Predicting the Effects of TTIP, or: Whose Crystal Ball Can We Trust?

In a paper called “TTIP: European Disintegration, Unemployment and Instability”, economist Jeronim Capaldo argues that there are flaws in four prominent studies on the effects of the proposed TTIP agreement between the U.S. and the European Union. The problem is two-fold. First, all studies use similar models and data, which means that they all share the same set of assumptions and should thus not be treated as independently reaching similar conclusions:

Methodologically, the similarities among the four studies are striking. While all use World Bank-style Computable General Equilibrium (CGE) models, the first two studies also use exactly the same CGE. The specific CGE they use is called the Global Trade Analysis Project (GTAP), developed by researchers at Purdue University. All but Bertelsmann use a version of the same database (again from GTAP).

A detailed discussion of the shared heritage of the different CGE models can be found in a paper by Werner Raza and colleagues (pp. 37-49), which Capaldo cites.

He then goes one step further and alleges that the underlying econometric models are simply false, or at least inappropriate. According to him, CGE models rely on several flawed assumptions:

  • High labor mobility is supposed to allow workers in less competitive industries to switch to those that benefit from trade liberalization, which are assumed to grow enough to absorb the new workforce.
  • Overall, the gains for workers with the right skills are supposed to outweigh the losses for others.
  • The model assumes that new trade between countries/regions is created (rather than diverted from elsewhere, which would be a zero-sum result).

While I have no training in economics and don’t know the econometrics literature, I realize that all large-scale models of social science need to rely on simplified assumptions. Nevertheless, it seems to me that Capaldo has a point. If his account is correct, then European policymakers should look for more diverse academic input. More generally, if the most widely used models really are blind to potential downsides for labor, then that goes against the interest of European citizens. (As they ought to be very loss averse when it comes to employment as well as skeptical about the distribution of pay-offs from economic gains.)

So how do we come up with an estimate that pays more attention to potential negative effects? Capaldo uses the UN Global Policy Model (GPM), which models economic activity as demand-driven, explicitly models different regions, and includes an estimate of employment. (Again, I lack the knowledge to assess how this works and how much sense it makes.) In this model, unemployment and household income are projected to deteriorate in the long term (2025) for several European countries, as aggregate demand is lowered due to trade diversion (see pp. 10-19 for this and other findings).

capaldo-figure4
Jeronim Capaldo, “The Trans-Atlantic Trade and Investment Partnership: European Disintegration, Unemployment and Instability”, Global Development and Environment Institute Working Paper No. 14-03, October 2014, p. 14.

Capaldo is pretty transparent about the limitations of this approach:

  • the non-TTIP baseline scenario (which serves as a comparison) might be wrong
  • the chosen model might be as ill-specified as the ones he is criticizing
  • policy responses down the road are not included (and that’s hardly possible)
  • …and the paper completely ignores the investment dimension of TTIP (which is a weakness shared by the CGE models, according to Raza et al., p. 49)

So the headline “TTIP will lead to a loss of 600,000 jobs” does not really do the paper justice, although the author himself uses pretty strong language in the conclusion.

No matter which forecast turns out to be better in the end, this discussion shows that policy decisions should not rely on a single strand of academic analysis. There is a lot of uncertainty involved in these negotiations, and I don’t see how there can be a confident forecast of net effects.

One final note for the political debate in general: TTIP opponents should not forget that the status quo will not necessarily be maintained or improved just by inaction. The people likely to lose from TTIP are probably heading for difficult times anyway, leading to questions about how to compensate them. Whether European leaders will decide in favor or against TTIP, they are making high-stakes bets on how globalization will play out over the next decades.

Thanks to Zoe for pointing me to the study. And if anyone can add insight regarding the comparison between the different models, please let me know!

