This book has sought to move beyond the headlines about chlorinated chickens, corporate tribunals and ‘growth and jobs’ to examine critically the effects and drivers of TTIP. Book title notwithstanding, we of course do not claim to have a definitive answer as to the full effects of TTIP or regarding the ‘real’, underlying intentions of those pushing for a deal (trade negotiators and business). However, we do believe that we have been able to dissect claims made by both proponents and opponents about the ‘true’ nature of TTIP. In doing so, we have sought to avoid speculation and have based our analysis on as much official information as is publicly available, supplementing this with interviews and academic and activist secondary literature.
The first two chapters have examined the key narratives used to promote TTIP, namely that it will provide a significant economic boost to the transatlantic economy and that it will help the EU and the US to remain rule-setters for the global economy in the twenty-first century. We concluded that these claims are dubious at best. In chapter 1 we saw how the promise of ‘growth and jobs’ is based on projections from a form of econometric modelling (computable general equilibrium) whose reputation for forecasting real-world trends is increasingly criticised, even from within the economics profession, especially as similar models in the area of finance failed to predict the 2008 crash (Watson 2014). The TTIP model, in particular, has been fed with data on regulatory convergence that are both unrealistic and biased, overstating the gains from transatlantic liberalisation and downplaying its potential (non-economic) costs. It thus represents an exercise in ‘managing fictional expectations’ – creating false imagined futures that may be difficult to contest for those without the technical expertise to unpick detailed econometric work. Similarly, in chapter 2 we saw that the claim that TTIP is the last opportunity for the EU and the US to set global standards before the rise of emerging economies (and in particular China) is also deeply problematic. The preference of negotiators (and multinational corporations) is for negotiators to adopt bilateral mutual recognition to achieve regulatory convergence – in other words, for the EU and the US to recognise their standards as equivalent only for exporters from either party. This is unlikely to incentivise third parties to adopt EU and US standards – because this represents no advantage with regard to the status quo – and may in fact have the opposite effect of undermining transatlantic regulatory leadership as trade diversion occurs and standards are potentially diluted.
This was the subject of chapter 3, which examined both the drivers and effects of TTIP. Will it completely erode standards of environmental protection, as claimed by critical NGOs, or can ambitious regulatory convergence be reached without lowering environmental, health and labour protections, as is consistently claimed by negotiators? We argued that the mutual recognition approach potentially risks setting into motion a downward spiral, whereby rules on both sides are not undermined directly in TTIP (a promise made time and time again by negotiators) but, rather, by enhanced regulatory competition after the agreement is concluded. Moreover, the agreement contains provisions for a ‘horizontal’ (or cross-cutting) regulatory cooperation chapter that may reinforce trade- and competitiveness tests for regulatory proposals. Both of these dynamics highlight what we see to be the main danger of TTIP: while the agreement may well not contain a direct assault on regulations and cherished public policies, it might contain various provisions that have a ‘regulatory chill’ effect in the future, including the much criticised ISDS provision, making it easier to deregulate and more difficult to adopt ambitious policies to protect and improve the environment, health or working conditions.
TTIP, not entirely surprisingly, resembles key characteristics and trends in EU and US politics. It shares a depoliticising nature with recent trends in European integration, where decisions are also increasingly delegated to non-elected bodies and away from democratic institutions (Scharpf 1999; Macartney 2014); this may well explain why some of the anti-TTIP sentiment has been tinged with Euroscepticism. At the same time, with TTIP, the power of economic interest groups in EU regulatory policymaking may be enhanced, rendering it more like the US system. There are also important parallels between TTIP and the EU’s REFIT programme, which seeks to reduce regulatory and administrative burdens for business. Both paint regulation in a negative light, as a potential (trade) ‘barrier’ or ‘red tape’ to be cut as much as possible. This is our main conclusion about TTIP: it is driven by both a philosophy and a discourse that idealise the efficient operation of markets and seek to minimise the constraints imposed by democratic decision-making in public policy, which is seen as inherently susceptible to capture by special interests and hence inefficient policy outcomes. This is a dominant assumption in neoclassical economics (‘the policy ineffectiveness proposition’) as well as in the ‘public choice’ school of political science, one of the mainstream approaches to the study of regulatory and trade politics (more on which below; on public choice, see Hay 2004). Therefore, there is a consistency between the mainstream economic model produced at the start of the TTIP negotiations and the content of these talks: both are essentially about the desirability of disciplining regulations and, by extension, public policy as much as possible. They are both based on the ‘fictional expectation’ of creating a perfect market.
