Wednesday

16th Oct 2019

Analysis

Liberty and the EU-US trade talks

  • The statue of Liberty, a gift from the people of France to the United States in 1886 (Photo: Flickr/Hazboy)

The most important issue on the agenda of EU trade ministers meeting on Friday (14 June) is the approval of a mandate that will allow the European Commission to open negotiations with the United States on a ‘Transatlantic Trade and Investment Partnership’.

At the time of writing, the approval of the authorisation of the start of negotiations and accompanying negotiating guidelines is not guaranteed. There remains disagreement between the commission (supported by member states such as the UK) and France on the question of whether ‘audiovisual services’ should a priori be excluded from the negotiation agenda.

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France believes culture has an intrinsic value and should not be treated as an ordinary commodity and, hence, should not be part of trade negotiations where concessions on the liberalisation of different products and services are reciprocally exchanged.

This well-known 'exception culturelle', the idea that culture has to be kept outside of the free market sphere, was again defended by the French culture minister on the eve of the council meeting. He has the support of 13 colleagues. But it is important to remember that trade or foreign ministers, meeting on Friday, have different priorities to culture ministers.

The European Commission (particularly Trade Commissioner De Gucht and President Barroso) and some other member states are vehemently against excluding the audiovisual sector because they fear that this will lead to the US also exempting some sectors or issues from the talks. In private, they are also said to believe that the idea of protecting national culture in this digital world is futile.

Culture and media

In the latest version of the mandate (that has been leaked), the audiovisual sector is included, but three parameters have been set that seem to preserve the right of member states to protect and promote the audiovisual sector through rules and subsidies from the past as well as in the future, and both in the traditional (e.g. radio and television) and modern (digital) environment. It remains to be seen if this is enough for France.

France's opposition has often been seen as symbolic. In the UK (which would like to announce the start of the negotiations at the G8 Summit in Lough Erne on 17-18 June), many mock this French anachronistic obsession. However, the conflict over 'l’ exception culturelle' is illustrative of a more fundamental dividing line in trade politics within the European Union.

It is an open secret that France and some other member states only support the TTIP in public because they do not want to be seen as overtly protectionist. But they have doubts about the advantages and desirability of a transatlantic trade and investment agreement.

They have some reason to be sceptical.

In the past, and especially since the introduction of the euro, southern European countries have benefitted much less (or to put it more strongly: have suffered) from external trade than northern Europe. They have run increasing trade deficits and their exports as a share of GDP have been significantly lower than in the north of Europe. Nonetheless, this agreement has been presented as a way out of the current economic malaise "without costing a cent of tax payers’ money", to quote Commissioner De Gucht.

However, there are doubts about this assertion. It seems that the TTIP is at the very least oversold. Under the most ambitious assumptions, the TTIP will add 0.48 percent to the EU’s GDP and will create several ten thousand jobs... by 2027. As we know, the number of unemployed in the EU today is more than 26 million.

The EU appears to be relying too much on the hope that exports will be able to compensate for the drop in internal demand in the region caused by austerity policies. Particularly for southern European countries, where internal devaluation is most in evidence and which have historically performed poorly in exports, this could be a dangerous misconception.

Labour law and environment

Another issue about which France is more sensitive than other (northern) EU member states is the loss of sovereignty. As tariffs between the EU and the US are already very low, most of the gains through the TTIP will come from ‘regulatory convergence’. This means that the EU and US will either adopt common (‘harmonise’) regulations (this seems unlikely except for a couple of products such as car safety standards) or mutually recognise each other’s standards (this is the route that is most likely).

This means a loss of democratic sovereignty over the rules that governments can apply in order to protect their citizens’ health and safety and the quality of the environment.

Even more intrusive would be agreement on investment protection, especially if an ‘investor-state dispute settlement’ (ISDS) mechanism is agreed, allowing private firms to sue governments if they deem that state action amounts to ‘indirect appropriation’ (this is foreseen in the mandate).

More indirectly, creating a transatlantic market place without any conditions in the social (the US has not ratified six out of the eight International Labour Organisation’s core labour standards) or environmental (the US has not shown willingness to take part in a multilateral climate change agreement) spheres risks putting the EU’s and member states’ more ambitious policies under ever more competitive pressure.

There is surprisingly little discussion about the impact of the shale revolution in the US (rendering gas prices for industry already more than four times cheaper in the US than in the EU) on the competitive position of European firms, which will only become more exposed after a TTIP without equivalent labour or climate change standards.

These are only a couple of critical remarks about the TTIP, a more profound analysis of the upcoming negotiations would be too long for these pages. I will end with drawing your attention to a remarkable coincidence (or rather not).

On the agenda of the foreign affairs council deciding on the TTIP mandate is also commercial policy towards China, including anti-dumping measures.

In recent weeks, the European Commission has imposed provisional anti-dumping tariffs on Chinese solar panels. In face of opposition from Germany, but to the delight of... France.

Maybe this gesture was just what the European Commission needed to convince France to trust and support it in opening trade and investment negotiations with the US.

The writer is a lecturer in EU trade politics at Ghent University in Belgium

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