Investor-State Dispute Settlement in Europe

In the last few months, criticism of  TTIP’s proposed investor-state dispute settlement  (ISDS) provision has become  so mainstream that even The Economist is questioning whether it’s such a good idea. More to the point, some of the biggest players this side of the Atlantic have also come out against it, largely it would seem, mirroring public sentiment.   French officials now claim that TTIP is a no-go if ISDS is kept in, while Germany has spoken out against its inclusion in TTIP, and has gone so far as to backtrack on agreements already made, saying that they want ISDS scrapped from CETA, the EU-Canada free trade agreement (which, until recently, nobody outside of Canada seemed to care about).

The perception of the  threat that ISDS poses is connected to the different health, food and environmental standards in Europe and the US. ISDS allows investors to sue host state governments for unfair or discriminatory treatment, and critics argue that investors will use arbitration (or even the threat of it) to force Europe to lower its regulatory standards based on treaty provisions. As proof of the potential for investors to employ ISDS to attack regulatory standards, critics frequently cite the cases of Philip Morris v. Australia, in which the tobacco company is suing over the country’s decision to require plain packaging of cigarettes, and Swedish energy company Vattenfall suing Germany over Merkel’s nuclear phase-out.

A threat does exist, as investors, and more importantly, arbitration lawyers are expanding the use of investment arbitration. As this article/advertisement  written by arbitration lawyers suggest, there is money to be made by actively looking for “innovative” uses for ISDS.

However, others argue that Europe’s sudden distrust of ISDS is hypocritical. European states, or at least European investors, have been a driving force behind ISDS in the past. The first Bilateral Investment Treaty was signed by Germany (with Pakistan) in 1959, and since then,  EU member states have signed at least 1400 BITs. Between 2008-2014 alone, EU investors made up 53% of all claimants in investor-state disputes.

Of course, more interesting to critics is likely the track record of EU states as respondents in these lawsuits. So here’s a breakdown of the cases Europe has faced so far, based on my own research.

eu

 

Here we see the EU member states which have been respondents in arbitration cases. The majority are transition economies, although Spain, Germany, Belgium and the UK have also been faced lawsuits. The concentration of disputes in formerly Communist countries is not surprising, given the logic that has (up until TTIP and CETA) governed BITs. That is, these agreements have usually been signed by pairs of countries between which the investment generally flows only in one direction – most often from developed to developing countries (or at least countries perceived to have unreliable domestic courts).  In other words, when the US and the Czech Republic signed a BIT in 1991, the implicit goal was to protect US investments in the Czech Republic. On the other hand, Western European states and the US have not found it necessary to sign BITs between themselves, as both sides have been confident in the domestic courts and investment climate of the other. At least, until now.

industries

The above shows the industries most often implicated in investor-state disputes involving EU members. How does this compare to investment disputes worldwide? At the global level, electricity and other energy, as well as oil, gas and mining, are the industries that see the greatest number of disputes. Not surprising, given that these industries are often politically interesting already. Extractive industries seem to attract  a range of governance problems, while public utilities are often are privatized to the detriment of low-income consumers.   What appears to be Europe-specific here is the concentration of cases in media and health insurance (although both relate to a number connected cases in Czech Republic and Slovakia).

measures

And here we have a breakdown of the state “measures” which are triggering disputes in Europe. The top two categories are the very specific measure of canceling an agreement, permit, or license of an investor, while the second category – regulatory change – encompasses a range of measures  which effect an entire industry or even the general public.

Finally, how litigious are US companies? Of the 561 known arbitration cases listed on UNCTAD’s IIA database, 124 cases, or 22%, involve US investors.  It’s impossible to know how often US investors will use ISDS under TTIP, if the agreement ultimately includes the provision. All we can say for certain at this point is that if it is left in, a great deal more of global FDI flows will suddenly be covered by ISDS.

Note: Edited to add French dispute to graph which had previously been left off.