But, while the TTIP agenda so far clearly does represent the interests of those who wish to depoliticise trade and regulatory politics, chapter 4 has shown us that there are clear limits to such an agenda. Civil society groups (especially those in Europe) have been at the heart of a fierce campaign against many of these aspects of TTIP and the agreement as a whole. They have underscored how the agreement threatens to undermine democratic decision-making by enshrining private investor rights, highlighted how TTIP may dilute of levels of social and environmental protection, and taken issue with the level of secrecy adopted in the talks. This has resulted in the suspension of negotiations on one of the most controversial aspects of the agreement, ISDS, led policymakers to tone down their proposals for a horizontal regulatory cooperation chapter, and provoked an unprecedented ‘transparency initiative’ that has seen the release of most EU negotiating proposals. While we should not overstate the extent of the challenge faced by TTIP from civil society – it is still too early to tell what the full impact of the civil society campaign will be – we believe that TTIP should therefore prompt a rethinking of our analysis of global trade politics while potentially opening up possibilities for reshaping it in a more progressive vein.
As noted above, the dominant paradigm to understanding global trade politics comes from the public choice school of political science and its emphasis on the rent-seeking behaviour of organised economic interests, which gets in the way of the efficient operation of markets (on this, see Hiscox 2002; Destler 2005). In the context of trade policy, these perceived inefficiencies have a particularly totemic quality, namely the misdiagnosis that protectionism – and notably the 1930 Smoot–Hawley Tariff Act which substantially raised US tariffs – caused the Great Depression and also led to a particular set of domestic trade policies. As one of the doyens of American Political Science, E. E. Schattschneider, put it, the problem was that the Act was ‘politically invincible’. This was because ‘the pressures [on Congress] supporting the tariff are made overwhelming by the fact that the opposition is negligible’ (Schattschneider 1935: 285). The renowned political scientist Mancur Olson (1965) was to put flesh on the bones of Schattschneider’s idea by articulating the now well-known ‘logic of collective action’. Only economic groups were likely to mobilise politically, given the costs of mobilisation in terms of time and resources. Moreover, given that such a mobilisation was likely to take place only once a clear common economic interest had emerged, protectionists were more likely than exporters or consumer groups to influence trade policy (with non-economic interest groups such as NGOs unlikely to mobilise effectively); the losses from import competition are always easier to identify than the gains from free trade to consumers and exporters. From this understanding of trade politics followed two policy recommendations. Firstly, trade policymakers had to be insulated from protectionist ‘special interests’. Enter ‘fast track’ in the US and the delegation of trade policymaking to a supranational entity in the EU (Destler 2005; Meunier 2005). Secondly, a means had to be found to motivate exporters to lobby for trade liberalisation as a counterweight to protectionists, prompting the ‘bicycle theory’ we discussed earlier in this book – the idea that liberalisation through reciprocal concessions via trade agreements had to be sustained (‘pedalling forward’) in order to prevent a return to protectionism (‘falling off your bike’).
We take issue here with both this analysis and its policy prescription. On the former, chapter 4 showed that the key to understanding the contestation of TTIP was to move away from the idea – quite obvious in the literature we have reviewed in the preceding paragraph – that trade politics is primarily about distributive questions. Rather than see economic interests fight it out for the spoils of liberalising (or not liberalising) transatlantic trade, TTIP has involved a fairly united business constituency face-off with civil society groups objecting to the agreement’s wider impact on socioeconomic objectives (and the regulations and policy processes designed to achieve them). We referred to this as normative trade conflict because it was about deeper values and principles, about the ‘everyday’ politics of the global economy (see Hobson and Seabrooke 2007), making it much harder to defuse by appealing (as advocates of TTIP did) to ‘growth and jobs’ or ‘global economic leadership’. In some ways this form of trade conflict is far more conflictual, given that it centres on more emotive, value-based questions (pace Woll and Artigas 2007). What this suggests to our minds is that we need not only to take a broader view of which actors matter in trade policy but also to consider the important role played by ideas in the making of trade policy. In particular, rather than take the view that trade policy is the result of competition between rational, economic actors, we join others in pointing to the important role of framing in legitimating and supporting the adoption of particular trade policies (Wilkinson 2014; Hurt et al. 2013). Notably, the limits to the trade liberalisation ‘bicycle’ in the case of TTIP – where the consistent mobilisation of businesses in favour of the agreement has fuelled suspicions of a corporate ‘inside job’ – underscores the importance of discursive framing over ‘collective action dynamics’.
