The Transatlantic Trade and Investment Partnership and the Role of Computable General Equilibrium Modelling: An Exercise in 'Managing Fictional Expectations'

• Published in: New political economy Vol. 20; no. 5; pp. 653 - 678
• Main Authors: De Ville, Ferdi, Siles-Brügge, Gabriel
• Format: Journal Article
• Language: English
• Published: Abingdon Routledge 03.09.2015; Taylor & Francis Ltd
• Subjects: Agreements; Applied general equilibrium models; computable general equilibrium (CGE); Economic models; Economic sociology; Equilibrium; Europe; European Commission; European Union; European Union (EU); Expectations; fictional expectations; International trade; Investments; Optimism; Partnerships; Policy making; Political economy; Political opposition; Studies; Trade agreements; Trade barriers; Trade negotiation; Trade policy; Transatlantic Trade and Investment Partnership (TTIP); Tribunals & commissions; United States > US; Europe
• ISSN: 1356-3467; 1469-9923
• DOI: 10.1080/13563467.2014.983059

Negotiations between the world's two largest trading partners, the European Union (EU) and the USA, on a Transatlantic Trade and Investment Partnership (TTIP) have been ongoing since July 2013. Anticipating the controversy the agreement has sparked, EU trade policy-makers in the European Commission have put considerable effort into discursively framing the agreement on their terms. Drawing on computable general equilibrium (CGE) models of the agreement's likely impact, the central claim has been that the TTIP promises to deliver much-needed 'growth and jobs' without stretching the public purse at a time of austerity. Our main argument in this article, drawing on the insights of the economic sociologist Jens Beckert, is that these CGE models - and the figures they have produced - represent an important exercise in 'managing of fictional expectations'. The models make overly optimistic predictions about the ability of the EU and the USA to eliminate regulatory barriers to trade - which are unlikely to be realised in the face of considerable political opposition - and also downplay the potential deregulatory impact of an agreement. Rather than act as a reliable guide to future outcomes, we thus show that these models serve the pro-liberalisation agenda of the European Commission and other advocates of the TTIP.