I’ve been doing a bit of work with Richard Elsner from MORE (see later), looking at the potential impact of TTIP (Transatlantic Trade and Investment Partnership). It is a classic case of where campaigning is tricky because the subject is seen as ‘too difficult’ for politicians, media and campaigners to pay attention to. Easier to leave it to someone else.
Savouring the very name Transatlantic Trade and Investment Partnership can induce deep sleep. Even so it’s triggered a lot of earnest highbrow analysis of why it’s a bad idea in macro-economic terms. Yet those with most to lose – their jobs for a start – may well be those who have so far played almost no role in the debate: small businesses (SMEs). In Britain this includes the iconic ‘White Van Man’.
SMEs ‘Set to Lose Out’
“If it goes through” says Lindsey Kennedy from SMEinsider recently:
“TTIP will have the most far-ranging impact on UK companies since the creation of the European Union. But, while the benefits to big business are clear, SMEs seem set to lose out”.
Strange thing is, that while TTIP was hatched in a behind-closed-doors conflab between the European Commission, the US Government and big business groups, it’s now being promoted by the EU as ‘good for small businesses’.
The reason for this change of tack is fairly obvious: politicians and officials supportive of TTIP, see any hint that it might actually be bad for business, as a potential Achilles Heel. They probably aren’t too worried that rafts of the ‘usual suspects’ oppose TTIP because most of these appear to be rabidly-through-to-mildly critical of capitalism. More worrying than the placard wavers, will be NGOs and others who might put some sort of legal spanner in the works – for example based on the legal opinion of a Bremen University Professor who says mechanisms in CETA (the Canadian-EU version) may be unconstitutional in Europe, violating a ‘principle of democracy enshrined in constitutional and EU law’, prejudicing the guarantee of local self-government’ and going beyond the ‘competence’ of the EU to negotiate such stuff. But who cares about the EU constitution ?
Nor will they be exactly happy that economists like Paul Krugman have attacked its ‘false rationale’, not to mention the growing beat of critical noises from various University studies and journalists like John Kay in the FT. But they know that your average SME boss simply does not read the FT, or blogs about macro-economics. She or he is too busy packing the van or checking that the customers are kept happy.
However, if German bakers, English plumbers and decorators, and French farmers actually got it into their heads that TTIP might allow multinationals to eat their lunch by importing cheaper American versions of their goods and services, that would make TTIP politically toxic in Europe. After all, at least half of the European economy and employment is in ‘SMEs’ and White Man Van is a key political battle ground in Britain.
Never Mind the Quality: Feel the Width
TTIP is about trade but its claims to make a difference rest not on lowering ‘tariffs’ or custom charges between Europe and America (already rock bottom) but on removing other ‘barriers’.
For example rules and regulations about consumer protection, environment, health and sustainability. Through TTIP-Goggles these can all be seen as ‘barriers’. European businesses have developed products and services which comply, and this is one reason why Europe’s ‘quality of life’ is generally seen as higher than that in the United States , and why US products and services are cheaper.
In short, the promise of TTIP is more trade through less quality. That may look ok on a Brussels spreadsheet. It may not feel so good in real life.
Local Suppliers First ? Maybe Not
What’s’ this mean for businesses ? Well some of those most vulnerable might be farmers and growers and food companies who supply “local produce” to supermarkets and any Local Authority or public body where there is a policy or practice to buy-local. Any preference given to buying local first could be open to challenge by companies in the US. This lynchpin of ‘sustainable sourcing’ might be swept away.
If you’re a small business in Europe that creates products adhering to long-running EU rules, your products are probably going to be more expensive to produce than their US equivalents, which can make greater use of cheap labour as well as, potentially, questionable chemicals and practices. If many of the EU’s regulations are scrapped, many of these cheap US products that were previously banned on the continent are likely to flood in, undercutting your prices.
