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 period4.
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?

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.

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.
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

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.
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.

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 shelves9.
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 costs10.
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 to question decisions made by the states, demanding compensations every time this
decisions have adverse effects on their operations and profit margins11.

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.
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.

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 year13. 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.
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 market15.
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

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.
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.

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
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 treaty18.
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 negotiations19.
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

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.
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.

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
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.

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.

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Corporate Europe Observatory (March 2013): BusinessEurope and the European Commission:
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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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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.

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
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European Commission (March 2014) - What is the Transatlantic Trade and Investment
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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.

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.

Todhunter, Colin (April 2014): The Transatlantic Trade and Investment Partnership (TTIP): A
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