« Civil Society Dialogue meeting: TTIP Sustainability Impact Assessment – Draft Final Report
Comments and questions from the Maison du Peuple d’Europe – EuropeesVolksHuisASBL1
Thank you for agreeing to consult us. We represent the MPEVh.
Our comments and questions concern the economic and social aspects of the TTIP SIA – final report.
For us, the economic and social aspects cannot be dissociated as it is done in the report and in the proposed sequence of the dialogue with the civil society dialogue.
We have read and analysed the SIA documents. For us there is a major problem, which is shared by many associations of different horizons: « The economic and social promises of this treaty do not resist a thorough and objective analysis ». In other words, the TTIP is an economic agreement whose economic and moreover social impacts have a lot of uncertainties and are at best very weak.
So why continue these negotiations?
Olivier Blanchard, former Chief Economist of the IMF, said recently that the financial crisis and its persistence raises a potentially existential crisis for macroeconomics. Practical macro is based on the assumption that there are fairly stable aggregate relations, so we do not need to keep track of each individual, firm, or financial institution—that we do not need to understand the details of the micro plumbing. We have learned that the plumbing, especially the financial plumbing, matters: the same aggregates can hide serious macro problems. How do we do macro then?
By reading the SIA study, we have the feeling that their authors are not questioning their approach and rather opted for a “business as usual” framework. However, the models used (CGE, econometric model E3GM) are based on a set of hypotheses, presuppositions, which are less and less unanimous within the scientific community. ECG models have well-known limitations and are not sufficiently emphasized in the report. In a recent audit of the European Commission’s commercial policy, the European Court of Auditors found that the Commission had not adequately assessed all the economic effects of preferential trade agreements. It identified fundamental weaknesses in CGE models – particularly the careful analysis of long-term effects – and the data sets used, so that they are only suitable for simulation and not for forecasting.
The econometric model E3GM, used in a second phase for the social impact, also has limits, which are not mentioned in the report nor the appendix. In this report, it is just mentioned about of the « forces » of the model.
We have a specific technical question: What is the proportion of imputed data (missing data replaced by estimates), directly or indirectly, as imputations also exist in the ILO and World Bank databases used as input) in the databases used in the models (ECG, E3GM)? In other words, to which extent are you using Swiss cheese filled with whipped cream?, to take the expression used by Denk and Weber in a key paper published in 2011.
Also, significant references are lacking in the SIA report such as the study called « Trade and Employment: from Myths to Facts« , prepared by the ILO in 2011 with the assistance of the EU (Directorate-General for Development and Cooperation – EuropeAid, European Commission).
<Comment skipped during the dialogue. We will like also to quote Clive George (Global Policy journal): « The economic profession is beginning to change, partly because of the financial crisis – which opened up space for heterodox voices – and partly through the efforts of a new generation of economists who recognize the limits of mathematical modelling and who recognize the roots of their discipline in the social sciences, political sciences, and even, as in the case of Adam Smith, moral philosophy, but this will not prevent politicians to seek evidence to support their policies, or to hide the real reasons for these policies.
Consequently, behind this arguable, if not misleading, justification in economic terms of the TTIP, is the real objective of favouring mainly, if not exclusively, the profit margins and the shareholders of companies through the harmonisation to the bottom of social and environmental requirements?
For the sake of the large proportion of the citizens, our priority is to push policy makers to reform the European and global institutions that deal with trade policies (and also social, financial, etc.) in order to rebalance the balance of power between citizens and multinational companies in the decision-making and legal processes, which would result in a better redistribution of economic gains. Multinationals have the opportunity to do « legislative shopping » (see article) and have the financial means to undertake costly legal procedures to defend their interests or lobby campaigns.
There are alternatives in progress. We therefore support Resolution 26/9 of the UN Human Rights Council on the development of an international legally binding instrument on transnational corporations and other enterprises and human rights. It has been adopted in 2014 by 20 states (out of 47 members of the Council), 14 states voted against (all countries from the Northern hemisphere actually) and there were 13 abstentions. The principles of this instrument has been supported by 85 states of the planet. We have much more hope in this future “other” instrument than in the TTIP.
We hope that our priorities and concerns will be listened and moreover, taken into account by the Commission in the future, for the good of all, since we are all citizens here.
By Jean-Michel Pasteels & Jacques De Gerlache