No, TTIP is not a good reason for Britain to leave the European Union
Britain’s Eurosceptics on the Left and Right have found common cause in objecting to the Transatlantic Trade and Investment Partnership (TTIP). Boris Johnson last week ridiculed the EU’s negotiating model as a “pantomime horse”. On the left, critics say TTIP is a corporate power grab and threatens the NHS. These views are flawed for a number of reasons.
On the Right, Brexit promises the ability of free trade deals without interference from Brussels and its red tape. But TTIP would still influence the UK economy. Once outside the EU, the UK would be unable to stop TTIP, or shape it. The EU, like the US, will remain an important trading partner after Brexit. So whatever the future arrangement between the EU and the UK, British firms will be required to adopt EU rules and regulations if they want to sell into the single market.
More importantly, TTIP would create a transatlantic marketspace that would influence British firms and the UK economy by aligning regulation in the US and EU by recognising or harmonising each other’s standards. These standards would become benchmarks for others to follow, particularly in those countries that trade a lot with either the US or the EU, or both. In 2015, 63 per cent of British trade (imports and exports) was with the EU and US. British exporters, keen to adopt newly agreed transatlantic standards, would pressure UK regulators to implement the same rules at home. So, standards agreed in TTIP, on issues like health, environment or labour, would percolate into the UK. Yet the British government would have no say in the shaping of these standards, as it does now. Only if the UK stopped trading with both the EU and the US would Britain be immune to TTIP’s regulations.
While the European Commission is able to negotiate with the US on the basis of parity, the UK would clearly be the junior partner in bilateral talks with Washington. Nothing suggests that British interests and standards would be better protected if it negotiated by itself instead of through the European Commission. Negotiating with a country one-fifth its size would make it easier for the US to get its way. Libertarians might not see a problem with this, but other conservatives would.
For their part, Left-wing Brexiteers fear that TTIP will lead to a large-scale transfer of democratic power to multinationals. They argue that the deal promotes the privatisation of the NHS, and that leaving the EU would mean avoiding TTIP and hence save Britain’s free healthcare system.
But the EU’s proposal on market access is clear: TTIP does not threaten the NHS in its current form. Health services that “receive public funding or state support in any form” are excluded from the deal. All other private healthcare in the UK would be opened up to US firms and investment. This would not undermine the NHS, rather it would increase competition in the British private healthcare market.
A second concern is that TTIP makes it difficult to renationalise parts of the NHS. But nothing in the EU proposal suggests that the NHS will be forced to open up further. The Commission’s negotiating offer makes clear that the UK could abolish private healthcare altogether if the government considered it a public utility. The EU offer allows the creation of new public monopolies. However, legal critics point to the unclear definition of "indirect expropriation" in international trade agreements, which could create an incentive for investors to sue. In TTIP, the Commission should push for as strict a definition as possible.
Still, those who feel NHS privatisation has gone too far, and whose concerns about US litigiousness cannot be dispelled, should know that voting to leave the EU is not the answer. Outside the EU the British government would seek to sign a deal of its own with the US based on the same liberal principles Leftists now worry about. That deal would contain many of the same elements that the Commission is now negotiating on London’s behalf.
The inconvenient truth for Brexiteers from both camps is that the only way to make sure that TTIP does not impact negatively on Britain is ensure that it is a good deal. Rather than caricaturing the talks to scare voters in the upcoming referendum, they should engage with the rest of Europe and spend more time debating TTIP’s benefits and potential drawbacks
A good transatlantic deal would have benefits that go beyond a limited boost for European economies while preserving a country’s right to regulate in public policy. But these advantages must be effectively communicated. If myths about TTIP are allowed to persist, it will make Brexit more likely.
Rem Korteweg is a senior research fellow at the Centre for European Reform.