The United States and Europe’s “Free Trade” agreement is a “dangerous” trade pact that will hurt the world economy and will make it harder for global financial institutions to operate, according to a new study.
In a report by the New York-based think tank Global Financial Integrity (GFI), the study warned that the deal is a major driver of the global economy and the ability of global financial services to operate.
In its first phase, the agreement has created “unfair competition” for financial services providers by making it easier for their competitors to buy and sell assets, GFI said.
This creates “a financial system in which markets are driven by financial interest groups rather than the interests of consumers, which has serious implications for the health and viability of global economic systems,” it added.
The free trade agreement, signed in September 2016 by Donald Trump, is the largest free trade deal in the world.
The deal is the result of the Trans-Pacific Partnership (TPP), which was negotiated in secret by 12 countries including Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, Switzerland, and Vietnam.
While the agreement will affect the economies of the US, Canada and Japan, GPI’s research found that the US and European countries are the two biggest beneficiaries of the deal.
The US, which received a record $2.6 trillion in trade revenue from the deal, will reap an estimated $1.3 trillion in revenue by 2024.
The country is expected to have $2 trillion in financial assets by that time.
The UK, Germany and France will benefit the most, with $2 billion to $2,500 per household.
The report said the agreement would result in a “significant reduction in the financial services sector’s access to capital”.
In a press release on Thursday, GGI said: “The U.S. and European economies will see a significant impact on financial markets, as these agreements open up a whole new market to investment by financial institutions, allowing for a further increase in capital inflows and thereby raising the viability of the financial sector.”
The study also said that the agreement was likely to reduce the ability for foreign financial institutions and individuals to compete for assets, and create a new regulatory environment in which they would not be able to operate as effectively.GFI’s executive director, Mark Zandi, said the deal would have a detrimental effect on financial services, as well as on consumer financial markets.
“The TPP has enabled the financial industry to engage in a massive amount of risky speculation that has contributed to financial instability in the United States, Australia, and other countries, which we now have a direct and very significant financial impact on,” Zandi said.
The U-turn on the TPP has not gone unnoticed.
In September, US President Donald Trump said that he would cancel the Transatlantic Trade and Investment Partnership (TTIP), which he had signed in November 2015.
He said that if he does not get a deal done before Christmas, he will withdraw from the pact.
The TPP was signed on June 26, 2016.