Prof. Dr. Paul J.J. Welfens, President of the European Institute for International Economic Relations (EIIW) at the University of Wuppertal; Professor in Macroeconomics and Jean Monnet Chair in European Economic Integration at the Schumpeter School of Business and Economics, University of Wuppertal and Research Fellow at IZA, Bonn; Non-resident Senior Fellow, AICGS/Johns Hopkins University, Washington DC. EIIW 2015 = 20 years of award-winning research
Tel +49 202 4391371
October 11, 2015
* Germany’s main public TV channels with clear hidden anti-TTIP agenda; * major NGOs get massive funding from government, including the EU, so that the Commission is indirectly funding an anti-TTIP wave in Germany and Europe; *the unfair anti-TTIP debate and the role of certain NGOs undermines rational debate in Europe
Protests Funded by European Commission and Anti-TTIP Movement in Public TV
The project of a Transatlantic Trade and Investment Partnership (TTIP) between the EU and the USA is controversial. Different groups are either pro- or contra-TTIP in Europe and one may expect that an open and fair debate on TTIP should take place, which would, in the end, lead the European Parliament – and possibly also the national parliaments of certain EU member countries – to vote on the final outcome of the TTIP negotiations rounds. The reality, however, is very different and Germany is a key country in which, surprisingly, a small majority of the people are against the EU-US free trade agreement (see PEW survey results). This is remarkable since from an economic perspective Germany, the UK and Ireland are among those countries in the EU which would benefit the most from a TTIP agreement. What is behind the German anti-TTIP puzzle? There is the strange role being played by the public TV channels in Germany and an inconsistency with regard to EU-funding of some major anti-TTIP groups, a fact which is not much known amongst the public: Effectively, the European Commission’s implicit subsidization of many non-governmental organizations – often through project funding – amounts to the Commission itself financially supporting an element of the anti-TTIP demonstration dynamics in Germany and the EU.
Looking a bit closer at the political economy of TTIP reveals two strange und unacceptable developments that help shaping the debate against an EU-USA free trade agreement. A hidden major driver against TTIP is the public TV system in Germany which consists of the public channels ARD and ZDF. Both seem to fear more competition in a future under TTIP and both have become members of the Deutscher Kulturrat: a non-governmental organization whose membership includes groups from the music industry and from the media sector. The Deutscher Kulturrat has exhibited a clear anti-TTIP agenda and has called for people to join the big anti-TTIP demonstration in Berlin in October 2015. Both the ARD and the ZDF are leading TV stations with a dominant joint market position in terms of TV news including in the coverage of TTIP. The latter has, over many years, been characterized by anti-TTIP activists and representatives from anti-TTIP non-governmental organizations receiving an undue amount of airtime in the debate. Both the ARD and ZDF are financed from user fees and payments from almost all private households, respectively, and the statutes of both big TV stations clearly stipulate that the ARD and ZDF should never indulge in the biased coverage of major political topics, rather a broad and balanced coverage of key topics and issues is expected. In the field of TTIP, however, this is not the case. Unnoticed by the public and the political system, both the ARD and the ZDF have a clear anti-TTIP position and it is obvious that influential journalists in both networks have been free to pursue ARD/ZDF interests from an implicit anti-TTIP perspective between 2013 and 2015. This perspective has been typical of almost all discussions on TTIP in ARD/ZDF (the latter including the channel 3sat). It is absolutely unacceptable that ARD and ZDF follow their own hidden anti-TTIP agenda and this holds all the more since both channels often invite anti-TTIP activists from non-governmental organizations as guest contributors which often themselves are not really independent but pursue their own agenda; paradoxically often on the basis of funds from the European Commission.
On October 10th, 2015, there was a big anti-TTIP demonstration in Berlin at which more than 150 000 people protested against the proposed free trade agreement between the EU and the USA. Among the main organizers were several non-governmental organizations (NGO), including the powerful environmental pressure groups NABU and BUND. The latter, in turn, is part of Friends of the Earth of Europe in which one major environmental NGO from each EU country is a member. The following critique is not as such a critical voice against environmental lobbying, but the point being emphasized is that an NGO should – obviously – not have major or even dominant funding from government, since this undermines the independence and credibility of the respective NGO and transparency is needed. A distorted civil society with opaque financing amounts to a distorted democracy.
From a historical perspective, many NGOs have played a crucial role in, for example, supporting the UN in developing countries – without NGOs, the UN would often be unable to achieve its key development goals; and given the lack of direct democratic control, one may also welcome the role of NGOs at the IMF or G7 meetings, since this generates some useful critical voices in many international fields. However, the role of NGOs in the European Union is strange since the European Commission does not really want NGOs to replace the Commission as a policy maker. However, it seems that the European Commission – facing weak and recently further declining legitimacy in Europe – uses hundreds of NGOs to effectively buy scarce legitimacy. Environmentally concerned NGOs obviously play a crucial role here: with Friends of the Earth in Europe receiving more than 50% of its annual funding from the Commission for many years. So, is Friends of the Earth and its network standing for non-government organizations?
The German environmental organization BUND benefits in turn from such EU funding (and it also gets funding from the German government). This then leads to the paradoxical situation that BUND, as an environmental NGO – or a quasi-NGO, i.e. Quango, – gets money from the European Commission and the European taxpayer, respectively, and this funding can, indirectly, be used for reinforcing the presence of BUND in social media and for organizing anti-TTIP campaigns in Berlin and elsewhere. The European Commission pursues a dangerous power game when it tries to buy legitimacy through NGOs instead of reinforcing the European Parliament, but is, in the end, actually financing rising anti-TTIP protests in a situation in which the European Commission is negotiating with the US on TTIP.
