Maltese economy will be sole loser from TTIP, report finds

A study has revealed that Malta will be the only European country whose economy will decline as the result of the Transatlantic Trade and Investment Partnership (TTIP), a proposed free trade agreement between the EU and the USA.

The study – carried out by the World Trade Institute and universities commissioned by the American Chamber of Commerce to the EU – revealed that the TTIP is likely to boost member state income levels by an average of 0.5%, with the exception of Malta where it is predicted to slump by 0.3%. Investment is alarmingly predicted to decline by 0.7%.

The reason given is that Malta is situated along the Chinese-Western European trade route and trades more with China and Canada than it does with the US. The US is the second most important non-EU export destination for Maltese goods (12% of all goods exports, after China with 36%). It is also the second most important non-EU services export destination (14%, after Canada with 15%). The main export sectors for Malta to the US are office machinery, financial services and machinery.

Economy minister Chris Cardona has welcomed the controversial agreement, arguing that it will open up fresh opportunities overseas for Maltese businesses.

However, Labour MEP and former prime minister Alfred Sant today called for a full debate and study on the potential effects of TTIP in Malta.

“People need to be aware what the stakes are and what a reasonable position on the matter could be,” Sant told the general conference of the PL’s Valletta section, while citing the WTI’s study.

“TTIP has generated huge controversy in the US and the EU. Among the reasons for this, there has been the fact that negotaitions have been carried out in secret and because many believe that the agreement will override national laws.

“Meanwhile, a huge public relations effort has been unleashed to sell TTIP to EU and US citizens. The same has happened in Malta, where we have been assured that it will bring great benefits.”

Sant, who is head of the Labour delegation, has in the past declared he would abstain from voting on TTIP.

The WTI’s study also predicts that Maltese exports to the US are expected to increase by 23% as a result of the TTIP, which could facilitate a significant increase in production of manufactures (+2.6%), and insurance services (+2.%). Electrical machinery is poised to see the largest export increase (+€38 million).

As the main export sectors for Malta to the US are office machinery, financial services and machinery, the manufacturing, financial and insurance services sectors are all expected to grow most as a result of the TTIP, but the motor vehicles industry may suffer.

The TTIP agreement is expected to lead to lower costs for EU and US producers, by reducing diffrences in regulatory regimes, enhancing information exhange and by aligning conformity assessments and certification procedures.

Should firms pass these lower costs on to consumers, prices in Malta are expected to decrease by an average of 0.2%, the joint third highest reduction in Europe behind Lithuania (-0.9%) and Poland (-0.3%). 

Prices are predicted to decrease most signficantly for motor vehicles (-0.7%), chemicals and pharmaceuticals (-0.6%), financial services (-0.5%), and transport equipment (-0.5%).

High-skilled and low-skilled wages in Malta are also expected to increase by around 0.6%, the fifth highest predicted increase in Europe – behind Ireland, Lithuania, Belgium, and Austria.