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Why We Should Rename TAFTA/TTIP As The 'Atlantic Car Trade Agreement'

from the we-could-call-it-'ACTA' dept

Mon, Feb 9th 2015 8:54pm — Glyn Moody

When TAFTA/TTIP was first announced, David Cameron said it would "have a greater impact than all the other trade deals on the table put together." We were repeatedly assured that it would boost both the US and EU economies significantly. But when people started looking at the European Commission's own projections for TTIP (pdf), they found that the reality wasn't so impressive. Here's the economist Dean Baker, in a post entitled "Why Is It So Acceptable to Lie to Promote Trade Deals?": The most widely cited projections for the growth impact of the TTIP are from the Centre for Economic Policy Research [CEPR] in London [in a study paid for by the European Commission] which shows the pact leading to an increase in GDP of 0.4 percent in the U.S. when its effects are fully felt in 2027, and 0.5 percent in the European Union. The analysis explicitly says that it will not lead to more jobs since the models are full employment models. It may lead to somewhat higher wages, but it is not a way to employ the unemployed. Furthermore, the discussion notes that in the transition, some workers may end up unemployed as the economies adjust to the new rules.

Implying that a deal that raises GDP by 0.4 or 0.5 percent 13 years out means "job-creating opportunities for workers on both continents" is just dishonest. The increment to annual growth is on the order of 0.03 percentage points. Good luck finding that in the data.
Recognizing that claims of substantial growth don't stand up to scrutiny, boosters of TTIP in Europe have resorted to a fallback technique: anecdote. If you can't prove something is good in general, show that it will be good for someone -- anyone -- and then extrapolate. Of course, that means you need to find an example of an industry that would definitely benefit from a US-EU trade agreement. An EU document on regulatory harmonization (pdf) from September 2013 gave a strong hint of which that might be: The safety regulations that apply to cars are different in the US and the EU -- even if the end result is comparable levels of safety. In fact, it's already possible to drive some US- approved cars on European roads, under a special European approval system. Through TTIP, the Commission would like regulators to formally recognise that important parts of our two regulatory systems are broadly the same in safety terms.
Later in the same document we read: Electric cars offer great potential to tackle climate change and pollution while boosting growth. Many companies on both sides of the Atlantic already sell them. Making them practical however will require new infrastructure as well as technologies and standards to ensure they are safe. That is why EU and US regulators and standard setters on both sides of the Atlantic are getting together early in this process to try to find common solutions that would allow for a real transatlantic market.
And then: One example is the whole area of car safety already mentioned. The political choice in this kind of regulation is that the car has to be safe. For example, doors need to be strong enough to withstand impact and airbags need to function perfectly.
It is striking how the anecdotal stories about the various ways in which the automotive industry would benefit from TAFTA/TTIP have become even more widespread recently. Here's the British MP John Healey, one of the main cheerleaders for TTIP in the UK, writing in October 2014 about the "potential gains" of the agreement. Guess which example he chooses? Take the car industry -- a British success story; supporting hundreds of thousands of good manufacturing jobs across the country. Eight out of ten cars made in the UK are sold abroad, but we currently sell far fewer than we could to the US because of different regulatory rules. This needn’t mean standards are higher or lower. Just as we drive on the left and they on the right, some regulations are not better or worse, just different.
Here's the EU Commissioner for Trade, Cecilia Malmstrom, speaking to the European Parliament's trade committee in December 2014: Take cars, we could look at the differences in our car crash tests or the way we check if the seat covers are flame-resistant. Reconciling small differences like these, without compromising on safety, would be a huge step forward.
A recent video from the German industry association BDI extolling the virtues of TTIP for small and medium-sized companies uses two examples -- one of which is cars. And here's a video from BBC News which is all about the fact that TTIP will make it easier to sell European products in the US, using cars as its example. The main CEPR study on the economic impact of TTIP does, indeed, predict that car sales will increase. In fact, as Martin Whitlock has noted, that boost to transatlantic trade in cars contributes half of TAFTA/TTIP's total projected uplift to economies: Cars form a big part of the E.U.'s case for TTIP. They account for 47% of the increase in exports and 41% of the increase in imports in the best case scenario, with well over three times as many vehicles braving the Atlantic storms in one direction or the other than at present.
Since the gains for this industry are expected to be so large, and those for other industries so small, why not drop all the contentious stuff that threatens to derail the whole deal, and concentrate on cars? In any case, it would be more honest to rename the TTIP proposal as the "Atlantic Car Trade Agreement," since that's what it is really about. We could even call it "ACTA" for short.

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Filed Under: automobiles, cars, regulations, tafta, trade agreements, ttip

22 Comments

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Padpaw (profile), 9 Feb 2015 @ 9:58pm

I am sure it is a great deal for the people that wrote it. No doubt they made sure that they will profit from it greatly. What do they care if it brings financial ruin to everyone else not in the loop.