Meanwhile, in the UK, many local councils have implemented schemes that aim to strengthen communities and support small businesses by prioritising relationships with local suppliers. The UK government recently pledged support to smaller businesses by setting a target for 25% of its supplier contracts to be fulfilled by SMEs by May 2015. From the information available at present, it seems that both of these arrangements would be deemed illegal under TTIP, which would prevent organisations from adopting a prejudicial stance against global corporations.
Hypocrisy or Happy Wilful Ignorance ?
How can Europe’s governments and many business groups be so keen to sign up to something so potentially disastrous for much of their electorate and members ? Most probably, planning fallacy and optimism bias. As with that trans-Atlantic project, the Concorde, blind faith leads them to continue with the policy. This despite mounting evidence that TTIP could ruin the livelihoods and hopes of millions working in small and medium sized businesses. It’s comfier than adjusting their views.
For the public, it’s counter intuitive that this can be happening. After all leading supermarkets like ASDA stress their commitment to ‘local sourcing’: we see the evidence every time we go into a store; and the government keeps saying it’s a ‘good thing’.
Waitrose, favourite store of the ‘London elites’ says:
‘We’re backing British …It’s what we call responsible sourcing. Waitrose encourages its suppliers to: provide the best possible conditions for workers; protect the natural environment; promote high standards of animal welfare’.
Umm, how will that work if TTIP goes through ? Is this something that John Lewis Partnership has an answer to ?
Poll after poll shows the British consumer likes the idea of buying local, and sometimes actually does it. Eg (YouGov) “59% of consumers prefer to buy UK-sourced meat and poultry compared to imported meat” and the UK Government: “most shoppers [are] saying they actively seek to buy healthy foods (82 per cent) and British seasonal produce (72 per cent)”.
What will it do for the many businesses that have built their business model on meeting the demand for local food ? Eg Accent Catering which ‘makes sourcing ingredients from local suppliers a top priority’ ?
And what about B2B, that is businesses supplying other businesses ? A recent survey in the EDP (Easter Daily Press) my regional newspaper, found businesses ‘ Buying local is a top priority for East Anglia’s businesses’: ‘
‘The east’s passion for the provenance of goods has seen its results soar above the national average – with 86pc of small and medium sized companies in the area and just 77pc nationally choosing local suppliers. The survey, carried out by Norwich-based Signs Express, asked more than 1,000 businesses across the country about their buying habits. The top three reasons companies gave for choosing local suppliers was it helps boost the local economy, speaking to the supplier is easier if there are any problems, and there are benefits in dealing with people who play a positive role in the community’.
Quite so. SMEs are part of the quality of life. People who are in some way more likely to care because they share your community and might meet you again.
SignExpress is a supplier to SMEs, ie mainly “local” businesses. Why is it relevant to a company like them ? Because of all those signs needed by SMEs, such as on White Vans. These are not obvious companies. A survey by the AA found the top five white-van-driving occupations in the UK were 1. Builder 2. Delivery Courier/Driver, 3. Shopkeeper, 4. Electrician, 5.Handyman. They do not get interviewed on TV or invited to speak for British business. But they are the unseen ‘strivers’ and so far silent majority of European businesses.
Many Local Authorities and Public Bodies also have shop-local policies designed to enhance sustainability and support local economies. Those are potentially just as vulnerable and would if anything, be easier for any multi-national to challenge using the measures proposed for TTIP.
‘Questions about TTIP for SMEs’
If small British business are largely asleep on TTIP, in Germany and other countries in the EU, things are stirring. Richard Elsner at MORE (Movement for Responsibility in Trade Agreements) based in Germany, has published five questions SMEs should ask themselves:
1: Overall, will the impact of TTIP be favourable to the European economy?
2: Will the impact of TTIP be favourable to Europe’s SMEs?
3: Will TTIP advantage big business’s interests over SMEs’?
4: Will the lowering of European regulations be a good for European SMEs?
5 : Will TTIP reduce SMEs’ influence over the regulatory process?
In a nutshell the answers are roughly: 1 – dubious and marginal at very best, could be negative; 2 – not likely; 3 – yes; 4 – no; 5 – yes. Have a look at his Blog for references and detail.