TTIP: Political support in Europe wavers ahead of Bratislava meet

9 September 2016

All eyes are set to turn to Bratislava this month as the European Council meets to debate the future of bilateral trade and investment talks with the US, particularly amid suggestions from some ministers and national leaders that the process should be put on hold.

The Transatlantic Trade and Investment Partnership (TTIP), as the planned trade deal is known, has been under negotiation for over three years. During that time the accord has drawn significant scrutiny, given the size of the players involved, the potential implications for “third countries” outside of its scope, and whether it will involve concessions on sensitive areas such as agricultural tariffs – and, if so, to what extent.

The 23 September meeting in the Slovakian capital city is thus expected to see a heated debate among the bloc’s trade ministers, with the result potentially meaning either renewed support to go ahead, revised instructions on next steps, or even asking the Commission to place the talks on hold entirely.

Both French Trade Minister Matthias Fekl and French President François Hollande have indicated in recent weeks that they are finding it extremely difficult to justify further talks with the US unless they see more concessions from their American partners, and plan to ask for the negotiations to be paused until conditions improve.

Meanwhile, political leaders in Germany have expressed differing opinions over the talks’ future. Angela Markel, the country’s chancellor, has long supported the pact. However, Economy Minister Sigmar Gabriel said late last month that, in his view, the talks as good as failed.  Belgian Prime Minister Charles Michel similarly told domestic press last weekend that his country would need to see a balanced deal in order to ensure its continued support – adding that what is currently under negotiation “doesn’t seem to be.”

“So, for the moment, I prefer to say that it’s not right and that perhaps we will resume negotiations later,” he added, according to comments reported by Reuters.

Some EU national leaders have stressed that they remain in favour of the pact, with Finnish Trade Minister Kai Mykkänen telling the Financial Times that a successful TTIP is key to making sure that global trade rule-making does not instead shift to the Asia-Pacific region.
 

Elections come to the forefront

With the imminent departure of US President Barack Obama from office, the American election process has already captured headlines over the last year, as Republican Party candidate Donald Trump and Democratic Party candidate Hillary Clinton spar on the campaign trail over who should next serve in the White House.

The impact of trade deals on domestic incomes, inequality, and sovereignty has been hotly debated in the election preparations to date, both in the primary process for choosing each party’s candidate, along with the general election campaign that is now underway.

The debate has focused primarily on a separate trade deal known as the 12-country Trans-Pacific Partnership (TPP) Agreement, which has already been negotiated and signed, and now needs to be ratified to enter into force. However, TTIP proponents warn that the fall-out from the anti-globalisation rhetoric on TPP could help scupper the Atlantic-focused trade talks in the process.

Meanwhile, France and Germany are both set to face presidential elections of their own in 2017, with the incumbents in both EU member states facing strong challenges from right-leaning politicians promoting more inward-looking rhetoric and policy.

Further complicating the debate is the backlash already being seen in some quarters against a separate EU trade deal with Canada, known as the Comprehensive Economic and Trade Agreement (CETA). The ratification process of that accord has been described as a “make-or-break” moment for the “credibility” of EU trade policymaking, given that the Commission deems it the most “ambitious” accord it has ever negotiated. (See Bridges Weekly, 7 July 2016)

EU and Canadian leaders aim to sign CETA this year and begin applying it on a provisional basis. However, getting the deal through both the European Parliament and the domestic legislatures of each EU member state – along with passing through the ratification process in Canada – is widely expected to be a difficult project, with unclear prospects for success.

Meanwhile, the EU will also need to navigate the likely exit of one of its major members, the United Kingdom, in light of the 23 June referendum result by that country’s citizens. While the UK has not yet triggered formal exit talks with the EU, and that process is slated to be long and arduous should it occur, the vote itself has already added fuel to the ongoing debate over globalisation and integration.

For the time being, the UK remains a full member of the EU, and therefore part of the TTIP negotiations, even as some of its officials have begun testing the waters for trade accords with third countries should the “Brexit” talks be successful. (See Bridges Weekly, 21 July 2016)
 

What’s at stake

If completed, TTIP would cover a market that constitutes half of the world’s total GDP, together with yielding market access improvements in goods, services, and public procurement, along with facilitating cooperation between regulators on both sides of the Atlantic, and setting new rules in areas such as labour and the environment.

Over the last several months, leaders and key negotiators have said that their objective is to conclude the talks by the end of 2016, given that Obama’s second and final term in office ends in January 2017.

However, they have also acknowledged that significant market access gaps remain in the three pillars of those talks, even after 14 negotiating rounds. They also disagree on other key topics such as whether to include a separate energy and raw materials chapter and how to craft provisions on investor protections. (See Bridges Weekly, 21 July 2016)

The sluggish pace of the TTIP talks, coupled with the upcoming elections and the current public sentiment on trade, have fuelled concern that this could be the end of the road for the EU-US negotiations, at least for the time being.

Leaders of some international organisations have therefore stressed in recent weeks that TTIP participants should continue their negotiating efforts, given the potential economic gains from a completed deal.

Ángel Gurría, Secretary-General of the Organisation for Economic Co-operation and Development (OECD) and Roberto Azevêdo, Director-General of the WTO, both warned this week about the economic dangers of protectionist approaches to policy-making, telling the CNBC news outlet that the TTIP deal should not be a casualty of the current climate.

“We are only two months away from the US election and again the mood in the US, at least from the speeches, very anti-free trade and at the same time in Europe, you have a very low growth period,” said Gurría.
 

ICTSD reporting; “Merkel suffers humiliating election defeat on home turf,” FINANCIAL TIMES, 4 September 2016; “EU-U.S. trade talks seem unbalanced, may need pause: Belgian PM,” REUTERS, 3 September 2016; “TTIP is tough but governments shouldn’t give up, OECD and WTO officials say,” CNBC, 3 September 2016; “Finland fights to keep TTIP talks alive,” FINANCIAL TIMES, 1 September 2016; “France urges Brussels to halt TTIP talks,” FINANCIAL TIMES, 30 August 2016.

This article first appeared in Bridges Weekly, 7 September 2016.

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