TTIP – The squabble over the free trade agreement

Discussions about the free trade agreement between the USA and Germany, also known as TTIP, have been raging since 2013. Not without reason, because there is so much information and disinformation about it that you hardly know where you stand. We will try to give you a little insight into the TTIP jungle.

“Vive la Fance
TITIP STOPPED!!!
France has broken off all negotiations!!!”

...such a meme that spread on Facebook at the beginning of May 2016. To be fair, we must emphasize that the creators of that meme have already corrected not to sign the TTIP agreement in its current form . The reasoning is clear: American corporations are being taken advantage of by TTIP, and European environmental and consumer protection standards are being undermined. However, France's threat is significantly delaying negotiations, which TTIP opponents support.

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What is striking on Facebook is that many people demonstrate “out of principle” without knowing exactly what it is about. In its current form, this free trade agreement is a thorn in the side of many for good reason. Given the typical Facebook “information bubble” in which many users find themselves, one only seems to hear about the disadvantages and is therefore wondering why many European governments support TTIP agree. For this reason, we want to give you a little more insight into the TTIP so that you can more easily form an opinion about what is good about it and what looks rather bad for us.

What does TTIP mean?

This is the abbreviation for Transatlantic Trade and Investment Partnership on how future trade and economic investments will take place between two continents, in this case Europe and the USA .

What is it good for?

Each country has its own rules for trading goods and services. In Europe, for example, there are certain food regulations that must be observed. Goods from abroad that do not comply with these regulations may not be imported. This is of course a good thing for consumers, as they can be sure that there are no substances in food or goods that are actually banned here. Conversely, foreign states also protect themselves from excessive imports. For example, if the car industry is booming in the USA, cars can be restricted from being imported from Germany.

And the free trade agreement? There is more of an ideology behind this that became widespread in the 19th century: if the restrictions on individual countries were lifted, it would ultimately serve the prosperity of all nations. On the other hand, it is argued that domestic companies and retailers are put under pressure by cheap products from abroad and ultimately go bankrupt. In the end, only the “big players” would remain.

Are free trade agreements successful?

The TTIP would not be the first free trade agreement in existence. The one we are most familiar with is the EU, in which trade can be carried out freely between all countries. One positive thing to say is that this made the EU a very strong economic power. What is negative, however, is that economically weaker countries, such as Greece, which has often made the headlines in recent years, are disadvantaged as a result. The basic idea that all countries will become prosperous is therefore only very conditional. Elsewhere, free trade agreements are relatively promising; the North American Free Trade Agreement (NAFTA) between the USA, Canada and Mexico brings many advantages to the countries.

What would TTIP change?

First of all, it would eliminate customs duties, which would make goods from the USA cheaper for us. Companies then also have the advantage of being able to apply for public tenders overseas. Sounds good, but it's also a disadvantage for the smaller companies: engineer Ted from Buxtehude can't keep up when the engineering collective Sven from the USA can always easily undercut prices.

Technical norms and standards would be adapted to one another. If there are specific standards, the exporting country must adapt its products to those standards. Overall, this would reduce the export effort and therefore also the costs. However, this also affects many other areas, such as cosmetics, medicines and crop protection. It is precisely on the latter point that tempers become heated, keyword: glyphosate.

There would also be many other regulations, especially regarding the food industry. This is where the biggest protests are, as the European food lobby, for example, is pushing for regional products to be explicitly identified. This should make it clear whether a food product was produced in the EU or imported from the USA. Many consumers welcome this requirement, but the USA sees it as a “branding” and discrimination against US products.

What is being negotiated?

There is a lot of need for action in the medical field. It starts with the fact that in the EU drug manufacturers cannot set their prices arbitrarily, but in the USA they can. In addition, drugs must be re-tested in both the USA and the EU to see whether they meet their standards. Conversely, there are very lax rules in the EU for breast implants, which can be done cheaply (and without major medical examination) in Poland or Romania. In the USA, however, such approvals are controlled by the FDA, so “bungling doctors” have no chance. In those cases, the standards definitely need to be adjusted.

There are standards in the EU for every little bit of technology, from the light bulb to the smallest screw. Everything is regulated very precisely. Of course, the USA has different standards, so every small standard has to be compared with one another. However, this will inevitably result in many regulations being streamlined. Good for the manufacturers, but of course everyone wants a say.

There is the biggest controversy in agriculture: European environmental regulations are high, and the pesticides that are permitted in the USA would not make it across the border here. We describe the reason why this is so problematic in the next paragraph.

Consumer protection

In Europe we have the so-called “precautionary principle”.
This means: Ingredients in medicines or food may only be used once their harmlessness has been proven beyond doubt. The USA, on the other hand, has the “aftercare principle”.
This means: Ingredients may be used as long as their harmfulness has not been proven. So from our point of view this is a disadvantage. Conversely, however, the USA has stricter standards regarding flavorings and children's toys. In the end, in order to find a compromise, both sides have to weaken their regulations. That may be good for the economy, but the consumer is at a disadvantage.

Praise and criticism summarized

This would definitely increase market diversity. Due to the simplified export and import of goods, the market for European companies is expanding immensely. This alone would increase profits, but simplified standards and the elimination of customs would also reduce production costs and ultimately prices. The latter is of course also an advantage for consumers.

But consumers are critical. It's not just about money, it's also about health, and things aren't looking so good there. So far, the EU regulations have been well protected, but the TTIP could mean that ingredients in food and pesticides could end up in the fields, some of which are highly controversial, and not without reason.

Of course, the secrecy surrounding TTIP was equally controversial. Until the documents were leaked by Greenpeace at the beginning of May 2016, the average consumer knew almost nothing about the exact negotiations; only finished points were posted online as documents. But it is now clear on which points the EU and the USA do not yet agree, and that is exactly where the problem is: points that are actually undisputed for consumers, such as no “Chlohrhen” in European supermarkets, have not been settled, but are still being negotiated .

There are great fears that the TTIP negotiations will be less about protecting consumers and will instead be dominated by the interests of business and politics. Many protests against TTIP are therefore not only justified, but also necessary.

Conclusion

The US-European Free Trade Agreement TTIP may be good in principle. For example, it works wonderfully between China and the Southeast Asian countries, and it also works without any problems between the USA, Canada and Mexico. But these are also all countries that already had and still have almost the same standards due to their close proximity. However, Europe and the USA have developed differently in many respects. A free trade agreement would largely benefit the economy, while the consumer would benefit from cheaper prices and more jobs, but would be at a disadvantage due to potentially toxic ingredients in food.

The TTIP negotiations will last at least until autumn 2016. Until then, the remaining negotiation points should be critically questioned, whether they only serve the industry or also the consumer. Politicians can do as much as they want to cultivate the image of TTIP; However, this does not hide the fact that the current draft still has too many disadvantages for Europe and its consumers. France did a good thing by being the first to publicly distance itself from the current draft. This gives hope that something will change there or that TTIP will finally be overturned.

In the meantime, we can only hope that politicians and lobbyists don't behave like politicians and lobbyists. But as people.