Understanding trade conflict as normative (rather than purely distributive) is also linked to our critique of the policy prescriptions of public choice accounts of trade policymaking. The idea that setting trade policy is best left to depoliticised, technocratic entities (such as the USTR or the European Commission) is especially problematic in our eyes if we consider the profound implications of the ‘deep liberalisation’ agenda implied by an agreement such as TTIP. As we have argued, this threatens to undermine democratic decision-making by ‘economising regulatory politics’ and subordinating this to the imperatives of markets. Moreover, if the intention is for TTIP to become ‘post-democracy’ in its purest form, as argued by Colin Crouch (2014), this depends on going about business as usual.
In this vein, it is heartening to see that there have been moves towards greater transparency on the EU side (most notably, the release of a number of negotiating texts). This will be hard to undo in future. While such moves are for now limited to TTIP, there is considerable pressure from civil society activists to increase both the depth of transparency (by releasing the actual, ‘consolidated’ text of the agreement as it is being negotiated) and its breadth (by having the new transparency cover all trade agreements and trade policy decisions). On the issue of depth, they have had support from the European Ombudsman (see chapter 4), while on the issue of breadth support has come from (among others) an unlikely quarter, the European People’s Party Vice Coordinator in the International Trade Committee, a fierce defender of TTIP and ISDS (Fjellner 2015a, 2015b).
But transparency matters little if no one is watching and holding policymakers to account. Sustaining an interest in global trade issues is therefore crucial if we want to reform the current trading system (with all of its attendant problems; see for example, Wilkinson 2014), especially if we consider that previous campaigns against ‘deep trade liberalisation’ at the multilateral level faded away only to see these issues reappear (in a more intense form) in bilateral negotiations such as those to establish TTIP. We would hope that, having invested time, energy and personnel in monitoring TTIP, NGOs and others will remain interested and active in trade policy beyond these specific negotiations. Moreover, derailing the TTIP talks will not, on its own, produce a paradise of sustainable and fair trade. But how might the momentum generated by TTIP be seized upon to change trade politics in a more progressive vein?
After having fulfilled our negative function as academics, critically examining the problems with TTIP, should we also try to perform the positive function of coming up with alternatives (Bourdieu 2003)? To do this justice would require an entirely separate book on TTIP or even on trade policy more generally. That said, below we offer some very preliminary thoughts about how this agreement, and trade policy in general, might be put ‘at the service of citizens’, as European Trade Commissioner Cecilia Malmström herself put it at her confirmation hearing before the European Parliament (2014).
A starting point might be to question whether, by already having invested (at the time of writing) about 200 full-time personnel and 1,500 negotiation hours in further liberalising trade and investment, the EU and the US are really getting their priorities right. The logic behind TTIP is that EU–US ‘bilateral trade is not fulfilling its potential’ and that there is untapped trade and investment opportunity, but in 2011 annual trade in goods and services already stood at about €702.6 billion and the bilateral investment stock at €2.35 billion (European Commission 2013a: 9, 12). Of course, trade can always be increased by further specialisation and sending (parts of) goods across the Atlantic, but the question is how much this would truly improve the well-being of citizens (the figures generated by the models we discussed in chapter 1, even if taken at face value, suggest only very modest improvements). There might arguably be other, more pressing priorities for transatlantic cooperation than trade and investment. Imagine all the resources, personnel and time spent on TTIP being dedicated to the joint fight against climate change, or tax evasion and unfair tax competition, for decent work and decent wages, less inequality … take your pick!
The likely response of TTIP advocates is that this is a trade agreement and therefore not the place to tackle such challenges. Trade agreements are about trade issues and should not be overburdened with other issues. This view is often shared by opponents of TTIP who, mostly for normative reasons, argue that trade agreements should stay away from issues of environmental or social protection. While we have some sympathy for this position, the problem is that trade agreements already go far beyond issues of trade, strictly defined. TTIP is the example par excellence of this trend. Tariffs – the traditional focus of trade negotiations – are a relatively minor part of the negotiations. As we have shown in this book, TTIP is primarily about domestic regulations that are (often very broadly) seen as having an effect on trade. In a globalised and interdependent world, almost every regulation can be seen as affecting international trade in one way or another and can thus be subsumed under the remit of trade agreement talks as a potential ‘non-tariff barrier’.
