MYTHS OF FREE TRADE – ATTAC REFUTES ARGUMENTS OF TTIP SUPPORTERS

By www.attac.de

[This article is translated from the German on the Internet, http://www.attac.de/kampagnen/freihandelsfalle-ttip/hintergrund/ttip-mythen.]

That free trade creates prosperity and jobs was always an argument of TTIP supporters to justify the non-transparent negotiations. There are studies that verify these positive effects. Don’t we need transatlantic agreements to keep up in the international competition against China?

The arguments to refute some of these one-sided statements are listed here as “TTIP myths.”

MYTH 1: TTIP and CETA are pure trade agreements. Simplifying the exchange of goods and services is central.

TTIP and CETA are far more than trade agreements. They help strengthen the power of transnational corporations and weaken democratic institutions.

• Capital provides its own judicial system that grants investors special rights to sue states without any democratic control. The chapter on so-called “regulatory cooperation” undermines democratic decision-making structures and gives economic lobbies the possibility of watering down or withdrawing disagreeable legislation before a public debate.

• Through TTIP and CETA many social, democratic and ecological achievements threaten to be defined as “trade barriers” – from the labeling of food, book pricing and data protection to financial market regulations.


• In addition the agreements prohibit communes, districts and German states from converting back. They create a one-way street toward privatization and deregulation.

MYTH 2: Free trade creates prosperity and jobs

Experience with past “free trade agreements” shows these agreements strengthen the power and profit rates of transnational corporations – mostly at the expense of population majorities.

• The North American Free trade Agreement led to an economic catastrophe for Mexico. Millions of small farmers lost their income through heavily-subsidized cheap imports from the US. Auto- and textile manufacturers shifted their production to the north of Mexico where people worked at the lowest wages in sweatshops without union organization.

• Free trade of this kind promotes a ruinous location-competition and diminishes state redistribution possibilities.


Therefore Attac promotes just trade instead of fair trade. Employee rights, environmental standards and democracy must have priority over one-sided trade interests. Together with many other organizations, Attac has worked out an Alternative trade Mandate (www.alternativetrademandate.org).

MYTH 3: Studies verify the positive effect of TTIP on growth, jobs and prosperity

A predicted growth in the EU of only 0.1% per year is forecast in studies to which the EU commission and the German government appeal. Economists consider this statistical interference. Moreover the basic assumptions and methods of these studies are repeatedly questioned by experts. Often studies only serve to divert from business- and power-interests throu9gh the delusion of scientific legitimation. Those business- and power-interests are the real drivers for TTIP & Co.

• Even economics minister Gabriel had to admit predictions about the job- and growth effects of TTIP are ultimately “voodoo economics.”

• A study of Tufts University in the US that uses a calculation model of the United Nations comes to negative effects on employment and the economy.


• After massive criticism of dubious growth forecasts and manipulated numbers, the EU commission and the BDI deleted the false promises from their websites. With that, the most important argument of TTIP supporters has collapsed.

Even if the TTIP agreement actually brings several percentages of GDP growth, we must ask whether we want to sacrifice democratic achievements, environmental protection and the quality of our labor for this growth. The richest ten percent of the population were the only ones to profit in the EU and the US from the growth of the last ten years while poverty grew. Therefore Attac does its utmost for political and economic conditions that set distribution justice and quality of life in the center, not blind growth at any price.

MYTH 4: Small and medium-size businesses are promoted with TTIP

There is no evidence of a positive or even neutral effect of TTIP on small and medium-size businesses. Since two-thirds of transatlantic trade falls to big business, additional profits can be expected there. Given the minimal total economic growth effects, the additional profits of businesses will be at the expense of small and medium-size businesses.

• Compared to the global players, most small and medium-size businesses are less export-oriented. Highly specialized niche-suppliers are often active in local and regional markets. If markets are now enlarged and deregulated through TTIP, the competitive pressure will increase drastically for them. Big businesses can supply their niches through low-price competition.

• Under TTIP and CETA, many state protective mechanisms for small and medium-size businesses would be termed “discriminating” and could become objects of lawsuits.


• Big businesses would profit from Investor-State arbitration courts because only they can afford the high average cost of $8 million per trial.

MYTH 5: We need transatlantic agreements like TTIP and CETA to prevent China from assuming the pioneer role worldwide and setting bad standards to which we must submit.

Economics minister Gabriel who likes to use this argument has repeatedly criticized TTIP- and CETA critics for irrational “fear-mongering.” However the China argument is irrational fear-mongering. It follows the very old pattern invoking the “yellow peril” to carry out a policy that is rejected more and more in the population.

• Through TTIP and CETA, the EU and North America are actually pushing bad standards worldwide that undermine democracy, environment protection and labor rights.

• The EU already proved to be a ruthless hardliner in the so-called EPA agreement with African and Caribbean states. Social security and human rights in the impacted states were systematically sacrificed to the interests of big European businesses.


• The reference to the allegedly ruthless China serves to divert from the aggressive trade policy of the German government and the EU.

Instead of promoting a trade war against China and the rest of the world, the German government and the EU commission could support a fair multilateral trade system that emphasizes social and ecological justice. As the largest economic bloc of the earth, the EU could lead the way and set completely different standards than the TTIP and CETA.

Incidentally, the EU has long negotiated with China – secretly in any case through a free trade agreement.

MYTH 6: The SPD has drawn “red lines” and will not approve any agreement that lowers past standards. Therefore citizens do not need to worry about democracy, labor rights and environment protection.

Under massive pressure from TTIP critics, the SPD party convention in the fall of 2014 resolved there would be no lowering of standards, no arbitration courts, no regulatory council and no privatization- and deregulation-pressure and that all negotiation papers would be disclosed.

• These positions are not found in the concrete negotiation process between the EU and the US. Neither the SPD fraction nor economics minister Gabriel has clearly declared they will block TTIP if the hopes of the convention are not fulfilled.

• On the contrary, many things suggest that TTIP will be waved through. Instead of rejecting the unnecessary and risky arbitration courts, Gabriel has urged a “reformed” ISDS. He does not mention the regulatory council or disclosure of negotiation texts.


• The litmus-test for the credibility of the SPD is the CETA agreement with Canada which has largely been negotiated. The German government including Sigmar Gabriel does its utmost for a speedy ratification although many of the supposed “red lines” were violated. CETA provides private arbitration courts and forces states into a one-way street of deregulation and privatization.

Without more massive pressure from citizens, corporate-friendly agreements with exaggerated promises will prevail. If they are once in power, cancelling them will hardly be possible any more.

www.alternativetrademandate.org