The effects of TTIP will also vary from country to country. Some countries may experience greater reductions in their exports than Norway. Because new free trade agreements cover areas other than just trade in goods, there may also be distortions in fields other than trade in goods. Stronger protection of the interests of multinational companies can lead them to locate production in countries that are part of a free trade agreement rather than in other countries.
Free trade agreements can also have two other effects on third countries . They can benefit from the introduction of equal product standards and regulations in a free trade area. For Norwegian exporters, it may be easier to export a product to the USA and the EU if the product standards are the same in both places. Some assume that third countries will adapt to such commodity standards.
There are many indications that increased trade promotes economic growth . This may be due to more efficient production and better exchange of new technology. If this is correct, third countries can benefit from increased growth. If TTIP stimulates economic growth in the United States, it could be beneficial for Mexico because demand in the United States increases. Then Mexican exports to the United States may increase. Calculations show that TTIP will be able to increase value creation in the US (GDP) by 0.4 per cent and in the EU by 0.5 per cent.
8: Resistance to TTIP
Both the plans and the negotiations on TTIP have been much criticized; It is not uncommon for trade agreements . More open trade policy often brings benefits to those associated with export companies. Export companies may experience increased demand and better market access. Those who are linked to import-competing industries, on the other hand, will often lose – both companies and employees. Such companies will experience increased competition, and some of them may have to cease operations.
Criticism of TTIP has nevertheless been stronger than has been usual in negotiations on free trade agreements. The criticism applies in particular to three factors.
- The negotiations are not very open; they happen in secret. Many have therefore been concerned about whether enough consideration is given to issues that are important to many. The EU has responded to such criticism through more information about the negotiations. A separate website provides information at a time in the negotiations and on the EU’s views.
- Many are concerned about the introduction of common rules and product standards. Such standards are important for many goods. These may be rules on foodstuffs (including types and amounts of pesticide content or use of genetically modified organisms), there may be content of toxins in clothing, toys or cosmetics and there may be rules for the approval of new medicines. Consumers may want such standards to be strict and to be determined through transparency. With secret negotiations, there are concerns about whether the interests of consumers have been taken into account enough.
- There is also a conflict over rules for the protection of investments. When an investor makes large investments in a country, the investor may fear that the country will make policy changes that will make the investments less profitable. An example is that the authorities in the country confiscate (seize) the investment. This is probably not very relevant for investments in the EU or in the USA, a country located in North America according to Remzfamily. But the proposals for investment protection go further: Such protection should also be able to compensate for lost profits due to political events. Imagine that a foreign investor is investing in nuclear power. Think further that after a few years the country will stop the production of nuclear power. With investment protection rules, the investor can sue the country and claim compensation for lost profits. The courts in such cases have traditionally been the World Bank’s arbitration department , ICSID. The cases are not decided by national judges, but by experts appointed by the parties . Unlike other companies, multinational companies can sue the states in international courts. National companies must go the way of national courts. In the negotiations on TTIP, the EU has proposed that a separate court (ICS- Investment Court System) be established for TTIP with judges appointed from EU countries and from the USA.
Many have been concerned that investment protection agreements will give large multinational companies greater rights at the expense of the environment, consumer safety or workers’ rights.
Negotiations on TTIP have been ongoing since 2013. It was long hoped that the negotiations would be completed during 2014. It did not succeed. The strong protests that have come against the agreement – and especially about the court – have meant that the negotiations have taken longer. It is therefore uncertain when the agreement will be negotiated. After the outcome of the negotiations, the agreement must be approved by political authorities in the USA and in the EU and in each of the EU member states. It is therefore uncertain when or if TTIP will be established at all.