The world’s greatest free trade zone is far from a done deal
On 2 April 2014, Former Italian Prime Minister and Visiting Sciences Po Professor Enrico Letta delivered the keynote speech at the university’s Annual Conference of the Master of European Affairs: “Transatlantic Trade and Investment Partnership: Dusk or Dawn ?” In the speech, Letta espoused ‘in this era of global economic disorders TTIP will be decisive in strengthening transatlantic ties’. However, given growing public concerns on both sides of the Atlantic about environmental, regulatory and food safety standards in addition to recent revelations of American spying on European leaders, the trade agreement seems only to be decisive in straining transatlantic ties. Moreover, the current political quagmire in U.S. Congress over whether or not to pass Trade Promotion Authority (TPA) — a legislative procedure allowing for the passage of a trade agreement with a simple up or down vote barring amendments — and the recent exodus of Trade Agreements champion, U.S. Senate Finance Committee Chairman, Max Baucus (D-MT) to serve as U.S. Ambassador to China, and last week’s announcement from U.S. House of Representatives Ways and Means Committee Chairman, Dave Camp (R-MI), confirming his retirement from Congress to enter the private sector after November 2014 mid-term elections, TTIP seems to be headed for a political cliffhanger.
During European Commissioner for Trade Karel De Gucht’s February 2014 visit to the United States, the Trade Commissioner underscored the importance of U.S. Congress passing Trade Promotion Authority (TPA) to both the Transatlantic Trade and Investment Partnership (TTIP) and the Transpacific Trade Partnership (TPP) negotiations. Without a simple up or down vote on trade agreements, Congress has the will to pick apart negotiated terms clause by clause, ultimately undercutting previously agreed to clauses. Both American and European negotiators are seeking assurances on the thorniest of topics, including Geographic Indicators (GI) on agricultural goods such as cheeses. The probability of Congress making amendments to such sensitive clauses, absent of TPA, may spoil negotiations altogether. The recent declaration of Democratic leadership, including U.S. Senate Majority Leader Harry Reid (NV), Senate Majority Whip Dick Durban (IL), and House Minority Leader Nancy Pelosi (CA) coming against TPA, does not send a message of economic solidarity with the European Union.
Political fissures between the 28 European Member States on TTIP are a point of contention for negotiations as well. France is the most vocal EU member on TTIP negotiations, voicing concerns in its national parliament over the Investor-State Dispute Settlement (ISDS) clause of the EU-US deal. The Investor-State Dispute Settlement clause allows both EU and US companies to pursue legal action against national governments if their regulations, including public health, environmental, and social protections impede their right to do business locally. U.S. energy companies seeking opportunities to undertake fracking projects in alternative-energy friendly France is problematic within the context of this clause. For example, an American shale gas producer could take legal action against France because its laws prohibit such exploitation. French lawmakers do not want to have the country entangled in costly legal disputes with well-endowed American oil companies especially as the nation mends from the 2008 Euro crisis.
On 9 January 2014, the French Senate debate showed bipartisan opposition to TTIP. Although the European Commission decided to postpone ISDS negotiations on 21 January 2014, this part of the trade deal is one of the most important components to be negotiated without the threat of U.S. Congressional amendments. Public procurement is also an issue of great contention. The ‘Buy American Act’ is very hostile to the idea of having European companies participate in tenders such as water and waste where France and other EU member countries could be competitive.
Another issue further splintering transatlantic ties is the latest leek from former National Security Agency analyst Edward Snowden, which reveals U.S. spying on EU political leaders, including German Chancellor Angela Merkel. On 12 March 2014 in Strasbourg, several Members of the European Parliament (EP) adopted a resolution threatening to revoke the EP’s consent to TTIP if US spying continues. U.S. President Barack Obama, National Security Advisor Susan Rice, and Secretary of State John Kerry seized the opportunity to mend diplomatic fences with European leadership during the 26 March 2014 EU-US summit in Brussels. However, the EP resolution still stands as a barrier to strengthened transatlantic relations. The measure passed by 544 votes to 78 with only 60 MEPs electing to abstain from voting, sending a clear message to both the European Commission and U.S. Administration that there is still much work to be done in the realm of transatlantic relationship building.
The EU-US trade relationship is the largest in the world, €2 billion worth of goods and services are traded daily between the two titans. According to independent studies highlighted by both the European Commission and U.S. Administration, the trade deal once fully implemented could increase the European Union economy by €120 billion, the U.S. economy by €90 billion and the rest of the world by €100 billion. Transatlantic Trade and Investment Partnership (TTIP) talks started in July 2013 with the resolve to conclude negotiations by the end of 2014. The fourth round of negotiations concluded in March 2014 with the European Commission now taking a three-month hiatus for the European Parliament Elections, and public consultations on provisions to be addressed in the next round of talks.
About the Author
Penny Tilghman is a Global Policy Fellow in Washington, D.C. with an MSc in Local Economic Development (International Trade and Investment) from the London School of Economics and Political Science (LSE). Ms. Tilghman is also a Hansard Society UK Scholar having served in the British House of Commons Office of the late Tony Banks, MP (Lord Stratford of Stratford).