[Ip-health] How to get rid of TTIP and use ISDS as a deal breaker
ante at ffii.org
Mon Dec 8 07:10:00 PST 2014
How to get rid of TTIP and use ISDS as a deal breaker
EU politicians may soon realise they should get rid of TTIP, the
EU-US trade agreement under negotiation. I will explain why they
may reach this conclusion and how to use ISDS as a deal breaker.
TTIP has two main objectives: creating jobs and growth, and
setting global rules.
Jobs and growth
Various studies show that TTIP will create jobs and growth. All
these studies use the Computable General Equilibrium (CGE)
model, which assumes that the market will solve unemployment
problems through lower wages. However markets are less flexible
than assumed in the CGE model, and the model does not include
that lower wages lead to less demand. (The EU commission is
silent about the lower wages.)
Jeronim Capaldo assessed the effects of TTIP using the more
realistic United Nations Global Policy Model. The study projects
that for the EU TTIP will lead to less net exports, a
contraction of GDP and personal incomes, and 600.000 lost jobs.
This would seriously harm the EU.
If Capaldo's study stands scrutiny the EU has a problem. In
Brussels, not losing face often seems the most important aspect
of politics. With all the political capital invested in TTIP, it
will be hard for politicians to change course. And special
interests may lobby for TTIP regardless. The public and the
press will have to monitor the process, and press for realism.
ISDS as a deal breaker
As I have explained earlier, investor-to-state dispute
settlement (ISDS) is rigged to the advantage of the US (blog,
html). The US position is vulnerable as they want to roll out a
rigged system. It is fair for EU politicians to say: we do not
want a rigged adjudicative system imposed upon us. ISDS is a
In the long term, this is beneficial for the US as well. The
president of the World Bank plays an important role in ISDS; the
bank will not for ever be headed by the American candidate.
To use ISDS more convincingly as a deal breaker, the trade
agreements with Canada and Singapore should not contain ISDS. To
keep their options open, the commission is well advised to
acknowledge in the presentation of the ISDS consultation results
that ISDS has shortcomings.
The strategic goal
How about the strategic objective, setting global rules? A trade
agreement isn't needed for this. Actually, a trade agreement
isn't the right instrument.
A brighter future
If Capaldo's study stands scrutiny the EU will have to change
course. No one can expect the EU to accept less net exports,
less GDP, and minus 600.000 jobs. And neither Europe in decline
nor a rigged ISDS system that can turn against them, serves the
US. With ISDS out and better forums for setting rules, Europe
can put its feet back on the ground, and let TTIP go.
More information about the Ip-health