EU-US Free Trade Zone ‘Deeply Problematic’ Without Developing Economies

EU-US Free Trade Zone ‘Deeply Problematic’ Without Developing Economies

RIA NOVOSTI 05/20/14

NEW YORK, May 20 (RIA Novosti) – It is “deeply problematic” for the EU and the US to promote a free trade zone deal that eschews big developing economies, according to a legislation expert for the Friends Committee on National Legislation, a Quaker lobby group.

Supporters of a free trade zone for the United States and the European Union, known as the Trans-Atlantic Trade and Investment Partnership (TTIP), praise it as a landmark economic pact that will forge a tariff-free market for 800 million consumers stretching from California to Romania.

But critics of the TTIP, which is being debated this week, say it undermines labor rights, harms the environment and threatens relations between the West and Russia and China.

“If I were in Russia or China, I would be encouraged to estrange myself even further from being a globally cooperative player. Excluding such major players is not good foreign policy,” Michael Shank told RIA Novosti. “With Ukraine blowing up, it will not incentivize [Russian President] Vladimir Putin to be a better diplomatic player on the global stage.”

European and American negotiators began five days of meetings in Arlington, Virginia, on Monday, in a fifth round of transatlantic trade talks that began last year and are expected to be concluded by the end of next year.

Discussions have already been linked to tensions between the West and Moscow over the crisis in Ukraine. In March, US trade envoy Michael Froman said a trade pact would make it easier for Europeans to buy US shale gas and become less dependent on energy from Russia.

The EU and US already trade almost $3 billion in goods and services a day. Studies suggest a trade deal encompassing almost half the world’s economy could generate $100 billion in additional economic output a year on both sides of the Atlantic.

The growth could be important for the euro zone as the bloc recovers from a two-year recession and soaring unemployment. But critics say the potential benefits will not be realized, because neither the US nor the EU will reduce barriers enough for small firms to benefit.

Meanwhile, Moscow is pushing for the creation of the Eurasian Union, a vast trade and political bloc stretching from China to the edge of the EU. It began taking shape in 2010 with the ECU, a free-trade customs union binding Russia, Kazakhstan and Belarus.

Garrett Workman, an economist with the US-based think tank the Atlantic Council, said bespoke trade zones are evolving because of failures to negotiate a global framework through the Doha Round of World Trade Organization (WTO) talks.

“While Russia pushes its Eurasian Union across Eastern Europe and China tests the water with its Regional Comprehensive Economic Partnership —TTIP goes much further, aiming to take away behind the border barriers to trade like regulatory process differences and testing mechanisms,” he told RIA Novosti.

Within Europe and the US, negotiations have proven contentious amid concerns that big business wields too much influence and will use a deal to drive down wages, workplace safety standards and undermine the bargaining power of unions.

“The trade deal gives too much power to corporations and will threaten important regulation,” said Ruth Bergen, an organizer for the Trade Justice Movement, a UK-based pressure group. “Companies will get the right to sue governments for legitimate public policy changes.”

“The growth of free trade zones is clearly an attempt by powerful countries to shore up their own economies against the rise of other countries. This is not about making life better for ordinary citizens but at keeping power in the hands of the already powerful,” she said.

In France, consumers are concerned that potentially harmful US food products, such as chicken washed in chlorine and meat treated with artificial beef hormones, could make its way onto supermarket shelves across the 28-nation European bloc.

Environmentalists have also raised concerns, particularly after a draft text of the deal was leaked and published by The Huffington Post on Monday. The document revealed that the EU is pressing the US to increase hydraulic fracturing, offshore oil drilling and natural gas exploration

“This trade proposal spells out more of the same: more dirty fossil fuels when we should be transitioning to clean energy, more climate-disrupting carbon pollution, and more risk for communities on both sides of the Atlantic,” said Ilana Solomon, a director for the Sierra Club environmental outfit. “Dirty fossil fuels must stay buried in the ground if we’re going to avoid climate catastrophe. This proposal should be buried with it.”