Will free trade bring nothing but benefits?

| Foreign Markets |

Negotiations concerning the signing of Transatlantic Trade and Investment Partnership (TTIP) are to start in 2014. The parties of the agreement are the European Union and the USA. The partnership will help lift barriers in the traffic of goods and services between Europe and the USA. The development appears beneficial for business, but at the same time arouses some fears.

Different standards

The European Union observes stringent standards connected with the protection of climate and the natural environment from the negative impact of industrial activity. Restrictions introduced by the EU bodies are mainly based on REACH (Registration, Evaluation and Authorisation of Chemicals) regulation, which specifies the rules of application and trade of particular chemicals, and a climate convention regulating CO2 production and trade. However, in US legislation there are no analogous regulations on chemical substances. Nor have the USA agreed to observe international protocols on greenhouse gases emissions.

Access to resources

Most European producers of chemicals, of artificial fertilizers in particular, depend on the imports of natural gas, which is indispensable for fertilizer manufacturing. By contrast, US enterprises enjoy access to gas which is three times cheaper and comes from shale deposits. If free trade is introduced, there might appear an issue with the protection of the EU market from inexpensive American goods.

Potential consequences

As a result, fertilizer manufacturers from North America and the European Union would compete on unfair basis. Unless the Partnership involves a caveat against such a situation, the EU market might become dependent on American products, posing a threat to the food supply safety on the Old Continent. Ironically, American companies could eliminate EU manufacturers despite the fact that European installations are frequently more efficient and the norms regarding environment protection are observed much more strictly on our continent.