About the EU-USA Free Trade and Investment Deal

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Step up to the plate

This article of the MEP Reinhard Butikofer was published in the Green European Journal on 23 April 2013

The huge majority of environmentalists, climate activists, GMO opponents, consumer advocates, trade unionists and other society stakeholders are still far from getting into the discussion at all

President Obama and Presidents Barroso and van Rompuy have agreed to start negotiations between the US and the EU to establish a Transatlantic Trade and Investment Partnership (TTIP). After each side has agreed on its comprehensive mandate for TTIP, the negotiations will begin this June and be concluded successfully and ratified within two years at the most. The economic impact of TTIP will, according to the analysis of the EU Commission, increase the EU’s GDP by at least half a percentage point and, as the president of Business Europe has added, result in the creation of two million new jobs in the EU.

Getting our house in order

In the US they say: If it sounds too good to be true, it probably is.

Yes, indeed, I would agree that TTIP could possibly have a positive economic impact, provided we do it right. But we also have to see clearly that there are considerable risks involved.

So far, the European side has been so much preoccupied with a surprising degree of euphoria that there hasn’t been enough time to really prepare well for the negotiations. As I write this comment, the German government has only just started discussing internally what strategy they want to pursue. The German Federation of Industry (BDI) has not yet managed to harmonize the partly diverse expectations of different industrial sectors. The French industry lobby (MEDEF) succeeded in doing that two weeks ago, but haven’t found time yet for exchanging notes with the Germans. The German and the French governments have not talked about it bilaterally yet. And the first exchange of views between the EU 27 member states has been at the informal trade ministers meeting in Dublin on April 18. That is to say: After having pleaded with the Obama administration for years to get this kind of negotiation going, we find the European side pretty badly underprepared. By the way, civil society has not caught up with the issue, either. Of course, there are some voices that have always known their answer even before the question had been formulated; some are against trade anyhow; a few are principally critical of anything transatlantic; some steadfastly reject a bilateral approach to trade (which in principle is not an irrelevant argument). But the huge majority of environmentalists, climate activists, GMO opponents, consumer advocates, trade unionists and other society stakeholders are still far from getting into the discussion at all.

I emphasise this, because the negotiations, once they get under way, will not be a dinner invitation, a soft ball game or a friendly walk over lovely transatlantic meadows. There are interests involved in the process that value in the billions of Euros. The negotiations will be a slugfest between competing interests at best. And the US side has made it abundantly clear that they are going to play tough. So, for instance, the chairman of the Senate Finance Committee, Senator Max Baucus from Montana, has stated in no uncertain terms in an op-ed he published in the Financial Times some weeks ago, that without acceptance by the Europeans of US GMO products there would not be a deal. The guy is serious. He represents a state with strong agricultural interests. And these interests count a lot with many other states and Members of Congress as well. Without taking that on board, President Obama cannot conclude a trade deal. By the way: will congress grant fast track authority to president Obama or will we first negotiate with his administration and upon concluding this effort start all over again trying to compromise on the compromise with the majorities in congress?

No walk in the park

When I mentioned the GMO tussle to an American diplomat in private conversation, he commented that an agreement over GMO between the US and the EU probably was as elusive as a peace agreement between Israel and Palestinians. He also hinted at a strategy that would get a good number of European actors salivating over expected benefits in various sectors before finally putting the GMO issue into play as a make-it-or-break-it, “the GMO way or the highway” kind of deal. To be sure, I’m not blaming the US side for pursuing what they see as their interests. But with such a partner you can easily be your own best enemy if you enter into a negotiation without knowing at least as well as them what your own position is going to be. And let us not “misunderestimate” the divergence between different European member states’ interests. A situation in which some member states would try negotiating benefits for themselves at the expense of their neighbors would certainly be a recipe for losing big.

What Europe wants

An informal meeting of EU Trade Ministers in Dublin, April 2013, to discuss the TTIP. (Copyright Irish Presidency 2013)I would start defining the European interest in three very simple terms. We will not allow TTIP to undermine European environmental and climate policy (or what is left of that). We will not allow TTIP to undermine European standards of consumer protection including data privacy. We will not allow TTIP to endanger European social and labor safety standards. Of course this describes only our starting point. As the topic gets more detailed, we must get more precise. This includes learning from previous Free Trade Agreements. Many people, for instance, believe that the EU-Korea Free Trade Agreement could serve as a template. I disagree. In the Korean FTA the EU negotiated – “successfully”! – an exemption from Korean air quality standards for European premium class automobiles. Not really an example to be followed, right? And then, of course, if we cannot define a positive agenda to be negotiated with the Americans, it’s hard to defend the whole effort. I would argue that the positive agenda could be found in the pursuit of common standards promoting the emergence of more energy and resource efficiency across the spectrum of industrial sectors clearing the way for the transformation of transatlantic economies towards the often proclaimed goal of an environmentally responsible, human centered low carbon economy. So far, to be honest, no one knows whether that will even be part of the agenda.

