Monday

25th Jun 2018

Magazine

TTIP's teflon coat wears thin

  • A protest against the EU-US trade talks in Germany. European fears are centred on the possible erosion of EU environmental and consumer rights (Photo: Emma Rothaar)

The prospect of an EU-US trade agreement was one of relatively few sources of comfort for EU lawmakers during the bloc's struggling economy in 2013.

Opening the first round of talks last July, European Commission officials and ministers spoke of a "debt free stimulus" that could be worth as much as €100 billion extra to the EU's GDP. Many governments described the potential deal as "win-win".

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... our join as a group

  • Opening the first round of talks last July, European Commission officials and ministers spoke of a ‘debt free stimulus’ that could be worth as much as €100 billion extra to the EU’s GDP (Photo: EUobserver)

Trade officials concluded their seventh round of talks on the cumbersome-sounding transatlantic trade and investment partnership (TTIP) in Brussels in October 2014. Their plan to initial a draft agreement by the end of 2015 remains the goal.

But in 2014, TTIP's teflon coat started to wear off as politicians and trade negotiators got down to hard detail, while opponents of the talks got organised.

Backlash

The backlash came as a surprise to both the EU commission, which is negotiating on the EU's behalf, and the Americans. No previous trade talks have attracted so much attention or controversy. But then no EU trade deal has come close in size and importance to TTIP.

TTIP was always likely to be vulnerable to latent anti-Americanism in many EU countries. There were scare stories about the prospect of US chlorine-treated chicken and hormone-treated beef flooding European supermarkets.

But rules on investor protection appear to pose the greatest risk to TTIP's survival.

Until recently, detailed knowledge of investor state dispute settlement (ISDS) was confined to corporate lawyers and trade negotiators. Outside these circles, few people had ever heard of it or understood it.

Investor disputes

The mechanism was designed in the 1960s by Germany, which now opposes its inclusion in TTIP, to let companies take legal action against governments on grounds of unfair treatment or discrimination in favour of domestic firms.

Critics say that corporate lawsuits, or even the threat of them, could prevent governments from passing legislation in fields such as health and safety and environmental and social protection.

The best-known case is an ongoing dispute between tobacco giant Philip Morris and the Australian government over Australia's plain packaging regime – a ban on cigarette advertising.

The EU executive parked the issue by opening a public consultation on ISDS at the start of the year.

In November, six months after the consultation closed, Cecilia Malmstrom, who replaced the abrasive Karel de Gucht as EU trade commissioner, told MEPs the commission is still evaluating its findings.

The German and French governments have indicated that ISDS is unnecessary because investor rights are already safeguarded by national laws.

It is a mark of how international trade has evolved that the main bone of contention is not tariffs or state subsidy for a particular sector but investor protection.

Already 1,400 agreements

The trouble is that EU governments have already signed up to more than 1,400 investment protection agreements, covering nearly half of the 3,000 such deals between governments around the world.

The US ambassador to the EU, Anthony Gardner, laments that media reports on ISDS overestimate the importance of existing claims.

The commission's preference, and that of the Americans, is to keep the clauses in any deal. De Gucht was a vocal supporter, telling reporters in October that excluding ISDS would be "an absolute disaster", while Malmstrom, has been more circumspect.

But it now looks increasingly likely that MEPs will veto the entire TTIP agreement if ISDS is part of it.

If so, the Juncker commission may conclude that keeping it in isn't worth the risk. Lawmakers have mooted a possible compromise under which ISDS would be taken out of TTIP and dealt with as a stand-alone agreement - the same way the EU's Charter of Fundamental Rights is attached to the Lisbon treaty.

Sceptical public

In her first speech on the trade talks as commissioner, Malmstrom hinted at a change of tack on how to sell TTIP to a sceptical public. She noted that striking an agreement with the US would help protect Europe's economy from the rising might of China.

The strategic element – that a US deal would strengthen the EU's hand in negotiations with China – is a new line to take.

In the context of Europe's declining share of world trade and the comatose state of global trade talks, many analysts view TTIP as a chance to shape regulatory standards across the world.

If nothing else, the furore on investor protection has demonstrated the importance of political symbolism. The perception of the US as the holy land of low regulation and brutal multinationals is hard to shake.

The court of public opinion

TTIP's path was always going to be longer and trickier than lawmakers cared to admit.

Officials hope to reach agreement on a draft text before the end of 2015 and lawyers will have months to scrutinise it before MEPs get their hands on it. Ratification, if it comes at all, is unlikely to be completed before 2018.

Unlike previous agreements it will have to pass the court of public opinion. One online petition against TTIP and a similar trade deal between the EU and Canada had over 1 million signatures in December.

The fact that the talks have already generated thousands of metres of newsprint is a sign EU officials won't be able to deflect TTIP scrutiny by hiding behind technical small print.

The story is already too big and too political for that.

This story was originally published in EUobserver's 2014 Europe in Review Magazine.

Click here to read previous editions of Europe in Review magazines.

Analysis

From trade tariffs to trust – TTIP a year on

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.

Agenda

Greece, Finland, and TTIP this WEEK

The focus will once again be on the Greek debt crisis this week, as well as continued negotiations on an EU-US trade deal, and Iran's nuclear programme. Plus, a new media kid on the EU block.

Opinion

Put aside ideology when it comes to TTIP

The potential impact of the US free trade deal on ordinary people's lives should be measured using analytical tools, not ideology, Portugal's junior minister for Europe says.

Analysis

Passing the court of public opinion

EU trade negotiators are used to working in secrecy, and say that it is the only way to secure a good deal. Unfortunately for them, that is no longer possible.

Magazine

In 2018, make Europe great again!

Is the EU back on track to make Europe great again? The fifth edition of EUobserver's Europe in Review magazine looks at the biggest events that shaped the EU in 2017 and prospects for 2018.

News in Brief

  1. EU publishes Australia, New Zealand trade mandates
  2. EP civil liberties committee votes for Article 7 on Hungary
  3. Report blames 2017 egg scare on lax EU enforcement
  4. Nine countries to sign up for Macron's military initiative
  5. Re-elected Erdogan potentially in power until 2028
  6. Macron's popularity drops among French pensioners
  7. Tajani calls for €6bn investment to halt migration
  8. Major demo in London for second EU referendum

Stakeholders' Highlights

  1. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  2. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  3. Macedonian Human Rights MovementMHRMI Launches Lawsuits Against Individuals and Countries Involved in Changing Macedonia's Name
  4. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  5. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  6. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow
  7. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  8. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  9. Mission of China to the EUChina: Work Together for a Better Globalisation
  10. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  11. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  12. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform

Latest News

  1. Orban allies divided in vote on Hungary sanctions probe
  2. Rutte - from 'Mr No' to 'next Tusk'?
  3. UN offers to help EU's migrant 'disembarkation' plan
  4. Progressive CAP alternative only hope for sustainability
  5. Ponytailed green MEP joins 'the other side of the table'
  6. EU leaders still in search of migration plan
  7. Migration row at centre of EU summit This Week
  8. Merkel's woes cast shadow on EU's future

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  2. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  3. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  4. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  5. FIFAGreen Stadiums at the 2018 Fifa World Cup
  6. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development
  7. Counter BalanceEuropean Ombudsman Requests More Lending Transparency from European Investment Bank
  8. FIFARecycling at the FIFA World Cup in Russia
  9. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  10. Centre Maurits Coppieters“Peace and Reconciliation Is a Process That Takes Decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  11. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  12. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece

Join EUobserver

Support quality EU news

Join us