17.12.2015

Capital’s economic Nato

Ferdi De Ville and Gabriel Siles-Brügge The truth about the Transatlantic Trade and Investment Partnership, Polity, 2015, pp160, £12.99

The truth about the Transatlantic Trade and Investment Partnership is the attempt by Ferdi De Ville and Gabriel Siles-Brügge at a dispassionate analysis of the TTIP agreement currently being negotiated between the US and the European Union, and the public debate that has surrounded it. TTIP has attracted much attention, with its opponents both within and outside the left arguing that it amounts to an assault on democracy on behalf of business interests. The authors seek to position themselves between its proponents and those telling horror stories about what the agreement would mean.

The measures to be included in TTIP are still subject to ongoing negotiations, but are largely aimed at reducing what have become known as ‘non-tariff barriers’ to trade. NTBs include differences in the regulations on goods and services and how they are decided, closed markets in the private-sector provision of public services and “lack of investor and intellectual property rights protection” (p4).

Siles-Brügge and De Ville note the tendency since the 1970s for free trade agreements to take aim at NTBs, both because tariffs have already been significantly reduced on a global level since World War II and because of the changed attitudes of western states towards regulation of ‘the market’. As the authors point out, the framing of such measures as a means of facilitating trade has allowed for the introduction of pro-business policies, whilst dubbing opponents backward, anti-trade protectionists. In the case of TTIP, neoliberal EU technocrats say they want to cut red tape and present it as an effort to boost trade rather than associating these measures with austerity.

Much of the book is dedicated to critiquing the claims of TTIP’s proponents as to the benefits that an ‘ambitious’ agreement might bring. They point out that the empirical evidence provided by previous accords, such as the North American Free Trade Agreement, illustrate that the promises of growth that preceded them were not realised. Particularly on the European side, politicians leading the charge have been keen to argue that TTIP presents an opportunity, as the European Commission put it, to “bolster economic growth without drawing on severely constrained public finances” and allow Europe to trade its way out of the crisis (p15). Aside from the fact that this view ignores the potential for displacement of workers, the authors argue that there is reason to be sceptical that the agreement will boost economic growth. Some have even predicted falls in GDP in the UK, Germany and France (p35).

It is noted that the forecasts employed by policy-makers and pressure groups are used less for their predictive utility than for their ability to manufacture consent - or, as the authors put it, manage “fictional expectations”. Various flaws in the economic modelling used for such forecasts (confirmation biases, basic assumptions around the motives of economic agents, the omission of data on inequality) are raised, which they argue render it highly unreliable for predicting the consequences of state action. The authors stress the unknowability of the future, with the implication that, instead of fighting fire with fire, opponents should avoid making GDP growth numbers the site of contestation in this debate.

In an effort to sell the agreement to European social democrats there has been an effort to present TTIP as a means by which the west can set global standards in regulation. The argument goes that the emerging economies of Asia in particular, whose states are meant to be less concerned with environmental and social protection, should not be allowed to set standards in the 21st century. If the US and EU, covering almost half of global GDP, could agree on standards, the rest of the world would have to play ball by in order to access their markets. The authors point out how EU leaders previously considered market power as their greatest asset in influencing the rest of the world, and imagined that Europe could raise global standards in social protection that way.

However, the domestic policies of European governments in recent years testify to the fact that they are less and less interested in maintaining such protection even for their own citizens. Instead there is a drive to increase the competitiveness of Europe in the face of so-called globalisation. We are told that current EU levels of social spending, claimed by Angela Merkel among others to amount to 50% of the global total, are no longer affordable. Since the 2008 crisis western governments have been busily dismantling the welfare state in their respective countries and the EU has led the charge to strip the working class of southern Europe of the gains it has won since 1945. Despite the triumphant talk following last week’s Paris agreement on climate change, previous rhetoric around environmental standards has also given way to a more ‘pragmatic’ approach. Lobbying from US trade negotiators and transatlantic capitalist associations, as well as geopolitical energy security considerations, appears to have led the EU commission to reject labelling tar sands oil as ‘dirty’.

De Ville and Siles-Brügge point out that the type of regulatory alignment most likely to result from the negotiations - “bilateral mutual recognition” - would be almost no use in incentivising firms globally to adopt transatlantic standards anyway. Instead European and American companies would gain an advantage in selling to each other’s markets in relation to companies from the rest of the world.

