Social and traditional media alike have been buzzing recently with debate about – of all things – a trade deal. TTIP may sound like the kind of bug you catch on an emergency ward, but that isn't why it has gone viral. The clunky acronym stands for the similarly inelegant Transatlantic Trade and Investment Partnership, which aims to deepen and expand trade between the European Union and the United States. The proposed deal, now seemingly struggling through the later stages of debate, follows years of secretive negotiations between the European Union and the United States. If implemented, the result will be a new round of marketisation – albeit packaged in the obscure language of 'regulatory standardisation' and 'non-tariff trade barrier elimination' – through which European elites in particular hope to rebuild a flagging hegemony.
Opposition to TTIP first became widespread among the European public in March 2014 when an early draft was leaked. That draft revealed not only plans to deepen existing free trade agreements between the EU and the US, but also to open up previously sheltered sectors of the European economies to US investment (of particular concern in the UK has been the National Health Service). After that leak, the European Commission, the principal body of negotiators on the EU side, opened up parts of the agreement to 'public consultation', though likely only in order to forestall any deeper, properly democratic demands the public might make.
The EU and the US have since the end of the Second World War formed perhaps the world's most tightly integrated pair of economic regions, and by far the biggest. Tariff barriers to trade in manufacturing and services are today practically non-existent. Regulation on financial transactions and markets varies, but is hardly inhibiting. From a US perspective, TTIP is a rearguard attempt to change the terms on which struggling US firms compete with more competitive ones in emerging markets. Though it cannot return to the export boom of the immediate post-war decades, it can prop up its monetary and financial hegemony through a reanimation of its manufacturing sector (US exports weakened at the end of 2014, slowing US growth overall). European policy makers, meanwhile, are exhausted by the eurozone crisis, with many running out of policy options. A deepening of economic ties with the US promises a renewed glut of investment by US firms, themselves flush with cash and profiting from the waves of investment coming into the US since the recession. It is hoped that TTIP will create a classic deregulatory neoliberal tide lifting all boats. The last thing any of them need, then, is intrusion by trifling citizens.
TTIP and the Vision of Europe
Official opposition to TTIP in Europe has been limited. Labour voiced its 'worry' about 'investor-state dispute settlement clauses', which allow companies to sue states. In the UK at least, serious parliamentary opposition to the deal seems unlikely. Elsewhere, the French have made it clear they do not support the inclusion of ISDSs (Investor-State Dispute Settlements) in TTIP – perhaps because out of the major European economies France is among the most indebted. 'We have to preserve the right of the state to set and apply its own standards,' Secretary of State for Foreign Trade, Matthias Fekl, told the Senate. Similarly, in Germany support for the deal depends on the exclusion of the settlements. This is cold comfort, however: following the sham of the European Commission's public consultation, and the placating of the Council of Ministers that will inevitably follow, there will be significant pressure on the Parliament (which anyway has very limited powers) to swiftly give the agreement the nod. The only likely political risk to the deal would come from popular referenda – which nobody is suggesting.
It is EU elites above all who really need the deal. Regardless of whether or not EU member states can be coerced into accepting the ISDS mechanism – which, despite France's grandstanding, many are in no position to reject – the deal is a perfect encapsulation of EU strategy. The deal's former, faintly demonic, public face in the EU, the ex-Trade Commissioner Karel de Gucht, evinced all the impatience with popular opinion you would expect, and his successor Cecilia Malmstrom has hardly departed from this script. The negotiations take place against a European backdrop in which deregulation, privatisation and low taxes have, since the Maastricht Treaty, been constitutionalised. The entire administrative architecture of the EU – with the Commission at its zenith – has been built to exclude or disempower democratic oversight. It has been put to most devastating effect in Greece and Italy where unelected, technocratic governments ruled during the eurozone crisis, and one senses a growing contempt for popular opinion within that distant architecture of power.
The European Union has developed in tandem with the neoliberal, market-dominated vision of global order not against it, and it contains all the anti-democratic tendencies of that vision. The Union's central problems have, since the start of the eurozone crisis, only partly been down to simple market conditions. With power utterly centralised in Brussels and Berlin, there has been no space for smaller, debt-encumbered states to embark on autonomous macroeconomic programmes to help their economies. Yet despite these persistent geopolitical faultlines, it is still possible for those trapped in the circular world of EU policymaking to imagine they are playing a part in a force with globally liberating possibilities. 'Trade concerns every single European,' de Gucht declared, without noticing the glaring contradiction: no European has been democratically consulted. The European Commission has dismissively batted aside requests for a 'European Citizens' Initiative' proposed by civil society groups, which has resulted in an attempt to take it to court.
TTIP and the Weaknesses of the West
Since 2008 the dollar has undergone a veritable autumnal flush: for global surpluses, the world's only superpower proved the only safe place in the storm. Yet among sober observers (such as Barry Eichengreen) in the brain trusts of the American state there is nervous talk of the renminbi displacing the dollar as world reserve currency in a generations' time. Such transitions are rarely painless. With multilateral efforts to coordinate free trade such as the Doha round of negotiations collapsing, and the G20 showing signs of independent life, the US is forced to resort to bilateral or unilateral actions. The world's only global superpower is being forced to negotiate the terms of its dominance on multiple fronts. The US need to further open and integrate other regional economies is growing increasingly urgent. Hence the public fanfare awarded to TTIP and its multiple references in Obama's State of the Union Addresses.
