Commentary. A free trade agreement that once promised 2 million jobs is now recognized for what it is: a bad deal for workers
The “announcement effect” is critical even in international trade. On June 13, 2013, the British Prime Minister David Cameron announced that the TTIP would generate 2 million jobs in the United States and Europe. The announcement was welcomed as a plausible thesis because then, as now, the contents of this free trade agreement are hidden from the public.
Economic policy works like this: It sets a number and carves a percentage. Based on this fictitious basis, it is decided how the world will go for the next generation. Four months later, in October, the 2 million number had already been reduced to a vague figure, but still momentous. The then European Commissioner and chief negotiator, Karel de Gucht, spoke of “millions of jobs.” The biofeedback sessions were not working in the European foreign affairs ministries and panic was rampant.
The European Commission put its experts to work in the secret rooms, but chose not to reveal the findings of their report. Using all the tables to calculate the infinitesimal and the nothing, it became known that the impact of the cancellation of tariff barriers and regulations expected in TTIP would produce a catastrophe on the job front: European Union countries would lose 680,000 jobs, while the United States would lose “only” 325,000. Pretty much the opposite of what Cameron announced three years ago.
There is plenty of evidence to turn to in the recent history of international trade. Bill Clinton signed the North American Free Trade Agreement in 1993, and made others sign it. He showcased the deal as creating 20 million brand new jobs. Ten years later, an analysis by the Economic Policy Institute showed that NAFTA has had the opposite effect on the American economy: The increase in exports did not offset the competition nor the import of products from abroad, resulting in the destruction of nearly 900,000 net jobs. Collateral damage of the war of numbers.
Fluctuating from the negative to a positive pole, the “mood” between the two shores of the Atlantic has always been bipolar. Depending on the pill taken, at the Confindustria offices or at U.S. embassies in European capitals, the studies on the impact of TTIP showed an annoying tendency to diverge, while maintaining one constant: Whatever form the treaty took — whether ambitious or in mini format — the transatlantic partners would get the best of the worst.
The economist Jeronim Capaldo, who has worked on TTIP forecasts since 2014, revealed that hell will break out in Paris. The job losses and the collapse of earned income would be equal to 8 percent in France. In the United Kingdom, the country whose prime minister has offshore accounts in Panama (already closed, says Cameron), 7 percent of GDP will be transferred from labor income to profits. Capaldo’s simulation shows that every worker in France would suffer losses of €5,500 per year, €4,200 in the U.K. and €3,400 in Germany.
Italy’s fate depends on the mathematical model applied. One used by Confindustria and the U.S. Embassy in Rome has actually projected an increase in exports of €2 billion in three years and 30,000 jobs. A prospect that must have enticed Prime Minister Matteo Renzi and his magic circle of numerologists. It is not actually true, but it is enough to change economic estimates. Or to choose a pill with different color.
The war over employment numbers that the TTIP sparks is the same one produced by the Italian Jobs Act. Work has less and less value. The value is determined by the speeches of politicians or bankers on employment and its future.
Every occasion is good to cut labor costs further and have those who live with the own income pay the consequences of the free market. The latest European Central Bank bulletin explains the TTIP or the Jobs Act and the economic policy that generated them. “The labor reforms approved during the crisis may have altered the functioning of the labor market,” it stated.
But among the austere Frankfurt accountants, it’s not conditional: The labor market is altered. For whoever does not play along, these reforms “led” and “will lead” — the verb can be changed to the past or the future tense — to deflation, the devaluation of work and the nullification of workers’ protections. You can call it TTIP or Jobs Act, but what it actually means is underemployment, job insecurity and free labor.