German-speaking political science and social media

Social Media Bandwagon
Source: Matt Hamm / Photopin / cc

Two months ago, the German-speaking blogosphere organized a blog carnival, directly following the Zeitschrift für Internationale Beziehungen’s symposium on the web 2.0. and social media in the International Relations profession. In the symposium, social media were approached as both an object of study, and a professional means to network and reach out to the general public. The symposium called for a reaction from the various German-speaking bloggers. And we got them. My initially planned contribution to the carnival never materialized when the work plate simply got swamped with editorial work on an edited volume, reviews of a book chapter, a data collection project, the preparation of field research, and me actually being on field research mission. So, this blog post should be considered a late addition to this little party.

Some of the contributions fleshed out part and parcel of bloggers’ experiences in general. Others reflected on the late arrival of German speakers to the use of social media for professional concerns and possible (negative) consequences (see Ali’s intro and collection of links, in German). Yet, it strikes me that an important question has been missing from the discussion: How much social media engagement of German-speaking political science researchers is out there? Continue reading German-speaking political science and social media

Dealing with the African Governance Transfer Tangle

AU HQ
AU Commission headquarter and Peace and Security Council buildings in Addis Ababa.

At the end of October, when the streets in Ouagadougou were filled with protesters calling attention to a reverberating crisis that is not unique to Burkina Faso, the African Union convened the 3rd High Level Dialogue on Democratic Governance in Africa in Dakar, Senegal, themed “Silencing the Guns: Strengthening Governance to Prevent, Manage and Resolve Conflicts in Africa”. This was the third workshop in a series of meetings organized under the auspices of the Department of Political Affairs (DPA) of the African Union Commission. While the inaugural High Level Dialogue in November 2012 was broadly framed as “Governance and Democracy in Africa: Trends, Challenges and Prospects”, the follow-up consultations focused on constitutional order and the rule of law in 2013 and the governance-conflict nexus this year.

The High Level Dialogue is meant to bring together actors involved in the promotion and protection of governance standards in domestic contexts: AU organs and officials, actors from the regional economic communities, civil society, African citizens, and numerous stakeholders. These dialogues will hopefully initiate and promote the exchange of ideas and best practices amongst various governance actors, and help develop a common understanding and mutual support in fighting the governance gap in Africa’s domestic contexts. The consultations involved a social media campaign. Documents can be retrieved from the DPA’s Scribd page and some buzz was created via Twitter – see #DGTrends and #SilencingTheGuns. [The very informative DGTrends Website has been off for some days now.] Continue reading Dealing with the African Governance Transfer Tangle

Human Rights Research in Political Science

santinoHR

Despite the fall of the Berlin Wall and the apparent triumph of liberal democracy, human rights abuses remain pervasive in many parts of the world. State-sanctioned abuses such as extra-judicial killings, torture, enforced disappearances, and political imprisonments are still widespread in some parts of contemporary Asia, Latin America, and Africa — in particular, even in those countries that are self-proclaimed liberal democracies. What causes state-initiated human rights abuses? What is the current state of political science literature with regard to the causes of human rights norm compliance?

Taking stock of our knowledge about the topic is not only important for academic reasons, but it is also a crucial task toward better global governance of the human rights regime. On that regard, the table below from Google books Ngram Viewer shows the annual frequency of usage of the term “human rights” in millions of digitized books; it reveals that the increase in usage started sometime around the late 1940s, perhaps just right after the UN General Assembly adopted the Universal Declaration of Human Rights in 1948.

ngramHR

In a recent article in Third World Quarterly, I provided a critical survey of contemporary scholarship on the causes of human rights norm compliance and deviations. The article revisits the state of the literature in comparative politics and International Relations with regard to the causes of human rights abuses. Notably, comparative politics scholars focus on intra-national variables as they explain variations in human rights compliance over time, while International Relations scholars emphasize the overwhelming importance of transnational and systemic variables. Thus, I argue that we have yet to see more systematic studies that examine the links between transnational and domestic factors as they jointly produce variations in human rights compliance over time.

