Thanks for the TTIP
A controversial, wide-ranging and game-changing trade agreement is currently making its way through the European Parliament. Critics say the Transatlantic Trade & Investment Partnership (TTIP) treaty will irreparably damage some of Ireland’s most important industries, while supporters believe it will promote growth and create jobs across Europe and beyond. Doug Whelan investigates
19 August 2015
In recent months, readers may have heard the occasional discussion on radio or TV, or read an article here and there, on TTIP. Short for Transatlantic Trade & Investment Partnership, TTIP is a trade agreement currently being hammered out between the EU and USA that aims to remove tariffs, cut out ‘red tape’ and reduce restrictions and investment between the two regions. According to the EU’s official site on the agreement, TTIP, which began negotiations in July 2013, will make it easier for US and EU companies to invest on the opposing sides of the Atlantic by bringing EU and US standards and regulations more in line with each other. According to the description, manufacturers would no longer be required to produce different goods for the EU and US markets, leading to lower costs.
There’s no denying that this sounds appealing, but critics of TTIP paint a different picture, saying that the agreement will lead to reduced standards and higher risks in food safety. This month, we decided to take a closer look at TTIP and investigate the claims made by both sides of the debate.
Behind closed doors
By all accounts, TTIP is an immensely complicated area – which is cited as part of the reason it has not been reported much in the “mainstream” media, because there is little to report other than reams of negotiations and complicated long-term economic predictions. But there is another reason there isn’t much to be reported on: the negotiations between delegations from the EU and USA have taken place in secret, behind closed doors. “We have been told that the deal ‘has to’ take place in secret,” MEP Matt Carthy told an information seminar on TTIP last month, “because of the sensitive nature of the documents involved, including mandates for negotiation.” Carthy, a Midlands-North West MEP for Sinn Fein, suggested that for public confidence in the deal, the negotiations should be held in public, for the sake of transparency and accountability.
Carthy said that while TTIP is being touted as beneficial to Irish SMEs, the new regulations will actually be of more benefit to foreign companies investing in Ireland than indigenous businesses themselves. “Economic growth attributed to Irish firms equals 0.34%,” he said, “while growth for foreign firms would equal 3.5%.”
Carthy added that the benefits offered by TTIP are not equal across sectors, citing the government’s own Copenhagen Report, a study examining the predicted effects of TTIP on Ireland’s economy. “The three sectors that expect to increase exports as a result of TTIP are electrical machinery, pharmaceuticals and insurance,” he said, “all of which are heavily dependent on Foreign Direct Investment. Six out of the eight sectors where all exports are produced by Irish firms are expected to fall as a result of TTIP.”
A different song
Fine Gael has been broadly supportive of TTIP, during the duration of the talks, despite the concerns raised by opposition TDs, MEPs and NGOs. FG MEP for Ireland South Sean Kelly said the trade deal offers “massive opportunities” for the Irish economy.
“So much of Ireland’s ongoing economic recovery is happening in the SME sector,” Kelly said. “Small businesses are the backbone of our economy, and after a very tough crisis, they are starting to create jobs again. The reduction of non-tariff barriers and the removal of red tape [as a result of TTIP] would enable our businesses to grow and become strong players on the highly competitive global stage.”
Kelly also stated ambitious economic predictions that would come as a result of TTIP passing, including a boost in EU exports that would particularly benefit SMEs. “TTIP could lead to a €250bn or 2% increase in EU GDP,” he said, “equating to an extra €500 per family,” he said, “and the creation of over 2 million jobs across Europe.”
An increase in exports and the creation of jobs as a result of TTIP once again sounds enticing and cause for encouragement as opposed to alarm. However, experts suggest that those benefits would not make it to Ireland, and that the opposite is likely in some of Ireland’s most important industries.
Speaking at Carthy’s TTIP seminar, Eddie Punch, general secretary of the Irish Cattle and Sheep Farmers’ Association, said that beef is the sector that would be most vulnerable to a bad TTIP deal. “We have to remember that the beef industry in Ireland is spread across the country,” he said. “A meat factory could be worth €70 or €80 million to one small Irish town or village. If anything was to go wrong with the trade deal that might cause the disruption or closure of one of those plants, who realistically thinks that Foreign Direct Investment is going to solve the devastation wreaked on Athleague, Bunclody or Rathdowney, or any of the locations our beef industry operates out of?”
