Effects of Transatlantic Trade and Investment Partnership

What is Transatlantic Trade and Investment Partnership

The Transatlantic Trade and Investment Partnership is defined by Lee Williams in Independent as “a series of trade negotiations being carried out mostly in secret between the EU and US” (Williams, 2015). The agreement aims to reduce the legal barriers between the big-sized corporations from EU nations and US, such as banking arrangements and food safety laws etc. The partnership is created for the sake of European Union and United States but there has been an ongoing debate on the effect of Transatlantic Trade and Investment Partnership on the non-aligned countries. This paper states how TTIP affects the non-aligned countries in an adverse way.

Advantages of Transatlantic Trade and Investment Partnership

First of all, negotiations of TTIP agreement brings the economies of the non-aligned countries to a standstill. This standstill effect of TTIP agreement can be analyzed in terms of the market shares of the non-aligned countries. Dr. Fatih Yar states in his article that “US and EU together constitute 46.7% of outputs worldwide, in other words nearly half of it. Also they form 30.4% of world trade. This agreement will contribute to EU’s production by 120 billion Euros and 95 billion Euros to US’s. However, these parties have a total value of 3.7 trillion dollars of cross investments” (Yar, 2015). This information is interpreted as in case this agreement is made, the considered parties, which are European Union and United States, will become in a status that will allow them to establish regulations which will affect, or maybe change, the equilibrium in the global economy.

            The unfair treatment towards the non-aligned nations create 2 very important handicaps for the market shares of the nations while entering new markets or trying to hold on in the existing markets that they are currently operating. The first negative impact of TTIP on the non-aligned nations is the decrease in the market share. As the legal barriers are removed for the European Union and United States nations, the corporations from these nations enter the market in an easier way which increases these two nation’s market shares and decreases the market share of non-aligned countries. In addition, the same reason applies for the price levels in the market share and affects it in an unfavorable way for the non-aligned countries.

Disadvantages Transatlantic Trade and Investment Partnership

            In addition to the effects of TTIP on market shares, the agreement affects the competition levels as well. Sait Akman makes some statements in his article about the FDI of Turkey as “In this day and age, there is nearly no county that does not have US or EU as their primary export and investment resource. To illustrate that these two economies have a share of 42.5% in Turkey’s total export by the year of 2013. 80% of Turkey’s foreign direct investment (FDI) is US or EU based” (Akman, 2014). In this case, as a result of TTIP, increasing the market shares and the price levels of EU and US will decrease the welfare levels and investments of non-aligned countries. These two are because of the reason that the non-aligned countries are likely to fail competing US and EU as the barriers are removed and other advantages, which are given above, are granted to the US and EU countries. The decreases in the welfare levels are stated with concrete numbers by Mehmet Çetingüleç as “The US-EU agreement is expected to boost prosperity by 2.6%-9.7% in EU countries and by 13.4% in the United States. In Switzerland, Canada, Mexico and Turkey, if excluded from the agreement, prosperity will decrease by 3.75%, 9.48%, 7.24% and 2.5%, respectively” (Çetingüleç, 2014).

            Secondly, apart from the economic effects of TTIP on non-aligned countries, the partnership will affect the non-aligned countries in terms of political issues as well. The negative effects are likely to end up with a political turmoil in the non-aligned countries. The political turmoil will be in terms of being at odds between the parties and the non-aligned countries. Decreasing the welfare and market share of the non-aligned countries will result in some political conflicts between the non-aligned countries and the parties as the non-aligned countries will try to apply some political sanctions to the parties. TTIP will have political effects on Turkey too, the most important effect would be the disagreement between the parties about entering the European Union, with considering the other advantages and disadvantages of EU apart from TTIP, as it seems the most guaranteed way to be included in TTIP agreement. In addition, TTIP will eventually upset the political balances in all over the world. The balances will end up with the political convergence between the BRICS countries as they will try to get together against the merger of EU and US to get more powerful.

            In addition to these two disadvantages that will be brought to the non-aligned countries by TTIP, some make some claims about how advantageous TTIP will be for the noon-aligned countries by arguing that TTIP will not cause economic downturn in non-aligned countries. On the contrary it will force them to get in the competition and produce high quality products. This argument is totally invalid as most of the third countries not involved in the agreement do not have the necessary industrial techniques and equipment as, for instance, it is stated by Lawrence Mbae that “Yet together, African countries account for just 1percent of global manufacturing, according to the report” (Mbae, 2014)  Moreover, this will not result in increased competitiveness in the terms of high quality but conversely it will cause low prices, decreased quality and poor laboring.

Conclusion

            To conclude, although some argue that TTIP is beneficial for world economy, TTIP affects non-aligned countries in several aspects such as decrease in market shares, negative effects in terms of price levels in the markets and political turmoil between the parties and the non-aligned countries.

References

Akman, S. (2014). AB-ABD TRANSATLANTİK TİCARET VE YATIRIM ORTAKLIĞI: Türkiye Açısından Bir Değerlendirme. Ankara Avrupa Çalışmaları Dergisi, 1-29.

Çetingüleç, M. (2014, 11 18). Will US-EU trade deal dissolve EU-Turkey customs union? Retrieved from al-monitor.com: http://www.al-monitor.com/pulse/en/originals/2014/11/turkey-us-eu-trade-deal-hit-turkeys-customs-union.html#

Mbae, L. (2014, 03 04). Industrialization In Africa: Can The Continent Make It? Retrieved from The Tony Elumelu Foundation: http://tonyelumelufoundation.org/articles/industrialization-africa-can-continent-make/

Williams, L. (2015, 10 06). What is TTIP? And six reasons why the answer should scare you. Retrieved from Independent.co.uk: http://www.independent.co.uk/voices/comment/what-is-ttip-and-six-reasons-why-the-answer-should-scare-you-9779688.html

Yar, F. (2015, 06 22). TTIP ve Türkiye. Retrieved from globalpse.org: http://globalpse.org/ttip-ve-turkiye/#_edn4