The empirical implication of my argument is that the human rights crisis in the Global South (e.g. post-9/11 Pakistan) cannot be solely explain by pinpointing either the internal governance problems of the Pakistani state or by zooming into the failures of transnational civil society movements to put pressure on the government. On that regard, the article enumerates some pathways the current social science scholarship must traverse in order to better understand the causal underpinnings of human rights abuses in the developing world. If my arguments are correct, then the policy implication is clear: in many cases, human rights crises in the Global South ought to be posited as a global governance problem that requires the cooperation of transnational and domestic actors.

In addition, students and scholars of human rights might find it useful to also refer to other important and very recent works on the topic: Emilie M. Hafner-Burton’ Making Human Rights a Reality; Thomas Risse and colleagues’ edited volume called The Persistent Power of Human Rights: From Commitment to Compliance; Sonia Cardenas’ Conflict and Compliance: State Responses to International Human Rights Pressure; David Karp’s Responsibility for Human Rights; Courtney Hillbrecht’s Domestic Politics and International Human Rights Tribunals; and Cindy Holder and colleagues’ Human Rights: The Hard Questions, among others.

Finally, these recent pieces of scholarship could provide us a better understanding of the causes and the consequences of human rights abuses, which in turn, could give us a stronger foundation for crafting effective public policies for stronger human rights compliance.

Introducing the DIY Standing Desk

Last year, political scientist Chris Blattman wrote about his attempt to reduce back pain by working with a standing desk:

That eminent scientific outlet, LifeHacker, informs us that sitting is killing us. My ridiculously good back doctor and the Columbia ergonomics office assured me this is not all hype, and that a standing desk would probably be a good move.

It has been. I enjoy the standing more than I expected. I do not get tired. My back has never been better, though weaknesses with my home desk option do bother it a little. Crucially, I discovered a trick for ensuring my feet never hurt (…).

In his blog post on the issue, he discusses the pros and cons for a number of desks costing between a few hundred and a couple of thousand dollars. But what if you’re looking for a very cheap way to see if a standing desk works for you? After all, back pain can become an issue long before you have tenure the financial means to buy specialized office equipment, and not every employer will be willing to help.

As an inspiration for grad students around the globe, here is the “Do-it-yourself Standing Desk”, as created by my colleagues Patrick, Maurits and Zoe.

standingsdesk
The DIY Standing Desk in action… all you need (in addition to the regular desk) is two crates and a surface for mouse and keyboard.

Marginal Costs in Intl. Affairs

Zero Marginal Costs SocietyLast week, Jeremy Rifkin presented his current book here in Berlin. In The Zero Marginal Costs Society, he argues that the marginal costs of production in many sectors are moving (close) to zero, leading to economic shifts on the scale of the industrial revolution. Three forces make this possible according to Rifkin:

  • a truly integrated global internet (communication + logistics + sensors)
  • abundant renewable energy
  • 3D printing as extremely cost-efficient mode of producing physical goods

No matter how you think about the details of Rifkin’s predictions, he makes persuasive points on what very low marginal costs can entail. This is obviously true for the areas he addresses (the economics of production, welfare, labor, automation, consumption).

But in addition,  marginal costs are worth  attention when we think about international relations and and transnational political affairs more generally:

  • If we buy Rifkin’s arguments, IPE scholars and others who care about economic power and growth prospects will put less emphasis on traditional metrics of factor endowments. If the Netherlands are just much better at making use of renewables than Russia, size is a bad predictor of success. How do you model something like the political will to embrace the future?
  • The marginal cost of reaching one more pair of eyes applies to political mobilization. No matter how high your PR budget, you can reach millions of potential recruits if you’re willing to be excessively cruel and upload an execution video. And how does having a single “viral” idea (involving buckets of ice) measure up against having a more traditional structure of supporters?
  • I’ve covered intelligence activities here on the blog, in particular the  large-scale surveillance conducted by the NSA and other agencies. Consider the logic of technology-driven surveillance: The marginal cost of targeting one more person is virtually zero. Keeping that person’s data for one more unit of time is free. And there is no physical or technological limit in sight.
  • Similarly, I suspect that “cyber war” skills probably scale at close to zero marginal costs. Once you managed to infiltrate a crucial bit of IT infrastructure (and still have plausible deniability to mitigate political repercussions), deciding about the amount of damage you want to inflict will not be a matter of costs.

