Given the magnitude of the effect that TAFTA/TTIP could have on the economies and daily life of both the US and EU, it is surprising that there has not been more analysis of its likely impact. In particular, you would have thought that the governments who favor it would have made great efforts to deploy plenty of evidence supporting the agreement. Instead, the European Commission simply repeats the same set of figures from the 2013 analysis that it commissioned from the London-based CEPR group (pdf), while the US side seems to think even one study is one too many.
Analyses from the public’s political representatives are also surprisingly thin on the ground. That makes a new report from one of the UK Parliament’s specialist committees, which are made up of current MPs, particularly welcome. It comes from the Business, Innovation and Skills (BIS) Committee, so you might expect it to be really upbeat about the TTIP negotiations. Instead, it is pretty unimpressed by the debate so far:
The BIS Committee finds that while a lack of detail on negotiations makes it difficult to assess the benefits of TTIP, all involved in the debate — campaigners, lobbyists, business groups, the UK Government and the European Commission — must ensure they take an evidence-based approach when assessing TTIP’s potential.
The report focuses on two main areas: TTIP’s economic benefits and the corporate sovereignty provisions, also known as investor-state dispute settlement (ISDS). As it notes, the main figures used time and again in support of the trade deal come from the European Commission’s CEPR report. Leaving aside its many debatable assumptions, one key fact that has emerged is that the core prediction for the best-case scenario — US and EU economies to grow by 0.4% and 0.5% respectively as a result of TTIP — refers to cumulative growth by 2027, and therefore amounts to around 0.05% extra GDP per year, on average. Regarding this fact, the economist Dean Baker wrote: “As growth policy, this trade deal doesn’t pass the laugh test.” On this issue, the Committee commented:
When we challenged the [UK Trade] Minister on the accuracy of the estimated benefits of TTIP, he appeared to agree that they should not be taken as fact. In doing so he quoted JK Galbraith, who said that the only purpose of economic forecasts was to make astrology look respectable.
The Committee was equally unimpressed with the arguments in favor of including a corporate sovereignty chapter:
We have yet to be convinced of the need for ISDS provisions in TTIP. The UK Government and the EU must demonstrate that the advanced legal institutions of the EU and the US cannot protect foreign investors before any ISDS is considered in the TTIP.
Again, coming from a naturally pro-business Parliamentary Committee, that’s a pretty damning comment. It shows just how much work the US and EU governments need to do in order to convince people — even those favorably inclined to the idea — that TAFTA/TTIP is worth bothering with at all.