As a result, it is very one-sided to say that TTIP should ensure that domestic regulation is adjusted to the requisites of international trade, but that it should not be expected to contribute to other non-trade objectives such as fighting climate change. In our opinion, this inconsistency should be laid bare. The mobilisation on TTIP might really have a transformative effect on EU, US and global trade politics if NGOs and (progressive) politicians succeed in changing how trade policy is seen from a policy area aimed at removing barriers to trade (in pursuit of the ‘imagined global free market’) towards an instrument to protect and promote societal preferences in the global market. Rather than facing a situation where too much domestic policy autonomy choice hollows out the full potential of free trade, we are facing a situation where too much free trade is hollowing out domestic policy choices. This may itself, in the longer run, even undermine support for an open global trading system (Polanyi 1944; Rodrik 2011).
As a result, what we need is a change of tack when it comes to TTIP. This might involve the EU and the US deciding to eliminate regulatory differences by consistently harmonising upwards. They could also agree to levy taxes at the border that would level the playing field in social, environmental and other areas not only among themselves but also with the rest of the world, which would prevent businesses from relocating to profit from laxer policies and discipline governments through regulatory competition.1 Both of these moves would be more genuinely in line with the narrative that TTIP could bring growth and jobs and global standards without lowering levels of protection – but neither is currently on the cards. Similarly, rather than using TTIP to expand the reach of the investor arbitration by including provisions on ISDS, the public debate it has sparked could be seized upon to catalyse broader changes to the global investor protection regime. After all, this is an area which has been much criticised by academics, activists and even some policymakers, but which unfortunately has largely existed in relative obscurity. Possible reforms to this system might involve curtailing access to such tribunals for foreign investors and more clearly spelling out their obligations with regard to host states and societies. While we do not claim to have a fully defined answer as to how to remake the global trading system, we hope that these initial reflections – and the TTIP negotiations that sparked them – can sustain a broader debate about the role that trade policymaking should play within society.
We foresee three potential scenarios for TTIP – although these should be treated with caution (in line with our argument in chapter 1 about fictional expectations). The first is that TTIP fails for one of two reasons. Firstly, it could happen during the negotiations, with big business losing interest as the level of ambition is increasingly lowered due to opposition from civil society and sceptical politicians. Secondly, TTIP could fail to clear the ratification hurdle after the conclusion of the negotiations because Congress, the European Parliament or EU Member States (and potentially their national parliaments) are unhappy with the final package deal. In both cases, the root cause of failure would be that the expected benefits of the deal are insufficient to mobilise support against the opposition. This might represent a tactical victory for opponents to TTIP but would hardly constitute a strategic victory, as the global trading system (with all of its acknowledged flaws) would remain in place. From the perspective of the NGOs involved, opposing TTIP cannot be an end in itself.
A second possibility is that TTIP is successfully concluded and ratified because negotiators have adopted a strategy of compromising on some of the most politically sensitive issues (such as ISDS – which might be further reformed or even completely abandoned – and/or a firm commitment not to import ‘hormone beef’ or ‘chlorinated chicken’) while preserving key elements from a business perspective (e.g., a ‘horizontal’ regulatory cooperation chapter). This would be a real Pyrrhic victory for opponents of TTIP, as it would leave a trade deal with many potential negative effects (minus a few highly contested issues) in terms of regulatory depoliticisation.
A third scenario – which we admittedly find the least likely ourselves – is that the NGOs lobbying against TTIP succeed in fundamentally changing the terms of the debate and negotiations such that trade policy becomes an instrument to achieve other policy goals (especially on inter- and transnational issues, such as the fight against climate change and tax evasion). A prerequisite for that would be that NGOs cooperate much more than they do today across the Atlantic and that they engage in profound constructive discussions about how to make the global trading system serve other policy objectives. Before we even get to that stage, more attention to and mobilisation on TTIP is required in the US, where the issue has not yet reached the political maturity it has in the EU. We hope our book may at least make a small contribution in this regard.