While prominent left-wing critics of the EU argue that Britain can avoid the worst excesses of the Transatlantic Trade and Investment Partnership by leaving the EU, Dr Gabriel Siles-Brügge argues that a Brexit may actually be counterproductive.
Stiglitz and the left ‘Brexiters’
‘I think that the strictures imposed by TTIP [the Transatlantic Trade and Investment Partnership] would be sufficiently adverse to the functioning of government that it would make me think over again about whether membership of the EU was a good idea’. This was the assessment of the free trade deal currently being negotiated between the EU and US of former World Bank Chief Economist, Nobel Prize laureate and critic of austerity Joseph Stiglitz. Speaking at a Labour Party event recently, his main concern was that a proposed investor-to-state dispute settlement (ISDS) mechanism would allow foreign firms to sue governments for public policies that hit their bottom lines.
Stiglitz is only the latest of a string of left-leaning figures, including the Shadow Chancellor John McDonnell, who see TTIP embodying the worst elements of a neoliberal European project bent on austerity, deregulation and serving the interests of transnational capital. The proposed trade agreement with the US has thus become a rallying cry for those on the Left who see in a Brexit an opportunity to regain lost British sovereignty in order to ‘build a new Britain, one of workers’ rights, a genuine living wage, public ownership, industrial activism and tax justice’.
I broadly share the concerns of those who see in TTIP and its bid to reduce transatlantic ‘red tape’ a threat to levels of social, environmental and public health protection, even if the deregulatory effects of TTIP are likely to be more subtle than the headlines about the dismantling of the NHS, ‘corporate courts’ and imports of chlorinated chickens suggest. The problem is that leaving the EU, even if it occurs before the conclusion and ratification of TTIP, will likely not spare Britain from most its potential negative effects.
A Great British agreement?
First of all, what is to say that a Britain outside the EU – once it has re-asserted its competence to negotiate trade agreements – will not seek to sign its own trade agreement with the United States? Despite statements from the US Administration that it has little interest in negotiating a standalone agreement with Britain, this can be read as an intervention in the UK referendum debate rather than a statement of long-term policy intentions. On the UK side, getting Britain to sign its own trade deals, especially with such important partners as the US, is one of the key objectives of a Brexit as articulated by the significant body of Conservatives and right-wing libertarians within the ‘out camp’.
Given its lineage, it is unlikely that this would be the sort of progressive agreement that left-wing ‘outers’ would be keen on. The current, Conservative-majority government has been a resolute advocate of an ambitious TTIP that significantly cuts transatlantic ‘red tape’ (and includes ISDS) – in part also to win over Conservative critics of the EU. Other governments in the EU, while still in favour of TTIP, have certainly been more circumspect in their support for the agreement. Their moderating influence (on issues like ISDS or TTIP’s regulatory cooperation provisions) would be lost in the case of a Brexit. Indeed, cutting loose from the ‘protectionist’ EU governments seems to be one of the key rationales for negotiating British rather than European trade deals.
The impact of EU Regulations remains
Even if the 2020 General Election were to yield a Labour government with no intention of negotiating a free trade agreement with the US, there is a second factor to consider. If Britain were to leave the EU, any of the arrangements necessary for it to maintain varying levels of access to the Single Market are likely to require accepting EU regulations – such as product standards related to consumer or environmental safety – without having a say in their elaboration. If TTIP impacted these, it would still impact Britain.
As Ferdi De Ville and I argue in a recent book, one of the most important likely impacts of TTIP is on future regulation and regulatory processes in the EU. TTIP is explicitly envisaged as a ‘living agreement’ that would continue exerting an influence on regulation beyond its signature and ratification. Crucially it would involve (if we take the EU’s textual proposal on the issue) provisions on ‘regulatory cooperation’ – increased contact between EU and US regulators – and ‘regulatory coherence’ – ‘improving’ the regulatory process by providing early warning of regulatory measures, offering stakeholders early input into the regulatory process and promoting economic impact assessments. These are likely to make it more difficult to introduce regulatory measures that impose an additional cost to business.
The regulatory agenda in TTIP dovetails with the EU’s own internal ‘Better Regulation’ Agenda. This is also explicitly intended to reduce the burden of ‘red tape’ for business but has been vigorously criticised by European NGOs for undermining efforts to develop levels of social, environmental and public health protection, leading the Commission to drop several regulatory proposals in these areas. TTIP in some ways represents an attempt to ‘bind’ (or commit to, in an international agreement) and reinforce key elements of this agenda such as the process of impact assessment or early warning for regulatory acts. Thus, even if Britain avoided having an agreement with the US featuring ISDS, it would still be exposed to the effects of TTIP- (and Better Regulation-related) ‘regulatory chill’.
In short, leaving the EU does not protect Britain from the potential negative impacts of TTIP (or of the Better Regulation Agenda). Many (if not most) of the ‘outers’ from the Conservative Party and those of an economically libertarian persuasion do not fundamentally challenge the deregulatory logic of TTIP – only that it is the EU doing the negotiating and not Britain.
Leaving the EU is likely to at best expose Britain to much of the agreement’s effect on the regulation of the Single Market. At worst, it may lead a Conservative British government signing an even more problematic UK-US agreement.