TTIP, it is hoped, will help open new areas of growth internal to the integrating economic regions – the EU, the US and their peripheral dependants – whilst at the same time developing conditions for the renewal of their competitiveness relative to emerging economies. This is a tall order to say the least. To generate long-term growth in the context of declining productivity, ageing populations and long-term economic stagnation, it will be necessary to do more than smash up social protections and increase the spread of finance (as per neoliberalism). TTIP will undoubtedly do both of these by more closely integrating European markets with flush American ones. But the hope is that in the long-term it will create new markets and new hi-tech commodities through which Europe and America can gain competitive advantages over emerging regions. Both Obama and Cameron have deliberately framed the deal as an 'engine of growth' firing up economies through innovation. Obama in particular was explicit in stating that the deal was not about 'trade alone', but a 'comprehensive strategy.' Van Rompuy talked of 'planting the seeds' of the jobs of tomorrow. All this rhetoric may sound familiar enough, yet there can be no doubting the scale of their ambitions.
TTIP may build upon the neoliberal model of deregulation, but it also intends to go beyond the limits of that model. Indeed, some see TTIP as being linked to the export orientation of the Europe 2020 programme. After decades of neoliberal laxity, western political elites are realising – perhaps too late – that domestic consent under capitalism can only be won through the redistributive effects of long-term growth. Without growth of this kind, expanding financial markets can only offset declining real incomes until another inevitable crisis comes along. TTIP's erosion of democratic accountability and regulatory standards, and its challenge to the sovereignty of national states, is being promoted by the Commission as the only means to restabilise the Union's much-buffeted system of governance. The intention is not only to further deregulate and financialise Europe, but to significantly deepen market penetration of daily life and thus to create a newly competitive, export-driven EU. New forms of advanced consumer goods can be exported to the rising regions, over whom the West still exercises vast technological superiority. These processes will of course benefit hi-tech exporting countries like Germany at the expense of lo-tech or agricultural peripheral economies. Yet to do this European elites and European capital must return to precisely the rival they have for so long been subordinate to – the United States. Greater openness to the dollar risks exacerbating European unevenness and reliance on financial markets to create new speculative forms of value. By opening up further to the US, the EU is essentially using the sword to heal the wound.
Though de Gucht insists that the EU is an equal to the US in economic terms, in geopolitical terms it certainly is not. The eurozone is not monetarily dependent on the dollar in the way so much of the developing world is, but the euro nevertheless plays a subordinate role to the US in the world of free-floating exchange rates. While the eurozone is volatile and relatively regionally fragmented, the dollar remains the world's most powerful currency. Despite, or rather because, of the neoliberal logic underpinning monetary union, the euro does not provide adequate grounds for a unified bloc that can compete globally. The idea of outsourcing manufacturing to poorer EU states and housing finance in the core has been discredited by the sovereign debt crisis and the crisis of the euro itself – both of which stem from precisely these systemic regional inequalities. The ploughing of north European surpluses into the poorer southern states simply resulted in greater catastrophe when the flows of credit dried up in 2008. Any forthcoming trade deal with the US is likely to compound these harsh realities.
TTIP versus the 'Surplus Recycling Mechanism'
The reality of global economic power is that it cannot be evenly distributed among cooperative regions. In order for EU elites to secure their own hegemony they must find some complementary, yet subordinate, role to play within the US controlled world system. Competitiveness – driven by deals like TTIP – is just the latest answer. Yet the very unevenness of European development and integration, channelled through expanding financial markets and the creation of deficit and surplus sovereign states, will hamper and ultimately undermine these efforts at creating an exporting, competitive bloc. Moreover, it is the hegemony of the dollar in financial markets, which EU elites will have to maintain, that will further fuel the growth of debt and the internal unevenness of the integrated European market.
What, then, are the deal's chances of defeat? No significant challenge is likely to come from within the highly undemocratic EU if the deal can sneak past the various interested finance ministers who testily skirt the negotiations' fringes. In a certain bleak irony the US, which stands to gain most in the immediate future, will also undertake the only convincing democratic process involved: if it ever gets there, the deal will have to be passed in both Houses of Congress. Given the benefits promised to both US industrial and financial capital, however, the prospects for challenge from that quarter are slight.
One source of dissent remains open. The euro remains substantially as vulnerable to shocks as it was before the crisis. Despite European leaders' ominous insistence to the contrary, the eurozone will not gladly dump members. Greece's January elections put an anti-austerity party in power for the first time and a new left-wing party in Spain has followed the Greek party Syriza up the polls. Debt restructuring or a Greek exit from the eurozone could severely hamper TTIP. Moreover the 'surplus recycling mechanism', by which investment from surplus to deficit regions is productively channelled, as advocated by the Greek Finance Minister Yanis Varoufakis, is a direct challenge to the contemporary European model. A 'surplus recycling mechanism' offers at least in theory a means for the social regulation of investment and development as opposed to the deepening marketisation, commodification and competitiveness proposed in free trade agreements like TTIP.
What concrete form might a surplus recycling mechanism take in the European context? Varoufakis has long argued for combining the positive effects of fiscal union (in the form of eurozone bonds issued by the ECB) with planned investment (undertaken by the EIB with ECB backing) for a European 'New Deal.' Crucially, this would be a form of Europe-wide public investment that would sidestep the volatility of financial markets and the consequent debt-austerity spiral imposed on countries like Greece. Against what Varoufakis calls the Troika's 'extend and pretend' debt programmes, the European Left is now well-placed to argue for a 'restore and rebuild' strategy of public investment. America, meanwhile, frustrated with the dragging on of the euro crisis, is increasingly turning its attention to trade deals with the Pacific, even while Doha-style development is a distant prospect. If progress on TTIP remains slow, Europe's impoverished and imperilled southern periphery could yet win the day.
Adam Blanden is a blogger and contributor to Dissent Magazine, Red Pepper, and New Left Project, among others. Follow him @adam_blanden.