Citizen apathy towards corruption in government never ends well. Though you might enjoy the shinies they bribe you with to ignore their nefarious doings.
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Peter (profile), 9 Feb 2015 @ 10:19pm

How do we create wealth if we substitute local products(cars, or steaks, or broccoli) with overseas products in both the US and the EU?
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CanadianByChoice (profile), 9 Feb 2015 @ 10:37pm

Car sales is, indeed, an excellent example
of the “Broken Window Economics” concept – a logical fallacy. With or without this agreement, the total number of car sales made between the EU and NA remains about the same. With this agreement, the total net change in car sales is zero; that translates to no real growth.
(So .. why should we be doing this again?)
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CanadianByChoice (profile), 9 Feb 2015 @ 10:45pm

Re:
The transport industries will make more money
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Anonymous Coward, 10 Feb 2015 @ 12:35am

Hey guise, listen!
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Anonymous Coward, 10 Feb 2015 @ 12:36am

Hey guise, listen! (TD ate my post)
I have this really good plan to steal from everyone! It's all hearsay, but I can prove it with this hearsay! Just ignore the facts, takes this brown envelope and these two lovely ladies!

YEAH!
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Not an Electronic Rodent (profile), 10 Feb 2015 @ 2:24am

Oh yeah, I'm sold....
Take cars, we could look at the differences in our car crash tests or the way we check if the seat covers are flame-resistant. Reconciling small differences like these, without compromising on safety, would be a huge step forward.
Well that all sounds just fandabulous, except for 2 things:
1/ Must be well over 90% of cars in both EU and US made by major motor companies, for whom getting a car tested to 2 sets of regulations is hardly a major impediment, so are we really suddenly expecting a massive influx of tiny car companies, who can barely sell to a domestic market to suddenly become giants of export and a major boost to the economy?
2/ The "American" cars you see in the UK (and EU) are all mostly the expensive "cool" ones - Mustangs, Corvettes, etc. Here, of course, I'm not including US-based brands like Ford that have international manufacturing and appeal, I'm talking about cars built exclusively in the US. If they shipped every car I've ever driven in the US here and made them 1/2 the price of similar cars in the UK, I still wouldn't buy them because I've never driven one that I'd feel comfortable driving on British roads. I suspect this, more than any split regulations, is why those cars don't get sold over here.
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Anonymous Coward, 10 Feb 2015 @ 2:26am

I am dumbfounded they would pick cars of all items to try and say those will sell better. Have any of these talking heads been looking at the economy where the average Joe is expected to be the one to buy it?

But let us ignore that little problem with the economy. How about this little issue dealing solely with cars.

http://www.businessinsider.com/unsold-cars-around-the-world-2009-2?IR=T

They got cars coming out the yazoo! Only they are not being sold. Rather than reduce the price, they have them stored on old race tracks, old airplane landing strips, just anywhere they can find large places to put them. Not in just one nation, read the article please, it's a global issue.
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Anonymous Coward, 10 Feb 2015 @ 3:46am

EU Commissioner for Trade
Interview done by the German state TV in 2014. He gets a bit defensive

http://youtu.be/vnOTyOjV4I4

My personal favorite is "you should not reason in percentages, you know." ~5min
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Anonymous Coward, 10 Feb 2015 @ 4:13am

SO For maybe 0.3 per cent growth in jobs ,we should scrap our european health consumer environmental
regulations,
eat food from the usa laced with chemicals ,
this sounds like an awful deal ,
does it take into account increased replacement of jobs by
machines ,robots and computers.
MANY american cars are larger than euro cars ,and americans buy a lot of trucks which are not popular in europe.

trucks, large cars dont suit most european city , urban area s .
europe is not texas.
And of course why should europe want to be sued by us companys for banning oil drilling or fracking ?
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dr evil, 10 Feb 2015 @ 4:20am

tit for tat
let me see, not zero sum .... any UK car sold here means a US car MIGHT not be sold here. So we (US) might have job LOSSES to offset their gains.

good,
lets do it.
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Anonymous Coward, 10 Feb 2015 @ 6:34am

Re:
That article is complete nonsense backup up only by images from google maps.
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p, 10 Feb 2015 @ 6:44am

Re:
The market will take care of it. /s
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Anonymous Anonymous Coward, 10 Feb 2015 @ 7:42am

Re: tit for tat
Exactly. It always bothers me in these economic discussions that somebody 'wins' and great effort is place upon conjuring up who that somebody is, and how, and especially how much. I don't see anyone working out who loses, or how, or how much.

If there is a winner, then there must be a loser, even in economics. To claim that shifting some wins from one column to another, then the losses should also be tallied, and quantified and qualified. But the golden rule applies: those who have (or are going to get) the gold write the rules.

