TTIP protests

Lies, Damn Lies and Trade Statistics

ttip_afp
Would you eat a chlorinated chicken?
  • Why it matters

    Why it matters

    The Transatlantic Trade and Investment Partnership is at a crucial stage in negotiations, with many Europeans still unconvinced by its proposed benefits.

  • Facts

    Facts

    • TTIP is a free trade agreement between the European Union and United States.
    • Economic figures in impact assessments have been manipulated by pro- and anti-TTIP groups.
    • Statements that TTIP would lead to a 0.5 percent annual increase in German GDP have been withdrawn.
  • Audio

    Audio

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Some people think the Transatlantic Trade and Investment Partnership, a proposed free trade agreement between the European Union and United States, represents a risk to food safety, public finances or even democracy. Others say such TTIP critics are partaking in hysterical naysaying.

Yet in their battle to curry public favor, both sides have headed off on the wrong track by putting forward striking simplifications, which are now compelling them to rethink their arguments. With huge levels of foodstuffs moving across the Atlantic, food safety has become a case in point.

Some TTIP opponents have turned the common U.S. poultry-farming practice of dipping chicken carcasses into a chlorine bath to kill harmful bacteria into a symbol for the feared easing of European standards.

They have succeeded in scaring consumers, who find the thought of so-called “chlorine chickens” disgusting. The method was banned in the European Union in the 1990s over fears it could cause cancer.

Proponents of the treaty have got carried away with bold simplifications, which have let their opponents score easy points against them.

But they have also damaged themselves by championing the issue, as experts recently argued convincingly that disinfecting butchered chickens is not harmful to health, and that European chickens cannot be considered much healthier.

Proponents of the treaty have also got carried away with bold simplifications, which have let their opponents score easy points against them.

For example, Foodwatch, a European organization that exposes dubious food industry practices, has put together a dossier in which it lists the false promises made by the proponents of the treaty. Foodwatch director Thilo Bode has published a successful book on it called “The Free Trade Lie.”

In response, the Federation of German Industries felt compelled to correct some pledges for growth on its website.

Referring to a study by the Center for Economic Policy Research undertaken for the European Commission, the federation had promised that TTIP would lead to an increase in economic growth of 0.5 percent annually. Now it has corrected that assertion, stating that German GDP would only increase by a total of 0.5 percent over the long term.

2015-01-14 TTIP hge-01

 

The E.U. Commission also quietly removed the same figure from its website, as has a major organization financed by employers.

Foodwatch had also called on the Association of the German Automotive Industry (VDA) to repeal its statement that TTIP would lead to an annual increase in E.U. economic clout of €119 billion ($128 billion). The organization has yet to change its claim on its website.

The correction is problematic for Matthias Wissmann, the head of the VDA, because he had accused those opposed to the agreement of closing their eyes to TTIP’s major effects on growth.

The source of all of these misrepresentations is the CEPR study, carried out in 2013. It examined scenarios for removing obstacles to trade.

The main part of the study looks at the farthest-reaching scenario of a long-term increase in economic output of 0.5 percent. But in the first sentence of the report, the authors add in the “per year.” That is not in itself wrong, because the increase in the level is expected to remain permanently.

Organizations such as the Federation of German Industries and the European Commission succumbed to the temptation of spreading the misunderstood first sentence.

But it still invites the misunderstanding that each year growth would be 0.5 percent higher than if there were no treaty.

That is how U.S. economist Joseph Francois, who is responsible for the study, justified the insertion of the “per year.” Mr. Francois, a former acting director for economics at the U.S. International Trade Commission who now heads the World Trade Institute at the University of Bern, Switzerland, did not give his opinion on whether he had provoked the misunderstandings and approved of them.

Organizations such as the Federation of German Industries and the European Commission succumbed to the temptation of spreading the misunderstood first sentence in such a way that the statement sounded good, but was wrong.

A study done by the Info Institute of the German Economy Ministry also made the effects of a free trade agreement sound better at the beginning of the study than in the body of it, and therefore led to an exaggerated representation of the beneficial effects of TTIP for proponents.

In one of its several scenarios, the Institute assumed that without transatlantic trade barriers, all of the obstacles between Europe and the United States would disappear, including the different currencies and the U.S. not being part of the European Union.

The authors characterized this scenario as more unrealistic and not their “preferred scenario.” Still, in their summary they emphasized the assumed creation of up to 110,000 jobs in Germany that would result from this scenario. The leading author, Gabriel Felbermayr, was keen to highlight the “up to.”

The figure of 110,000 new positions made job creation one of the supposed benefits of a TTIP agreement. But not even the qualifying “up to” survived everywhere. Those who left it out include the German Council of Economic Experts, an independent government advisory body, from whom one would expect more thoroughness.

 

Norbert Häring is a Handelsblatt editor focusing on monetary policy and financial markets. To contact the author: haering@handelsblatt.com

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