Hegemony

Instead of setting standards for the rest of the world to follow, TTIP seems to be more about further strengthening the economic relationship between the US and the EU. This is increasingly important for the US hegemon state, given the increasing economic and diplomatic clout of China on the world stage. It is this mind-set that has led Nato secretary-general Anders Fogh Rasmussen (among others, including Hillary Clinton) to claim that TTIP amounts to an “economic Nato”. The Trans-Pacific Partnership, which has come under greater criticism from the US labour movement than TTIP due to the potential impact on protection for workers, is seen by many as being partly motivated by a desire to contain China. TTIP may also be conceived as a means of managing the transition towards a world system characterised by greater multipolarity.

The truth about the Transatlantic Trade and Investment Partnership proceeds to touch on a few of the great number of concerns that have been raised by various critics. European NGOs are concerned about the possible lowering of standards in environmental and consumer protection. There are worries that the proposed ‘liberalisation’ commitments will lock in existing levels of privatisation. An EU position paper on the negotiations suggested that a regulatory cooperation body could be formed to introduce changes to TTIP without ratification from US or EU legislators.

The proposal for ‘investor-to-state dispute settlement’ (ISDS) tribunals has been by far the most controversial aspect of TTIP. These ‘independent’ tribunals would be a means by which investors could sue governments which take over their property or simply pursue policies that are said to adversely affect their profits. Interestingly until now such arrangements have generally only existed as a neocolonial means to protect capital invested in the global periphery by firms based in core states, on the pretext that they are required to supplement ‘underdeveloped’ legal systems. As the authors point out, given the attitudes of governments on both sides of the Atlantic, it is likely that any ISDS mechanism would grant investors greater rights and would act to further dissuade governments from taking decisions that conflict with the interests of capital. The tribunals themselves would comprise of three arbitrators - one from each of the parties in dispute, and one from a dispute management organisation (p88). The authors point out that such an arbitration set-up would have an interest in awarding decisions to investors in order to persuade others to bring forward new claims.

Strangely, whilst recognising its potential consequences, they argue that this “does not quite amount to the ‘horror story’ of some critics of TTIP that ISDS amounts to a ‘full frontal assault on democracy’” (p90). This is true in the sense that the capitalist class are more than capable of getting their way through the existing constitutional structures of liberal democracy anyway. However, the authors are obviously not coming at this question from a Marxist perspective and it seems that this is said in order to position themselves between the proponents and the critics.

ISDS is anti-democratic, not simply in terms of the thinking behind it, in that it is part of a longer-term process by which the influence the working class can exert within capitalist society is to be reduced. De Ville and Siles-Brügge themselves point to the trend for economic decision-making on the part of states to be increasingly delegated to non-elected bodies. The overtly anti-democratic (even in liberal terms) nature of ISDS has meant it has attracted criticism not only from the left, but also from bourgeois politicians concerned with protecting state sovereignty. As suggested in the book, it may well be that this proposal is scrapped or significantly altered as a concession to allow for the passage of TTIP through the European parliament.

The final chapter explains how the outcome of the TTIP negotiations is still uncertain, and three potential outcomes are envisaged. Firstly TTIP fails either because EU member-states or the European parliament refuse to ratify it, or it fails because the text is watered down to such an extent that business groups lose interest in it. The second outcome is that TTIP passes after controversial measures, such as the ISDS mechanism, are dropped. The third outcome - which they recognise as the most unlikely, but for them is the most desirable - is that the NGOs manage to shift the debate in such a way as to lead trade policy to be seen as a tool in fights such as those against tax evasion and climate change.

The truth about the Transatlantic Trade and Investment Partnership is enthusiastic about the level of attention attracted by the TTIP negotiations and voices a hope that this will lead to the sustained politicisation and contestation of trade politics. In the end the authors advocate something along the lines of a ‘better’ TTIP that emphasises the responsibilities of business towards society and seeks to enhance regulation that protect the peoples of the transatlantic area (although no illusions are sown that this is on the cards). Nevertheless, the view of De Ville and Siles-Brügge is perhaps a step ahead of those within the reformist and nationalist left who see the possibility of a progressive outcome in a withdrawal from the EU in favour of the UK ‘bosses’ club’.

Callum Williamson