From the perspective of economists conducting research on TTIP – almost all finding major benefits for the EU and the US (and sometimes for the world economy as well) – the hidden influence of quasi-non-governmental organizations with their broad anti-TTIP agenda is not acceptable in that large amounts of taxpayers’ money is allocated to such organizations in an opaque way, while the respective NGO continues to claim that it is an independent actor in the overall debate.
As regards the European Commission, the obviously often uncritical and generous funding of many NGOs by the Commission is not politically intelligent and is not politically correct, as in this way the public debate and political competition in the democratic system is distorted in a hidden way: through a massive increase of the political clout and influence of certain NGOs. If one would want to follow Kant’s moral imperative, according to which one should consider as a morally acceptable decision that which could in principle become the basis of a general legislation, it is clear that the strongly privileged government-funding of certain NGOs through government/the EU in Europe is not in line with the eminent philosopher’s fundamental principle. Certainly, NGOs have a crucial role to play in democracy, but the emphasis cannot be on government funding and the “buying” of legitimacy by policymakers which would otherwise not do well in a political competition at the ballot box. The Association of Accredited Public Policy Advocates to the European Union estimates that the EU directly and indirectly allocates about €7.5 billion to NGOs annually, this would represent an enormous 5% share of the overall EU budget. There are many NGOs which receive considerable funding from the European Commission, but to get detailed information on this is quite difficult. More transparency is needed here.
Thilo Bode from the NGO Foodwatch in Germany has, in a popular book against TTIP, written a few hundred pages of claims and arguments against TTIP – and in his introduction he emphasizes that he once studied Economics and wants to highlight critical aspects of TTIP. Instead, Bode shows no familiarity with the scientific economic literature on TTIP and occasionally his text is without any basic logic: For example, he argues that Germany’s highly intensive farming causes an extra ca. €1,500 of annual water treatment costs for a family of four and that these costs would offset the roughly €500 of benefits resulting from TTIP that Bode finds in the Commission’s official TTIP study. This is complete nonsense as the costs of water treatment have nothing to do with TTIP, moreover, Bode obviously did not read Chapter 6 of the Commission study which implies another 0.3% income gain from TTIP in the context of more transatlantic direct investment flows – not to mention the additional benefits of about 1% of GDP identified by EIIW research, namely economic gains from induced transatlantic innovation dynamics. Bode, in his piece in the German newspaper Handelsblatt, has also claimed in 2015 that the low transatlantic tariff rates imply that the benefits from TTIP will be minimal; this is beside the point since TTIP negotiations focus primarily on reducing non-tariff barriers (e.g. standards) which, on average, account for about a 17% tariff equivalent – cutting such high non-tariff barriers considerably would indeed generate major income gains for the EU and the US. Despite not knowing much about the theoretical models relevant for understanding TTIP and International Economics, respectively, Mr. Bode is a leading figure in the German TTIP debate and a popular commentator on anti-TTIP shows on TV. Given his poor understanding of integration economics, he also suggests in his book that experiences from NAFTA integration – with the USA/Canada joining Mexico for a free trade area – naturally deliver relevant insights for the effects of TTIP in Europe and the US. This, however, is wrong as TTIP is an integration between two economies with high per capita income and similar factor endowment, namely, both the USA and the EU are richly endowed with physical capital and skilled labor; by contrast NAFTA stands for a case where the US/Canada have a high per capita income while Mexico – richly endowed with labor – has low per capita income. The anti-TTIP book of Bode raises some interesting points, but the text is chiefly a platform for the airing of prejudices and exhibits lack of any basic understanding of International Economics.
Mr. Gabriel, the Minister of the Economy in Germany, has published a full page of pro-TTIP argument in many German newspapers on October 10th, 2015, but this will not help much if the two leading public TV networks in Germany pursue a hidden anti-TTIP agenda and if NGOs with a strong anti-TTIP approach receive large amounts of funding from the European Commission. TTIP is not only about free and fair trade, it also is about a fair public debate in Europe. Anti-TTIP groups have effectively captured Germany’s two leading TV networks – exploiting the self-interest of their channels – and powerful quasi-NGOs mobilize their media power, including that in the social digital media, to rally against TTIP with taxpayers’ money. This is not in line with the democratic rules and principles of an open society.
The European Parliament should adopt clear rules that NGOs should never receive more than 5% of the respective annual budgets from governmental sources, otherwise they should be classified as government-sponsored private organizations. Funding information in the annual reports of NGOs should, in the future, clearly indicate all financing from government. Leading public TV channels should not be allowed to be pawns of international lobbying groups and if for specific reasons such partisanship is realized, the relevant conflict of interest must clearly be indicated.
If TTIP would fail in Germany and the EU, respectively, because of an unfair anti-TTIP debate this would be a double disaster for Europe and the world economy. The German government and the European Parliament should quickly adopt reforms and new legislation to cope with the very serious problems and distortions pointed out here.
The USA has closed successful TPP (Trans-Pacific Partnership) negotiations with countries in the Pacific area in early October 2015 and Thailand, Korea and Taiwan, as additional Asian countries, have expressed an interest in joining TPP which includes Japan and Australia as key partners. The relative opening-up of the US for many Asian countries implies a disadvantage for firms from Europe as long as TTIP is not adopted.
If TTIP should fail, the EU would not only not realize the major economic benefits and employment gains possible under TTIP, but the European model of a social market economy would become much less influential in the world economy. With a weakening Europe, it would only be a question of time until the EU would be forced to increasingly implement standards from China – not exactly what the large majority of the population in the EU would really want. TTIP is not a box of Christmas presents, rather it will hopefully be a solid compromise which brings benefits to both the EU and the US; and a joint transatlantic political initiative which should help to minimize the negative market access problems for firms from the South in the context of TTIP would indeed be desirable, namely as an element which makes TTIP a Win-Win-Win situation.