I’m sure there are many more examples. And if you’re willing to bear the cost of adding one more book to your reading list, consider Rifkin’s.

Democratic Consolidation and the Global Political Economy

santino

How do we promote regime stability especially in the Global South? In the current issue of International Studies Perspectives, I argue that the life expectancy (or stability) of nominally electoral democratic regimes in the developing world is highly contingent upon responding to the material needs of its people, and maintain that material distributive issues within those countries are highly dependent upon a given regime’s position within the broader global political economy. The article is highly theoretical, and it is inspired with a critical political economy perspective.

Perhaps one of the principal messages of the article is that regime stability in the Global South necessarily depends (but not sufficiently) upon carefully addressing issues of material distribution within those countries. In praxeological terms, regime distribution is not a task that can be solely done by the national institutions themselves, but perhaps by transforming the over-all structure of the current global political economy. In academic terms, regime stability (and in this case, democratic consolidation) is a subject of scholarly investigation that should bring scholars of comparative politics (who tend to be ‘methodological nationalists’) and international relations into one discussion table. The article explains these theoretical points in much detail, and make some illustrative examples in order to reinforce those arguments.

The article was written in 2010 to 2011 during my Master’s studies in Osnabrück, and it underwent several stages of peer-reviewed revisions since then until its acceptance in International Studies Perspectives in 2013. Indeed, the article is highly pessimistic of the future of the current neoliberal democratic regimes in the Global South, and quite radical in terms of its criticisms of the moral failings of the global political economy (as well as the academic scholarship that underpins it). In retrospect, however, I now tend to reconsider those arguments I’ve made in this article with much caution and intellectual humility.

While my long-term research agenda still focuses on the transnational-domestic linkages that produce local political change in the developing world, I am more predisposed to more empirically driven (but theoretically grounded) research, rather than theoretical musing as exhibited in the current article. Notwithstanding, I invite readers to read the article (contact me by email in case you don’t have online access), and to engage in a productive and critical discussion about the points raised (and not raised) in the article.

Finally, interested readers might also consider other highly recommended works on the topic:

International Relations & New Media

zib

In the current issue of Zeitschrift für Internationale Beziehungen (ZIB), four authors discuss International Relations and New Media. To complement the series in ZIB, we’re running a so-called “blog carnival” that deals with the topic. Please head over to zoon politikon to check out what our colleagues have written [in German].

Here, I would like to address two of the four ZIB articles. The first was written by Ali, a former colleague in Berlin, who is a very experienced blogger (and Twitter power-user).

Under the heading “The Republic of Scholars 2.0” [PDF, in German], he argues that academic discourse in less formalized settings (such as social media and blogs) is the modern equivalent of the exchange of letters among scholars in the 17th century. Thus, German-speaking academics should overcome their shyness and catch up to their American and English colleagues, who seem to be more active users of new media. You can find a summary of Ali’s argument on his blog.

Based on conversations Ali and I had last year, I have argued in the same direction:

Does this lead to shared cultural understandings or at least mutual tolerance? Or does the web merely offer a cheap and anonymous way of reinforcing prejudices and being angry at each other? As any self-respecting political scientist will tell you: It depends…

Academic blogging is probably a “most likely” case of a positive effect. After all, we’re talking about a group of people who share similar ideas and practices, are used to cross-border exchange, and have a lot to gain from talking to each other. Yet I am also cautiously optimistic for non-academic political blogs that speak to a general audience. Whenever people are exposed to voices from outside of their well-established “filter bubble”, this is a great chance to learn and understand new perspectives. The internet certainly offers a huge potential in that direction.