Emerging economies and global trade

There’s another aspect of the TTIP undertaking that merits serious consideration. It is the bilateral approach. Greens have traditionally supported and advocated multilateral trade regimes. Now for many reasons there seems to be no chance for reviving the Doha Round or anything similar under the authority of the WTO for the time being. So, maybe, bilateral or interregional and plurilateral trade agreements could possibly open up a way out of the dead end. But, of course, it makes a major difference whether such approaches are being conceptionalized with the multilateral goal in mind or whether we will in fact be pursuing a “the west against the rest” strategy, circling the waggons, so to speak, against the perceived risk of emerging economies acquiring more leverage in the sphere of global trade. Representing 45% of global trade presently, the transatlantic partners cannot step around this issue. We must be ready to take responsibility in accordance with the weight we carry. EU commissioner De Gucht, unfortunately, has opted for the wrong perspective, describing the motivation behind TTIP in an interview with the Christian Science Monitor as part of a grand strategic design to contain China. I am sure that in the medium and long term this is not going to work, and I’m afraid that such a way of thinking might end up dividing the world into competing trading blocs with all the negative implications that would have for global economic progress, global governance and stability and global peace. It certainly is a very difficult task to negotiate an EU 28 deal with the United States simultaneously with an EU-Japan FTA and the US led Transpacific Partnership (TPP) effort. It’s even more challenging to do that under the paradigm of multilateralism through inter-regionalism but at least we have to be aware of this perspective instead of just playing to the populist anti-Chinese knee-jerks that resonate all too well with parts of the US and the European public. The immediate critical reactions that the pronouncement of the TTIP project has received from countries like South Africa and Brazil should be taken as a pertinent warning.

No rush to the altar

If the TTIP negotiations should stand a chance of resulting in a success, the negotiations cannot possibly be concluded as fast as some US and EU politicians are promising. Mike Froman, President Obama’s sherpa, has frequently expressed a strong demand that if the US would engage in this negotiation, the goal of the journey should be reached “on just one tank of gas”. Of course, that can mean different things according to different fuel efficiency standards, and if we used a hybrid car with a good range extender we could be driving for quite a while. In more simple prose: either we negotiate a comprehensive agreement and afford the time for the talks that we need to reach a good conclusion or we define the amount of time that we want to allow and then have to take the deal we can get in that time frame. I’m afraid the second option would not serve the European side well. Take again the automotive sector. Reducing or abolishing some tariffs that do presently impede the export of American SUVs to Europe could be accomplished in a few months’ time. Agreeing on common standards for future e-mobility and other transport efficiency standards will certainly take longer, as the European and the US standardization organizations adhere to quite different philosophies and enjoy a great deal of independence vis-à-vis the executive. Narrowly limiting the amount of time to be invested in the negotiations would basically foreclose any opportunity to really move forward on the future oriented, efficiency related tricky issues.

Need for red lines

Some European governments, most prominently the French, are presently jockeying for major exemptions from the negotiating agenda. With several of these exemptions they seek, Greens would definitely sympathize, GMO being the most obvious example. I have heard that even the German chancellery has weighed the option of taking GMO off the table before the very start. I must confess, I’m skeptical whether many such exemptions could be agreed either between the European member states or with the Americans before we get going at all. But I’m fully convinced that the European side has to have some well-defined red lines that are being clearly communicated to the US from the very beginning. The Americans, for instance, must know that there is not going to be a deal on GMO. Over and out.

Two very important factors in the evolvement of the negotiations will be whether parliamentarians from the European Parliament and national parliaments on one hand and stakeholders like NGOs and trade unions on the other hand will be able to play a visible and influential role. We should make every effort to bring these groups together. We should also engage in creating a very thorough dialogue between consumer advocates, NGO representatives and trade unionists of both sides of the Atlantic. Only if these actors overcome the peripheral role that they have often times played with regard to trade negotiations and manage to integrate their agendas, only if we come up with what could be called a public trade diplomacy, we can expect that the TTIP project is no going to be taken hostage by well established and sometimes openly ruthless industrial interest groups, be it from the US or from the EU. Insisting on a high level of transparency and inclusion of civil society is therefore a green must. Taking a principled stance here will be decisive for the practical outcome that can be achieved.

Taking the fork in the road

Finally: there are, I am arguing, quite a few open questions. Ignoring them with blue eyed idealism or hoping that everything will go fine just because the transatlantic relationship has been aptly described as a “marriage in search of a spark” and TTIP seems to be the only plausible excitement within reach would be devoid of realism as well as of any earnest vision. We must, in a baseball analogy, step up to the plate and go for the best batting we can offer. Their pitcher will throw all kinds of fast balls and slice balls and curve balls and whatever. Never mind that some very particular industrial interests might expect that somehow the whole purpose of the game is to reserve all the home runs for themselves. The game is on and we have to play. Maybe, if we do it right, we can hit the ball out of the stadium. After all, Yogi Berra, the famous baseball philosopher, used to say: “If you get to a fork in the road, take it.”

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