How do we break the golden rule?
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Reality bites, 10 Feb 2015 @ 8:05am

TPP = Traitors Protecting Profits
Anyone from any country involved in the illegal treaty should be arrested and tried for treason from their respective countries. Since only a true traitor would push such a unattractive deal.
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nasch (profile), 10 Feb 2015 @ 9:14am

Re: Car sales is, indeed, an excellent example
With or without this agreement, the total number of car sales made between the EU and NA remains about the same.

Probably true, but if nothing else we can get access to European cars that we can't right now, and vice versa. That isn't worth the rest of the garbage in TTIP, but I agree if we could get a treaty just to harmonize auto regulations that would be pretty cool.
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nasch (profile), 10 Feb 2015 @ 9:19am

Re: Oh yeah, I'm sold....
Must be well over 90% of cars in both EU and US made by major motor companies, for whom getting a car tested to 2 sets of regulations is hardly a major impediment,

It's not just the testing, there are conflicting regulations, and features allowed in one place (usually Europe) and not in the other. There are small changes that need to be made to the car to sell it in both markets, and the harder and more expensive it is to do, the less likely it is to happen.

I suspect this, more than any split regulations, is why those cars don't get sold over here.

There is some aspect of self-fulfulling prophecy. The regulations make it harder to sell in both markets, so American companies are less interested in investing in the European market, so they don't bother designing cars with Europe in mind. And the other way around too, there are tons of European cars that don't get sold here. That isn't the whole story of course, many American cars will never be suitable for Europe, and vice-versa.
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Anonymous Coward, 10 Feb 2015 @ 9:31am

There should be an internet blackout about these secret trade deals as soon as possible!
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Anonymous Anonymous Coward, 10 Feb 2015 @ 9:50am

Re: Re: Car sales is, indeed, an excellent example
As in 'drive from the middle'?
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Anonymous Coward, 10 Feb 2015 @ 3:43pm

Best about TTIP
The best argument pro TTIP which concerns the public and might move them on the pro side are the following:

The US either lowers the age of drinking to 16 and removes the bag-in-public ban or they might get sued by beer producers in the EU.
First for reducing the amount of potential consumers and second because if you can't see the label it is an advertisement problem.

On the other side I hope the US companies (not sure if that is the correct word or who sells the product) sue the EU for not legalizing weed. At least some states in the US made it legal so it is something that can or could be traded on the market. And I guess we all agree that there is a market for that product.

I call that a win-win-win situation. Public gets drunk and stoned, the companies get the extra income and the politicans can say the trade agreement is a huge success.
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Not an Electronic Rodent (profile), 11 Feb 2015 @ 5:02pm

Re: Re: Oh yeah, I'm sold....
There are small changes that need to be made to the car to sell it in both markets, and the harder and more expensive it is to do, the less likely it is to happen
I'll admit I don't know the regulations so you could be right, but that seems counter-intuitive to me. The fact is you do see examples of various (domestic) US cars in the UK (and the rest of Europe), which I've always assumed are privately imported (the "high-end" US stuff has the occasional specialist dealer, but not as far as I know the "standard" cars).

Examples I've seen of either class seem to have no modifications and while one might pay a premium to have, oh, maybe a mustang modified to import it, it seems a stretch to think that a private importer would pay for expensive alteration and testing to have one of the cheaper cars.

While I can understand that safety testing might be mandatory for "import for sale" but might be waived for a private importer, I have to assume the cars themselves are UK-road legal since they are UK registered. Either that, or the changes are so small as to be economic for a private importer on a cheap car that they'd pose no problem for a manufacturer.

Observation of roads on both sides of the pond suggests more that Americans and Europeans simply tend to look for different things in cars (obviously with some common ground), and I suspect that regulation has little, if anything, to do with design choices. After all, as far as I know the Ford F150 is one of the best selling vehicles in the US is it not? I think you could remove import duty as well as regulation on this and you still wouldn't sell that many in the UK
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nasch (profile), 11 Feb 2015 @ 8:59pm

Re: Re: Re: Oh yeah, I'm sold....
The fact is you do see examples of various (domestic) US cars in the UK (and the rest of Europe), which I've always assumed are privately imported (the "high-end" US stuff has the occasional specialist dealer, but not as far as I know the "standard" cars).

There are exceptions for one-off imports I think. I'm talking about the mass market.

Observation of roads on both sides of the pond suggests more that Americans and Europeans simply tend to look for different things in cars (obviously with some common ground), and I suspect that regulation has little, if anything, to do with design choices.

Different tastes and needs are probably a much bigger factor. I'm also pretty sure harmonized regulations would make it cheaper and easier for companies to sell cars in other markets, but by how much I don't know.
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