The second article is called: “Teaching IR with New Media” [PDF, in English]. Kimo Quaintance (who has a blog, too) advocates the use of tools such as Wikis and blogs in teaching, but also cautions that not all optimistic assumptions about digital natives should be taken at face value:

While students may possess broad experience with e-mail, social networking and mobile devices, this doesn’t necessarily translate into the kind of information literacy or knowledge creation skills useful in academia.

Kimo has some very good, constructive points on how to foster information literacy, collaboration and outreach. I recommend you read the whole piece.

Here I just want to echo his words of caution. Take the following as me playing the devil’s advocate: Under some conditions, I think that the usage of “new media” in teaching can feel artificial or forced. Blog posts instead of essays, web sites instead of presentations? That might work, but we should be careful not to be too optimistic based on our own enthusiasm for the medium.

First, and most generally, if the core elements of the discipline are old-fashioned, teaching might not be the best venue to change things. If the #1 skill to master is writing formal papers, that should be what you (are forced to) practice. But of course this is subject to change and should not be used to kill all kinds of innovation, so I don’t want to over-stress this point.

Second, think about the value added. Model UN and other simulations are useful because they are inductive tools to experience dynamics that might be difficult to understand based on theory alone. Spending many hours to set up a mock NGO website might be interesting, but we have to be sure that it really adds something that could not be learned in a more efficient way. Also, depending on the class, the experience should not overshadow the contents: If after three days of mock conference / web design I only remember how much fun the negotiating / coding was, but nothing about policy issues, maybe that’s a problem…

Finally, how many people do you know that were born in the 1990s and maintain a blog (in the “traditional” sense)? It might be that blogging is completely passé by now and  we’re beating a dead horse. Maybe the easiest way out would be to ask people about their media habits and productivity tools first, see how much desire for change there is, and then make suggestions. Or let people experiment in groups?!

To wrap up: Ali and Kimo have made a number of very good points on the usefulness of new media in the exchange between scholars and for teaching, respectively. I highly recommend both pieces! Again, please consider looking at the other blog posts dealing with New Media and International Relations, and of course the rest of the ZIB issue.

#FutureNATO Storify

Since April 2014 I have been a member of the NATO Emerging Leaders Working Group, a project run by the Atlantic Council. The group, consisting of 15 diplomats, scholars, and business leaders under 35, was one of three groups tasked to develop recommendations to the NATO Secretary General in the run-up to the Wales Summit in September 2014. In mid-June, we presented our ideas in Brussels. You can find more information about the three reports here.

In order to keep the discussion going and involve more (young) people we decided to experiment with the idea of a Twitter debate. I had hoped that – given the support by some partners including the Atlantic Council and its blog NATOSource as well as Chatham House – we would bring together a number of people interested in discussing some of the topics we raised in our report. Nonetheless, I have been quite surprised that it turned out so well when we launched our first debate yesterday. The debate dealt with NATO and its relationship to Finland and Sweden, two countries that are members of the EU, but not of NATO, and have often contributed more to NATO missions than some allies. In the report we suggested NATO offer them a fast-track membership option. Now we wanted to know what people in Finland and Sweden thought about it. Would such a public offer be seen as constructive for triggering a more intensive domestic debate or would it be counterproductive (if considered as interference)? And why did Sweden and Finland contribute so much to NATO missions without being able to count on NATO defending them as non-members (Art. 5).

Of course, we’re still learning (for instance, it might be better to focus on one single question, rather than a set of questions; it might also be helpful to have a short blog post as a starter instead of a number of background articles on our Facebook page), but my feeling was that many enjoyed the debate and learned new facts and discussed aspects they had not been aware of before. And I got to “know” a few new people working on similar topics… A sort of “summary” can be found below.
As the Atlantic Council staff told us, the debate had 2,463,736 impressions reaching 339,471 accounts, with 231 users posting 712 tweets. Not too bad a start I would say.

Next week, we’ll discuss the (in)famous 2 % target for defense spending.

StorifyPlease check out the summary of our debate.

Additional discussions will be announced via @FutureNATO and on the respective Facebook page.