I thought it worth pointing out this story from last week, with France threatening to pull the plug once more on TTIP. I’ve long suspected there was a very real chance TTIP would fail and this really underscores the perils of deep and comprehensive agreements. There’s too much to bicker over – and in the end we lose out on forging our own unbundled deals. We’re subject to France’s protectionism and petulance.
Thus far, the EU has only ever succeeded in one bloc to bloc agreement (EU-Carricom) and for all the fanfare, and years of negotiation, it has largely fallen flat, produced few results and – because of the asymmetrical nature – has given the EU an advantage in primary imports and a place to dump surpluses, but is using the lack of implementation of global sustainable development accords in the Caribbean as an excuse to not deliver what was promised prior to the financial crash.
The result being a much watered down agreement that has done little to help the Caribbean diversify exports and has had little impact on their respective economies. To a large extent, the agreement exists in name only.
In this regard, the same could happen with TTIP. It may yet pass, to much celebration and fanfare, but in real terms will not deliver the goods. Looking at the history of such bloc-to-bloc negotiations, they are prone to many collapses along the way on the back of comparatively small sticking points ; put forward by more influential economies inside the EU, namely France.
It is said that without the EU, Britain would be isolated and that to get the best deals and to execute any fundamental changes to the status quo, there is a need to cluster together, pool resources and form alliances to leverage collective strength in negotiations.
That’s fine if your agenda is also their agenda, but Spain is having a tough time trying to push forward an EU-Mercoser agreement that would harmonise trade with Spanish speaking nations in South America. The EU has limited diplomatic run time and a full plate, so Spain will have to wait its turn, delaying a deal that could open up a hugely beneficial trade triangle until TTIP is finalised.
That leaves us looking for an alternative model. One which deserves exploration is the type which does not involve formal, geographically-anchored country agreements. Instead of portmanteau deals between nations, we need to look at sector or product deals – in which temporary or industry alliances can be formed for the purposes of tailoring an agreement to the most favourable and most achievable outcomes.
The best examples, for the moment, come with the deals brokered through the UNECE-sponsored World Forum on Vehicle Regulation Harmonisation, a process we’ve labelled “unbundling”.
The latest development here is the international agreement on tyre standards for passenger cars, where a new system for certification has recently been adopted for product certification, known as Global Technical Regulations (GTRs).
This, as the name applies, is actually a global agreement, aimed at providing uniform regulation for an industry worth $200 billion a year, employing over 600,000 people globally. Currently, it is producing 3.3 billion units annually and the industry is expected to grow to $220 billion by 2015.
The point here is that, while TTIP could – in theory – produce a boost to the global economy of $500bn annually – over a wide range of products – it is unlikely ever to come to fruition. A deal on tyres – just one product – could, potentially deliver about $40bn, which has a much better chance of being achieved. Do a series of deals, product-by-product, and you will get to your TTIP target, while the negotiators for the “big bang” are still talking about what sort of coffee should be served at the conference tables.
As global trade is expanding at an unprecedented rate, with highly agile corporates being able to rapidly shift bases to take advantage of favourable trade agreements depending on their sector, Europe is well behind the curve.
It increasingly looks like we are isolated from the world within the EU as we are prevented from acting in the interests of our own emerging industries, where new innovations must wait in line for decades to be recognised as priority EU concerns. All the while the EU is engaged in stamping out brushfires in its own back yard.
The bottom line is that the EU is outdated and locked into an obsolete paradigm while the world overtakes. If there were to be any reform of the EU worth having it would be that all nations would have some, if not all, trading autonomy returned so that nations would be free to pursue their own interests, more in line with their cultural alliances, and then lodging them with the EU so that all EU states may take advantage by way of using the instigating nation as a proxy. After all, that is how Norway accesses EU trade agreements without being an EU member.
That of course is not going to happen. Such a proposal would threaten the very basis of the EU as it contradicts the EU’s own statehood ambitions. Moreover, the next EU treaty is likely to want more, not less control over the affairs of Eurozone nations, effectively becoming the economic administrator in the way it has imposed itself upon Greece. Such a treaty would not only marginalise us further in terms of EU priorities, it leaves us locked out of the emerging global single markets.
We could be joining a global automotive trade alliance, which would have all the benefits of a single market in terms of tariffs and regulations, without the need to cede everything else to a supranational authority.
We could then expand it to other sectors to create a multi layered single market where those industries not seeking favourable terms can opt out of the process entirely thus streamlining it.
In the final analysis, the EU says we need it most of all for trade, but it’s actually not very good at it. It’s large enough to be a massive influence, but by way of its own mentality it is actually holding back global growth and preventing nations with specialist industries benefiting themselves and the wider EU economy.
Indeed we do need a reformed EU, but few can really define what that means. They make pronouncements on the need for greater competitiveness but what’s required to do that is anathema to their ethos and an existential threat to Le Grande Project. The dream of a one nation Europe blinds them to opportunities and the realities at play. They cannot possibly conceive that it is they who are the regressive nationalists.