TTIP and TPP, what can we expect from these Free Trade Agreements
The global productivity remains at its lowest level, inflation is now next to be negative in many developed countries, the central banks have already used their Bazookas and the world bank has corrected on the downside its previsions for the world economic growth. The global currency war boosted by the many QE, seems not the be the cure for the long term growth. These monetary easing programs might have pushed the world out of a financial ruin but now is time to think forward on how to push the productivity higher.
What can global leaders do to remedy to this situation? Mr. Obama finally has a solution for the American economy and also for the entire world: Free Trade. After years of negotiations and mutual blocks this probably may be the best time to put on table a global free trade agreement. For many economists that have been critic about the high risks of a Free Market, the word Free Trade may sound like something to be afraid of.
The Transatlantic Trade and Investment Partnership is an agreement that Mr. Obama is intended to sign as soon as possible and however before his last day at the white house. It could be a great success for the president and for the democratic party overall. After the success achieved with the Trans-Pacific Partnership agreement, the US plans to accelerate the negotiations on the TTIP agreement.
Obviously the Global Trade has been the engine of the globalization and of the global growth. Millions of people in western countries have benefited from the low prices of goods coming from the far east. Other millions have been pushed out of poverty in the far east region thanks to the fall of barriers in the world trade. There are no doubt about the many benefits that these two new agreement could bring to the global economy. Not the same can be said about the distribution of these benefits. Those who complain about the Free Trade, support the idea that similar agreements have been one of the main reasons why the rich are getting richer and inequality is rising in the last years. The working class in the US has seen declining real wages in the last 20 years and higher family debts, to maintain the same standard of living.
The multinational companies probably will benefit from these agreements more than the small and local entrepreneurs in the US and Europe. Recently, has been estimated that the major American companies have evaded around $640 BN in taxes, keeping the cash and the profits, out of the US. However if some economists could have good reasons to worry about free trade agreements between developed and developing countries, none of them must worry about a free trade agreement between the US and Europe. These two macro-areas have even to many barriers between each-other.