Free Trade and the Fear of Too Much Freedom

It is right that the U.S. and Europe have set their sights on free trade. The concerns of many citizens should, however, be the impetus for more transparency in the negotiations, whose conclusion is a distant prospect.

Increased economic growth and hundreds of thousands of additional jobs — these are the main arguments with which the supporters of the planned free trade agreement, the Trans-Atlantic Trade and Investment Partnership, advertise the controversial deal. The opponents see in TTIP the condemnable attempt to erode high European standards in the social and environmental spheres and, in protective clauses for investors, an attack on democracy. In the debate over a free trade agreement between the U.S. and Europe, there is a lot of emotion at play — the matter has hardly moved forward a year after the start of the talks. Or has it? It is difficult to know, and that is a further point of criticism about the negotiations: only very little about their progress has been made public, and, for the most part, there has been a lack of transparency.

The idea of free trade, when considered historically, is quite young. At the turn of the 19th century, economists promoted it strongly, praising the advantages of tearing down tariff barriers and the abolition of other restrictions on trade, but the pendulum has hardly swung in just one direction since then; long phases of the opening of markets have consistently been opposed by periods of withdrawal and walling off.

Politicians do not always have an easy time with free trade. Many advocate for it, but when it appears opportune, they turn into protectionists. Fifty years ago, President John F. Kennedy already dreamed of a free trade zone between Europe and the United States. He made fiery speeches to Congress in support of free trade, with success. In the negotiations that he initiated, the tariffs for thousands of products were sharply reduced. Barack Obama, who sees himself in the tradition of Kennedy, also wants to smooth the way for American business to enter into foreign markets.

TTIP should be the key to Europe and also open the United States. Import duties as a brake on free trade are by now an exception; today, the process proceeds more subtly. Countries now set up other barriers, so-called non-tariff barriers. It is a matter of bureaucratic hurdles, environmental requirements, formalities and technical and social standards, which make it harder, more expensive and sometimes impossible for foreign businesses to gain a foothold in another market.

Free trade agreements like TTIP are, however, also instruments to ensure and strengthen established positions. From the viewpoint of other countries, the phrase “free trade agreement” sounds like a taunt; they are clearly the losers if the world’s largest trade blocs, the EU and United States, mutually grant each other further advantages.

The protection clauses for investors have also ignited much criticism. The EU and the U.S. want to, under pressure from business, outsource lawsuits between businesses and nations to a board of arbitration, independent of any one country. With that, the constitutional state will be annulled, rant the critics. The EU and U.S. are not breaking any new ground, however. There are now already more than 2,000 such agreements for the protection of investments worldwide. With them, countries give up judicial autonomy, but they submit to the arbitrators of their own free will — no one forces them to. Possibly the EU and U.S. could also do without such clauses; however, in the end, there are legal systems on both sides of the Atlantic, however different they may be, on which one can rely.

On the other hand, news of America’s espionage activities in European countries are disturbing the negotiations and have hurt confidence levels. Europe must respond to this authoritatively; this is not how one behaves toward partners. In general, both sides must act more transparently if they want to prevent their project from failing prematurely. Steamrolling the citizens does not work.

At this time, in the debate over TTIP, two seemingly irreconcilable groups stand in opposition to one another. The one equates free trade with more freedom; the other sees this freedom as threatened by more free trade.

This contradiction cannot be fully resolved. That is why it is even more important that the champions of free trade fight out in the open, if only so can they dispel doubts. And the most important is that the citizens have the last word. Without the parliaments in Washington, Brussels and Europe’s capitals, nothing will happen. And it’s good that way.