• Dan Mullaney (l), Chief US Negotiator, with his EU counterpart Ignacio Garcia Bercero (Photo: European Commission)

Analysis

From trade tariffs to trust – TTIP a year on

28.07.14 @ 10:14

  1. By Benjamin Fox
  2. Benjamin email

BRUSSELS - When political leaders on both sides of the Atlantic gave negotiators the green light to start talks on a Transatlantic trade and investment partnership (TTIP), it was widely seen as an economic 'win-win' - a debt free economic stimulus.

  • An anti-TTIP poster (Photo: Emma Rothaar)

The EU's politicians and diplomats, for whom getting the US to the negotiation stage was something of a coup, were particularly optimistic. A study for the European Commission last year suggested that TTIP would be worth an extra €100 billion to the bloc's struggling economy – equivalent to 0.5 percent of GDP - and create the largest single free trade zone in the world.

A year on and negotiators, who recently concluded their sixth round of talks, are still bullish about the prospect of securing a deal and are confident that talks can be concluded by the end of 2015.

But the atmosphere is far more defensive than twelve months earlier and the ratification of an ambitious agreement is fraught with difficulties.

Trust – the elephant in the room?

Much of the initial optimism around TTIP was dampened by the revelations of the NSA's surveillance programme, which broke into the news just days after the TTIP talks began.

Suggesting that the US bugging operation encompassed millions of Europeans and even the EU's own institutions, instantly cast a pall over the talks.

Had the scandal broken a few weeks earlier, they might never have started.

And trust - or rather the lack of it - is "the elephant in the room, particularly when it comes to perceptions about privacy of data,” says Anthony Gardner, Washington DC's ambassador to Brussels.

Both sides complain that anti-TTIP campaigners have pushed a number of myths – that US chlorine-treated chicken and hormone treated beef will flood European supermarkets, while investor protection rules will allow all-powerful multi-nationals to sue governments to prevent them from passing health and safety legislation.

“Everyone knows that there are areas where we have different opinions,” says Gardner.

Jean-Claude Juncker's quip during one of the election's presidential debates that “the chicken does not want to be chlorinated either,” did not increase his popularity among US officials who saw it as one of many anti-US jibes during the campaign.

Gardner also disputes the assertion that American standards are lower than Europeans – offering toy safety and car crash testing as examples where US has higher safety standards. It is “a lot more complicated than is portrayed in the press,” he says.

But it is the row about investor state dispute settlement (known as ISDS) that has become the great frustration for negotiators, particularly for the Americans.

ISDS is not a new innovation – its first proponent was the German government in the late 1950s – and such clauses are present in virtually all EU trade deals.

“I’m really surprised at how much currency ISDS has generated," says Gardner, who complains about the way that press reports about ISDS tend to focus the notorious Phillip Morris case in Australia – where the US tobacco giant has sued the government in protest to its attempt to make plain-packaging of cigarettes mandatory.

“Never do the stories say that these cases have only been filed, not decided,” he notes, adding that “ISDS is about “discrimination and appropriation not about protecting profit.

He adds that the so-called 'chlorinated chicken' debate “is not a health and safety but a political issue".

Going beyond tariffs

But despite these difficulties, both sides insist that they won't settle for a deal that only deals with scrapping tariffs and say that it is unrealistic to think that parts of the agreement can be unpicked without the whole thing falling apart.

In the past, trade deals were predominantly about whether to reduce tariff barriers on goods and by how much. Scrapping the remaining tariffs would be worth about €20-€30 billion, but the bulk of the talks are about regulation – harmonising standards across an exhaustive list of manufacturing and services industries.

The work itself, as officials are at pains to stress, is largely technical. 'Boring', 'tedious' and 'technical' are three of the most commonly used words to describe the current talks. “Some might consider it mind-numbingly boring work,” says one negotiator.

After six rounds, officials are now working from five consolidated texts. Offers and counter-offers have been made.

Regardless of the substance, it is a big exercise. Officials say that the 24 separate negotiating groups meet for between one and two days during the round. Meanwhile, more than 70 business, trade and consumer groups made presentations in the four 'stakeholder' groups which deal with different aspects of the talks ranging from the wine and dairy markets, to public procurement and intellectual property rights.

As a result, the talks themselves do not take place in the Commission or US government buildings – there are simply too many civil servants. During the most recent round, officials gathered at the European Management Centre next to Place Chatelain, one of Brussels' most fashionable neighbourhoods, which the Commission rents for the purpose. The previous round in Washington DC in May was conducted in a local university.

At the mercy of politicians

The truth is that the other elephant in the room is that negotiating with the US raises perceptions about all-consuming corporate power coupled with latent anti-Americanism among a portion of Europeans.

“We have to respect that the perceptions are there and we need to do a better job in terms of communication,” says Gardner, but the chances of dispelling all of these fears – whether media driven or not – must be slim.

The French government has insisted that the cultural industries be left out of TTIP, while the Americans have taken financial services regulation off the table. Leaving out ISDS may be the only way that TTIP can pass through the European Parliament and – possibly – national legislatures.

Gardner speaks for both sides when he told this website that “there are still a majority in the European Parliament who are in favour of what we are trying to do,” and that the same was true in the US Congress.

But MEPs were careful to sit on the fence when they debated TTIP with Commissioner de Gucht in Strasbourg earlier in July.

David Martin, trade spokesman for the centre-left S&D group, the Parliament's second largest group remarked that TTIP “does have the potential to be a catalyst for jobs and growth” and could be the EU’s “last chance to set global standards”.

“Socialists were at the birth of TTIP and we do not want to be its assassins,” he said.

In the next breath, however, he stated that ISDS should be left out of a deal and warned that “we haven’t made up our mind and will judge this agreement on its merits.”

For her part, Marietje Schaake, a Dutch liberal, questioned whether TTIP would "be possible from the US perspective without ISDS”.

For the moment, the centre-right EPP and conservative ECR group are the strongest supporters of TTIP. But the support of the Liberal and S&D groups will almost certainly be needed to reach the 376 total out of the Parliament's 751 deputies required to pass an agreement.

But “we haven't made up our mind” probably sums up where most Europeans sit on TTIP. Fine sounding forecasts about 1 or 2 million new jobs or 0.5 percent of GDP growth look good on paper but mean little to small business owners.

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Officials are aware of this, but “we haven't made up our mind” is a timely reminder that regardless of what comes out of the negotiating rooms around Place Chatelain and Washington DC, TTIP remains a fragile creature, at the mercy of politicians and public opinion.