Myths, facts and arguments

In recent months the negotiations for the Transatlantic Trade and Investment Partnership (TTIP) have come under stark criticism. Civil society groups warn that TTIP will lead to lower consumer protection and environmental standards, as well as limit the regulatory sovereignty of the EU, its Member States, and the United States. These groups are concerned that only large firms would benefit from the agreement and not ordinary citizens and consumers. According to the critics, the risks clearly outweigh the potential benefits. Is there any truth in these allegations? Without a doubt these public concerns have to be taken seriously.

However, upon closer look at the mandates of the EU and the United States, the position papers of the negotiating parties, as well as previous negotiations it becomes apparent that many of these concerns are unfounded.

Myths and facts

“Only large firms benefit from TTIP.”

Fact: Not only large firms, but also small and medium sized firms (SME) as well as consumers would benefit from TTIP – in fact significantly more from a comprehensive agreement than from an agreement in which only tariff reductions are agreed upon.

“The high consumer and environment protection standards of the EU are at risk. Simplifying regulations and standards is only possible by lowering standards.”

Fact: Both the EU Trade Commissioner Cecilia Malmström as well as the U.S. Trade Representative Michael Froman have highlighted again and again that standards will not be lowered and the “right to regulate in the public interest” will not be questioned.

“TTIP undermines European health standards for genetically modified food and hormone-treated meat.”

Fact: So far, no free trade agreement by the EU has led to lower health standards, including agreements with developing countries.

“TTIP will undermine our high working standards in Germany.”

Fact: The EU’s negotiating mandate explicitly states that labor and social standards must not be lowered as a result of TTIP. In addition, both sides have acknowledged each other’s high standards in this area prior to negotiations.

“TTIP does not need an investment protection clause. On the contrary, these are dangerous because they enable U.S. investors to overturn European or German legislation in the environmental and social field.”

Fact: International Investment Agreements (IIAs) are important tools to promote foreign direct investment (FDI) abroad. They hedge investors against risks and enable the settlement of investment disputes through arbitration. A settlement cannot overturn domestic legislation or regulation. It can only award compensation payments.

“TTIP will lead to the privatization of our water supply, health and education.”

Fact: According to the EU Commission and its negotiating mandate, a privatization of service providers will not be part of TTIP. Privatizations are decided by governments themselves and not through free trade agreements.

“TTIP will weaken rural agriculture in the EU.”

Fact: In the agricultural sector, both the EU and the U.S. have forward looking interests. The U.S. wants to export more basic products such as cereals and soya to the EU, while the EU wants to export more higher-value foods such as wine, cheese and chocolate to the U.S. Thus, agricultural markets on both sides of the Atlantic could benefit.

“TTIP will harm the multilateral trading system as well as third countries.”

Fact: The WTO remains the most important institution for liberalizing trade worldwide, monitoring members’ trade policies and settling trade disputes. Trade agreements such as TTIP can, however, supplement the WTO by phasing out tariffs between their members, establishing mechanisms for regulatory cooperation, and setting rules in areas which are not yet fully under the purview of the WTO such as investment, government procurement, and competition.

“TTIP is negotiated behind closed doors.”

Fact: Transparency is the foundation for a fact-based discussion. We would therefore welcome making public as much information about the negotiations as possible. At the same time it is common in international negotiations not to disclose all negotiating documents and doing so would limit the flexibility of negotiators on both sides of the Atlantic.