The Telegraph | 4 May 2016
Unloved, untimely, and unnecessary, the putative free trade pact between Europe and America is dying a slow death.
The Dutch people have amassed 100,000 signatures calling for a referendum on this Transatlantic Trade and Investment Partnership, or TTIP as we know it. The number is likely to soar after Greenpeace leaked 248 pages of negotiation papers over the weekend.
The documents do not exactly show a “race to the bottom in environmental, consumer protection and public health standards” – as Greenpeace alleges – but they do raise red flags over who sets our laws and who holds the whip hand over our eviscerated parliaments.
Dutch voters have already rebuked Brussels once this year, throwing out an association agreement with Ukraine in what was really a protest against the wider conduct of European affairs by an EU priesthood that long ago lost touch with economic and political reality.
French president François Hollande cannot hide from that reality. Faced with approval ratings of 13pc in the latest TNS-Sofres poll, a TTIP mutiny within his own Socialist Party, and electoral annihilation in 2017, he is retreating. “We don’t want unbridled free trade. We will never accept that basic principles are threatened,” he said.
In Germany, just 17pc now back the project, and barely half even accept that free trade itself a “good thing”, an astonishing turn for a mercantilist country that has geared its industrial system to exports.
The criticisms have struck home. The Dutch, Germans, and French, have come to suspect that TTIP is a secretive stitch-up by corporate lawyers, yet another backroom deal that allows the owners of capital to game the international system at the expense of common people.
Weighty principles are at stake. The Greenpeace documents show that the EU’s ‘precautionary principle’ is omitted from the texts, while the rival “risk based” doctrine of the US earns a frequent mention. Clearly, the two approaches are fundamentally incompatible.
Personally, I think the EU’s regulatory philosophy is a key reason why the region has missed the big technological leaps of the last quarter century. But that is not the point. If democracies wish to ban genetically-modified crops out of scientific infantilism, that is their prerogative.
It is a heresy in our liberal age – a sin against Davos orthodoxies – to question to the premises of free trade, but this tissue rejection of the TTIP project in Europe may be a blessing in disguise. You can push societies too far.
The European Commission’s Spring forecast this week has an eye-opening section on the rise of inequality. Without succumbing to the fallacy of ‘post hoc, propter hoc’, it is an inescapable fact that the pauperisation of Europe’s blue collar classes corresponds exactly with the advent of globalisation.
The report admits that “offshoring” by manufacturers may have played a role, meaning of course that Western multinationals have been able to play off workers at home against cheap labour in China, emerging Asia, or Eastern Europe. This game is limited only by cost of shipping goods, or by worries about the rule of law. It is why the profit share of GDP has been rising relentlessly. The owners of capital have never had it so good.
Yes, other factors are at work. A shift in technology has raised the premium on skills. Reliance on QE instead of fiscal stimulus has inflated the price of assets held largely by the rich. The eurozone’s austerity regime has made matters even worse, hitting the poor hardest.
Even today the youth jobless rate is still 51.9pc in Greece, 45.5pc in Spain, 36.7pc in Italy, and 24pc in France. The report shows that those with incomes below 40pc of the eurozone median have suffered a 14pc drop in their net receipts even since the Lehman crisis.
This is not just a political failure: the inequality itself perpetuates the depression, for the poor spend and the rich save, and the core problem in the world economy is excess savings.
The imbalances that led to the savings glut and the global financial crisis – and has fed the 1930s malaise of excess capacity ever since – all track in one way or another to globalisation, whether it has been unchecked capital flows or the rise of China.
Perhaps great shock of globalisation is a one-off effect, already past its worst as Chinese wages shoot up and the Communist Party weans the economy off manic over-investment, or at least talks about doing so.
But right now China is still adding excess capacity across a swathe of industries, and there is every reason to fear that the next global downturn will bring matters to a head, either because President Xi Jinping devalues the yuan to buy political time or because capital flight forces his hand. Either way we would face a deflationary tsunami.
Western leaders did not fully understand what they were doing when they tore down the defences over the last quarter century, and lightly overlooked what competition with Chinese labour might mean for tens of millions of their own electors.
The great socialist parties of Europe abandoned the field, leaving it to the far-Left and far-Right. It falls to the Front National’s Marine Le Pen to denounce globalised capitalism as a conspiracy against workers, the “law of the jungle”.
Nor do the elite really know what they are doing with TTIP this time. Brussels estimates that the treaty would ultimately increase Europe’s GDP by 0.5pc. If that is all there is, it is a trivial prize set against a further loss of sovereign democratic control over our laws, rules, principles, and way of life.
The treaty’s army of critics is right to grumble about plans for special tribunals outside the normal court system that would allow companies to sue governments and to overturn laws passed by elected legislatures.
You can argue there are already 57 of these ‘ISDS’ tribunals in action around the world, whether for the Energy Charter, or the Moscow Convention on Investor Rights. Their workload is rising exponentially, nearing 600 cases a year. But do we want another one, and with vastly greater scale?
We are living in an age where people feel overwhelmed by global forces. The wiser statecraft is surely to shift the balance back a little towards parliamentary supremacy, whether in Britain, America, Germany, or France.
The paramount issue at hand is to conserve the vitality of our core democracies at a time when they are under multiple pin-prick attacks, from the European Court, or trade tribunals, or from any one of the proliferating supra-national bodies run by lawyers and technocrats on the margins of accountability. If TTIP whithers on the vine, so be it.