At the risk of tempting fate, one might hear Punch’s statement and respond with, “But Eddie, what could possibly go wrong?” To answer that question, also speaking on the day was James McCarthy of the Irish Farmers’ Association, who told the audience that Ireland simply would not have a beef industry had it not been protected by existing EU regulations from “the full wind of world trade” over the years.
“There are opportunities for Ireland,” McCarthy said, “there’s no doubt about that. But the concerns of farming have to be met, and a lot of that is to do with equivalence of standards.”
Equivalence of standards is one of the main issues that industry professionals in Ireland have with regard to TTIP. The beef and poultry industries in the USA have quite different – and sometimes much lower – standards with regard to the use of chemicals in the production process, as well as food safety and other elements. The EU currently enforces restrictions on the use of antibiotics and growth hormones on animals. Since these restrictions are not enforced in the US, beef producers there do not currently have access to the EU market. James McCarthy, Eddie Punch and other experts in their industries believe that TTIP will lead to reduced standards in EU beef, rather than increased standards in US beef.
“I don’t think people who consume what I produce on my farm would accept my standards slipping back,” McCarthy said, “and if the bar is lowered for the industry, I don’t think consumers will accept that either. But I cannot compete against produce from the US that comes in at a lower standard.
“The threat is very real,” he added. “We faced it before with Brazilian beef, and we were told you can’t do this and you can’t do that. But we put it up to the EU that time and we were found to be correct.”
Barry Finnegan, a lecturer in journalism at Griffith College and anti-TTIP campaigner, agrees that new regulations would have a dramatic effect on food standards. According to Finnegan, large-scale food suppliers from the US would flood the Irish market, creating unfair competition on locally produced food that Ireland is known for.
The Irish Dairy Industries Association, a division of IBEC, does not see things this way, however. Cormac Healy, director of the IDIA said earlier this year that TTIP will provide a major boost to Ireland’s export market. “Better market access conditions are always relevant to an export-focused sector,” he said, “and our global competitors are currently improving their competitiveness in international markets. We cannot fall behind.”
Where are we now?
As it stands, the TTIP bill is still making its way through the European Parliament. On July 8th, 436 MEPs (including Fine Gael’s four members) voted in favour of the TTIP report, 221 voted against, while 447 voted in favour of a revised ISDS mechanism (see panel below). These votes are not the final decision on the matter, but can be seen as a sign of the level of support for TTIP that exists in Strasbourg.
TTIP is, as we have seen, a monumentally complicated issue with endless variables and arguments for and against, but also some glaring elements that any business owner in Ireland should be aware of. We suggest you keep an eye out for any news related to it in the coming months, and perhaps even the coming years, because sweeping changes could come at any time.
ISDS: See you in court?
One of the most controversial elements of the TTIP negotiations is the ISDS mechanism, or Investor-State Dispute Settlement. ISDS is a tool that will allow companies to use the trade agreement to file private lawsuits against states when regulations are deemed to affective their investment potential – including their profits. According to the non-profit NGO Friends of the Earth, the system has been heavily criticised for its reliance on three individual arbitrators to interpret the provisions of the agreements and issue rulings behind closed doors that signatory states must comply with. Their decisions are not bound by case law and cannot be appealed, which makes the system highly unpredictable for society and investors alike.
Natasha Cingotti of Friends of the Earth, speaking at the same event in Dublin last month, called ISDS “a Trojan Horse for corporate interests”, that would not only be harmful to the environment and public health, but also would affect future regulatory changes in the sense that governments would be forced to consider commercial interests when making new laws, despite their proposed value to society.
ISDS comes down to giving corporations power that nobody else in society has – the ability to challenge regulations made in the public interest in private, secret corporate courts. “ISDS and the regulatory cooperation that TTIP will bring in represents a deadly cocktail for killing regulations,” Cingotti said. “Not only do you have a mechanism allowing investors to complain when something gets in their way, there will also be the power to review any piece of legislation in the EU or US – local or national – that prevents them from profiting.
“This will put trade concerns above any other social concerns, taking power away from elected representatives,” she said.