Small gains, big pains

A newly issued briefing from the influential Centre for Economic and Policy Research (CEPR) has said that the potential gains from the Transatlantic Trade and Investment Partnership (TTIP) would deliver just 40 US cents per person per day in the USA and just 0.2 euros per person per day in the EU.

Campaigners for the TTIP agreement between the USA and EU have argued that US and EU workers would benefit significantly from the deal – but the CEPR says that these gains would be dwarfed by losses the great majority of workers would experience due to increased inequality.

“The projected gains from the proposed TTIP would be so small that it would take 38 TTIPs to make up for the long- term damage the US economy has suffered over the last decade,” CEPR co-director Mark Weisbrot said.

The briefing by economist David Rosnick, looks at a widely cited study by the Centre for Economic Policy Research in London.

The CEPR study estimated that by 2025, under an “ambitious scenario”, the TTIP would increase – on average – US consumption by today’s equivalent of about 20 – 40 cents per person per day; and by 0.1 – 0.2 euros per person per day in the EU.

Tariff reductions under the TTIP, according to the London-based CEPR, “would increase US GDP by only 0.04 per cent by 2027,” Rosnick notes – “raising consumption by a bit more than $1 per person per month.”

The CEPR’s projections for these small gains come in part from its significant underestimating of the costs from patent protections for pharmaceuticals, copyright enforcement and other protections under the TTIP that could increase the price of a product by thousands, or tens of thousands, of per cent.

“This, in combination with a blind eye toward patents and copyrights, suggests that the study overestimates the potential gains from the TTIP – though perhaps no more so than similar studies,” Rosnick states.

“As with similar projections made for the Trans-Pacific Partnership, (the proposed agreement between the USA and over 20 Pacific Rim countries) the small gains most US and EU workers would see from the agreement would be dwarfed by the effects of increased inequality that would result from the TTIP,” Rosnick said.

In another blow to TTIP, a new study conducted by the University of Michigan Transport Research Institute (UMTRI), in collaboration with SAFER Vehicle and Traffic Safety Center in Sweden, the UK-based Transport Research Laboratory (TRL) and CEESAR of France said US and EU regulated automobiles do not achieve ‘equivalent levels of passenger safety’.

The year long study by US and EU independent research institutes deals a blow to the EU and US auto industries efforts to build the case for what was described as ‘mutual recognition’.

‘Mutual recognition’ was seen as a way to reduce the costs associated with having to re-engineer vehicles differently for the two markets, without either side giving up their regulatory regime.

Since the launch of the Transatlantic Trade and Investment Partnership (TTIP) talks, US and EU auto industry groups have been seeking to build evidence to back up claims that US and EU regulations achieve the same safety outcomes and should be mutually recognized. The UMTRI-SAFER study represented a key part of that effort.