Growing the Pie or Slicing it Differently - on the Need to Disentangle Two Aspects of Trade Agreements

Abstract

Recent trade negotiations such as TTIP include investor protection clauses. Against the background of an analysis of the case for trade, the paper asks whether such clauses can be justified from a normative perspective. More specifically, what is the impact of investor protection on the domestic distribution of the gains from trade between labour and capital, and how should we assess this impact from the perspective of justice? In order to answer this question, the paper develops a series of ideal-type scenarios that reflect the consequences of investor protection on employment on the one hand, and on the distributive conflict between labour and capital on the other. While no claim is made which of these scenarios corresponds to TTIP or other trade agreements, they provide a useful normative framework to analyse such agreements.