By Adam B. Weber.
This past weekend, the world leaders that make up the G20 (or Group of Twenty) had their annual Summit in Brisbane, Australia to discuss the key issues impacting the global economy. While the Summit traditionally only covers economic issues, crises such as the Ebola outbreak and climate change made their way into discussions.
One of the notable takeaways from this year’s G20 Summit was British Prime Minister David Cameron’s outright support for the Transatlantic Trade and Investment Partnership, or the TTIP. The TTIP is not a new issue in the international arena, as negotiations on this trade agreement began back in July 2013. Essentially, the agreement would strengthen the already lucrative pact between the US and EU by cutting tariffs across the board and settling differences in regulatory procedures between these nations. According to the European Commission of Trade, the proposal would deliver economic gains of almost $150 billion and $112 billion to the EU and US economies, respectively.
The agreement, despite its promise of much-needed economic growth in both the US and EU, has encountered significant resistance mainly from unions. Protests have been held throughout Europe in the UK, Germany, France, Italy, and Spain. Opponents cite the “Investor State Dispute Settlement” clause as the main cause for concern. This provision allows companies to sue governments if public policy threatens a company’s profits. More specifically, British unions worry that the UK’s government-run National Health Service (NHS) would be jeopardized by private healthcare providers filing suits. Mr. Cameron has attempted to quell this concern by arguing that the EU and US have signed multiple similar trade agreements in the past, and this has never been a worrisome issue. The European Commission on Trade estimates almost $2.5 billion worth of trade per day between the two parties, making it the largest trade partnership in the world.
Opponents also argue that the settling of regulatory differences between the participating nations will translate into the loosening of regulations, putting consumers, workers, and the environment at risk. For example, the regulations governing food quality would be weakened as a result of the agreement, endangering the health of European consumers. Cameron and other advocates have responded by pointing out that the TTIP does not plan to loosen regulation, but rather to make trade more efficient by consolidating different regulations that achieve the same end result. For example, if the EU and US have identical car safety tests, then car companies would only have to submit their products to one of the tests, as opposed to two. However, if the two tests were not identical, the TTIP would reform the regulations to only include the more comprehensive test. Thus, the agreement minimizes transactions costs while maximizing safety measures.
At a time when both the US and EU economies could use a boost, Prime Minister David Cameron is attempting to push through a deal that could bring hundreds of billions of dollars in new trade revenue to all parties involved. It remains to be seen how opponents of the deal will respond to Mr. Cameron’s most recent remarks, but the debate is sure to heat up as the British Prime Minister made his priorities clear this weekend in Brisbane.