Free trade: Project of the Powerfull (TTIP)

Today, promoting free trade agreements is a worldwide trend. At least 110 countries are parties to negotiations concerning more than 22 regional free trade agreements. At first glance, it is therefore not unusual that the US and the EU would seek to conclude a transnational free trade agreement, named the “Transatlantic Trade and Investment Partnership” (TTIP).

No continent wants to lag behind when it comes to promoting free trade. To name but a few examples: On 22 November 2012, the ASEAN countries entered into negotiations on a regional free trade agreement with Australia, China, India, Japan, New Zealand and South Korea. In parallel, the five Asian countries of Brunei, Japan, Malaysia, Singapore and Vietnam are negotiating with the US, Canada, Mexico, Peru, Chile, Australia and New Zealand on a Trans-
Pacific Partnership (TTP). China might also join these negotiations.

The focus of the US is therefore not only the EU, and vice versa. The Europeans are negotiating with Americans, but they are also involved in several other free trade agreements.

On 1 March 2013, the EU and Morocco officially entered into talks, which are to be joined by Egypt, Jordan and Tunisia. Since 6 March 2013, the EU has been negotiating with Thailand, and in the same month, negotiations were initiated with Japan. In addition, negotiations have been underway with India since 2007, and since 2000 with the South American economic zone of Mercosur. Negotiations with Singapore were concluded in December 2012, and an agreement
with Canada has almost been completed.

Although many countries seek to conclude free trade agreements, the talks between the US and the EU are of particular importance. The negotiations concern the two most important economic areas in the world, which together account for 44% of global economic output and 60% of foreign direct investment. An agreement between the EU and the US would set worldwide standards by which other countries would also have to abide.

A free trade agreement between the US and Europe is aimed at – as the name suggests – stimulating trade. Said trade, however, is currently not actually doing too bad. Every single day, goods worth approximately EUR 1.8 billion are being exchanged between the US and Europe. If trade is already flourishing, why do we need a free trade agreement at all? This question gains additional significance if we look at the actual trade barrier: currency speculation. Up to USD 5.3 trillion are in use every day around the world to speculate on currencies. By contrast, the entire world trade was only USD 18.4 trillion in 2012 – that is, in a year. Daily currency
speculation has long since been disconnected from trade flows.

Currency speculation is, however, not without consequences for global trade, since exchange rates dramatically fluctuate. To give but one example: Between 2010 and 2013, the dollar swooped to between 1.20 and nearly 1.50 against the euro. For German exporters this meant that their commodities increased in price by 25%.

However, nothing is done at the international level to counter currency speculation, although exchange rate fluctuations pose the greatest risk to trade. Instead, countries focus on topics such as customs duties and non-tariff trade barriers, which play a significantly more minor role. These strange priorities cannot be explained by looking only at the present situation. The ideology of free trade has become powerful over its 250-year history. The theory of free trade evolved in the
struggle against mercantilism, which the leading economists of the day regarded as government interference.

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Ulrike Herrmann is editor of the economic policy and social issues section for the German newspaper taz since 2000. She often takes part in discussions on radio and television, including the television show Presseclub and the TV station Phoenix. Her nonfiction publications deal with basic social and economic policy issues. In 2013 she published her book Der Sieg des Kapitals. Wie der Reichtum in die Welt kam: Die Geschichte von Wachstum, Geld und Krisen (The victory of capital. How wealth came into the world: The story of growth, money and crises).