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The EU-US free trade agreement clashes with the German way of life

Germans fret about whether their sophisticated standards of production and consumer protection will survive the clash with permissive US approaches – warns Dr Sebastian Płóciennik

If the Transatlantic Trade and Investment Partnership between the European Union and the United States was ever a solution looking for a problem, that problem has now emerged. The crisis in Ukraine requires a bold sign that the West is strong and united just as it was in the good old days. The creation of an economic area with a combined population of 820 million people and a gross domestic product that makes up almost 50 per cent of the global share, seemingly fits the bill. The protagonists of this ‘economic NATO’ are therefore pushing to expedite negotiations.

But not everybody is happy to take the fast track. Among the loudest grumblers are the Germans who fret about whether their sophisticated standards of production and consumer protection will survive the crash with permissive US approaches. In the last year the media was full of reports about chlorine-preserved poultry, genetically modified plant foods and growth hormones. The TTIP also throws a shadow over a domestic financial system supporting small banks as well as the national ban on hydraulic fracturing or ‘fracking’.

Germans look suspiciously on the plan to offer extraordinary protection to investors – the idea that you can allow companies hit by governmental regulatory decisions to seek redress through special arbitration courts rather than through the normal national courts. It gives rise to the fear that large companies will gain leverage vis-à-vis governments planning to, say, increase social or environmental standards. For Germany, such concerns are no longer merely hypothetical. The Swedish energy concern Vattenfall claims that Germany’s radical withdrawal from nuclear energy after the Fukushima disaster has caused it losses of €3.7bn, and is suing the federal government by means of a special international body created for international disputes in the energy sector.

Promises that the economy will boom and new jobs will be created are now considered to be little short of propaganda. Likewise forecasts that GDP will rise by €120bn in the EU and 400,000 more jobs will be created. Indeed, there is widespread opinion that the lion’s share of the gains will go to big business – which will drive wages down.

Such concerns can seem a bit surprising for outsiders. Since 1995, various German politicians have promoted the idea of a free-trade zone with America; viewing this as a means to boost exports and growth. Today the Mittelstand companies, the core of German capitalism, stand to gain most since these so-called pocket-sized multinationals should see their expansion into the American market eased. Berlin is also interested in using the deal with Washington as a means to soften up third countries dismissive of the multilateral trade order of the World Trade Organisation preferred by Germany. The medium is the message: TTIP should set the gold standard for an open and inclusive trade regime; but it should also show that the West is prepared to exclude those who don’t play ball. The Ukraine crisis should only cement this argument.

The problem is that regular Germans have not been inducted into this way of thinking. Having graduated from the social-market economy from the 20th century, focused on post-war reconstruction and security, Germany is now a green-market economy treating local, environmentally-friendly consumption as a national sport and way of life. Germans are individualistic, anti-capitalist and hostile to economic elites and big business. This is underpinned by a growing Americo-scepticism, which all explains why the German government cannot afford a simple, neoliberal story for TTIP – bolstered by the specter of a new Cold War. A new story is needed that combines the virtues of free trade and existing liberal capitalism with green approaches. Framing such a story will be as difficult as it would be for a vegetarian to explain his job application in a butcher’s shop. The TTIP is not a done deal.

Dr Sebastian Płóciennik is a senior researcher at the Polish Institute of International Affairs think-tank

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