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TTIP & TTP: A Race to the Bottom Not the Top

Oct 22 , 2015

One week ago more than a quarter of a million European citizens demonstrated in Berlin against the Transatlantic Trade and Investment Partnership (TTIP) – the treaty that European and American technocrats have negotiated for two years, and if agreed upon, would shape global trade norms for decades ahead.

While the transatlantic community has discussed the TTIP at least in principle since the end of the cold war, it has only been recently that the EU and the United States decided to officially begin comprehensive negotiations on a text that, according to official statements, will “level the playing field” and shape high standards for the trade of the world’s two largest markets.

Beyond mere technicalities, geo-economic conditions have incentivized both sides to see the glass half full instead of half empty and negotiate. Eminent among these conditions stands the recovery of China and its inexorable commercial expansion.

In less than a generation China has transitioned from a closed economy with “work units” seeking autarky to a commercial powerhouse with giant conglomerates winning global market shares. While back in the 90’s and early 2000s China started to flood the world with low quality and labor-intensive products, it has now started to compete with the “West” on capital intensive and advanced technology exports. Chinese companies like Alibaba have outmatched their Western competitors.

As China has thus broken into these advanced sectors traditionally dominated by American and European companies, the TTIP could be seen as a reflective reaction of the Transatlantic community to a trembling geo-economic status quo.

President Barack Obama himself has implied that the TTIP and the TPP are the Economic pillars’ of the U.S.’s rebalancing to Asia to deal with an increasingly assertive China that looks to distort the rules of the game and adhere to lower standards that preempt U.S. companies from emerging markets.

Former U.S. officials have even called the TTIP and the TPP a version of an economic NATO that complements the U.S. security position in Asia and limits Chinese material/military expansion. This support for the “twin trade pacts” has become even more essential now that China is shaping her own mega-economic plan with the New Silk Road OBOR strategy. To many pundits in Washington, China’s Silk Road economic diplomacy risks ostracizing U.S. businesses from the Eurasian economy – the largest in the world. Acting preeminently, U.S. led trade regionalism will lock China into an irreversible liberal global order and perpetuate U.S. geopolitical eminence.

While the TPP has already reached the phase of ratification, the TTIP is still at the phase of technical negotiations. The key reason for such a slow process is the asymmetric bilateral security arrangements with China between the Asian members of the TPP and the European countries.

For many Asian countries, the mere size and economic expansion of China threatens their economic independence and potentially their security position as well. It is thus almost “natural” for them to align with the United States and shape a “high standards” agreement that will divert trade from China and conditionally demand a more reciprocal opening up of the Middle Kingdom’s vast market.

To the contrary, while the EU has been disenchanted by Chinese rigidity on market access and China’s preemptive investments that shape future tech standards in Africa, it still enjoys breathing space, as it does not feel threatened by Beijing’s gunboats.

Apart from the geo-economic principles that seem to shape the operational codes of Western elites, perhaps it is more relevant to talk about the welfare of the European, Chinese, and American people.

Even though TTIP’s negotiations are covered under a veil of extreme secrecy with members of Congress and EU experts entering heavily secured rooms to examine the text of the negotiations, leaks have made it clear that the ISDS mechanism is an apotheosis of corporatism. It will ostracize the long established judicial authority of the Western republics and empower corporations to demand “earth and water” from states that do not respect the preeminence of profit.

As the Nobel Laureate Joseph Stiglitz has eloquently put it: “In the future, if we discover that some other product causes health problems (think of asbestos), rather than facing lawsuits for the costs imposed on us, the manufacturer could sue governments for restraining them from killing more people.”

In addition, issues concerning data privacy and the infiltration of security services into the private life of individuals break the covenant of our Western Polity. Instead of ensuring the compliance of China to higher standards, they drive the West into a race to the bottom disrespecting long established and inalienable human rights.

More than 4 million European citizens have signed against the TTIP and last week’s massive demonstrations highlight the commitment of the European demos to a world where the pursuit of happiness comes above the pursuit of profit. Rephrasing a U.S. founding father, the rise of China must not lead the West to sacrifice its liberty to seek temporary security; for it will undermine both, perhaps irreversibly.

Instead of trade regionalism driven by security imperatives, the three big elephants in the room, the EU, the USA and China, should join forces and with a trilateral trade commission shape a vast economic space from the Atlantic to the Pacific Ocean. The West along with China must put the welfare of the citizen above all other operations and co-decide the standards of future mass technologies and the path of humanity to a sustainable destiny.

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