam vantagens e riscos no debate com a Comisso.
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relations. Available at http://trade.ec.europa.eu/. Date of access 24th of April 2015.
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Investment Partnership (TTIP). Available at http://ec.europa.eu/. Date of access 22nd of April
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Partnership (TTIP)? Available at http://ec.europa.eu/. Date of access 21th April 2015.
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