Posted Friday, May 10, 2013
Inside U.S. Trade – 05/10/2013
The United States and European Union have tentatively set the dates for the first three rounds of negotiations for a bilateral trade agreement — starting in the second week of July — as part of their ongoing preparatory work, according to informed sources.
The two sides have agreed to hold the first negotiating round in the week of July 8 in Brussels, followed by a mid-September round and a mid-December round, according to these sources. In a related development, the U.S. will also participate in a July round of the Trans-Pacific Partnership negotiations that may take place from July 15 to 25, sources said.
The timetable for the U.S.-EU talks is based on the assumption that each side can complete its domestic processes necessary to launch negotiations roughly by mid-June, sources said. This would set the stage for the launch of the negotiations shortly after the June 17-18 G-8 leaders summit chaired by British Prime Minister David Cameron. It is unclear at this time whether the launch will be accompanied by a political declaration of U.S. and EU leaders, business sources said.
Cameron has pledged to use the UK G-8 Presidency to help generate growth, jobs and prosperity for the long term by focusing on promoting free trade, tackling tax evasion and encouraging greater transparency and accountability, according to his agenda posted on the official UK G-8 website. He will meet with President Obama in Washington on May 13, when the two leaders will discuss “Syria, trade and economic cooperation, countering terrorism, and priorities for the upcoming G-8 Summit,” according to a May 8 White House press release.
In the U.S., there has been no organized opposition to any of the issues raised by the U.S.-EU deal, sources said. Members of Congress that are aware of the proposed negotiations generally view them positively, they said. However, if the EU sought significant carveouts from the negotiating agenda, it would cause an enormous problem for key members of Congress, sources said.
In a related development, the House Ways and Means trade subcommittee has scheduled a May 16 hearing on the U.S.-EU trade negotiations, according to a May 9 announcement from subcommittee Chairman Devin Nunes (R-CA). In the statement, he referred to the negotiations as “an opportunity for the United States to resolve long-standing regulatory barriers, and, in particular, regulatory barriers not based on sound science that block our agriculture exports.”
The notice does not announce who will appear as witnesses at the hearing.
The hearing falls within the 90-day notification period triggered by the Obama administration’s formal notification of Congress that it intends to enter into the negotiations. The administration notified Congress on March 20, which means the layover period ends after June 20.
EU member state representatives meeting in the Trade Policy Committee (TPC) last week began a discussion on a revised draft of the negotiating mandate provided by the European Commission, according to informed sources. Following the May 3 TPC discussion, Hans Straberg, the European Co-Chair of the TransAtlantic Business Dialogue, said this week he saw nothing to suggest that the EU could not meet its goal of having the mandate approved by a council of trade ministers in mid-June.
At this point, member states are still debating the extent to which the mandate should protect the audiovisual sector from foreign competition in line with existing EU rules. But EU sources said they believe if the EU seeks to carve out audiovisual services, it will lead to efforts by the U.S. to carve out sensitive sectors, such as air services. In that area, the EU is interested in seeking to liberalize the equity caps for foreign investment in U.S. airlines, business sources said.
The French government has exerted major political pressure on the commission to ensure a carveout for the audiovisual sector, but it is not the sole advocate on this issue, one source said.
According to this source, there is no unified front of member states against the French demands. For example, the German government does not yet have a unified position on this issue, though the German Economics Ministry opposes a carveout for the audiovisual sector, he said.
No other issue has gotten quite the degree of political attention from member states as the cultural exception, a U.S. business source said. For example, the German government has raised objections to the Commission’s proposed approach to investor protection, such as minimum standards of treatment (Inside U.S. Trade, April 5). But that opposition seems to have eased off somewhat, though Germany formally still maintains a reservation on this issue, one source said.
Spain’s minister for trade last week said that the coverage of audiovisual services is likely to be the only “serious difficulty” in crafting the final mandate, citing heavy opposition from both the French and Belgian delegations (Inside U.S. Trade, May 3). Sources last week said that there would likely be at least one more draft mandate before a final vote is held.
EU member states will likely approve the mandate unanimously, as opposed to taking a qualified majority vote, business sources said.
Inside U.S. Trade – 05/10/2013, Vol. 31, No. 19
Once more the EU institutions are hardly able to back up the main concerns of the civil society. Last 25 April 2013 the EU Parliament International Trade Committee adopted a Motion, proposed by the President Vital Moreira, to be discussed by the European Parliament in May, about EU trade and investment negotiations with the USA. INTA motion fails in using properly the few powers given to the Parliament on trade and investment. Instead of designing a model of trade and investment policy in the interests of the people and the planet, the INTA proposal backs up the vision of the Commission of a corporate-agenda as the EU way out of the crisis. The motion was approved with 23 votes in favour, 5 against (2 Greens and 2 GUE/Left and one S&D), and one abstension (…)
MOTION FOR A RESOLUTION
to wind up the debate on the statement by the Commission pursuant to Rule 110(2) of the Rules of Procedureon EU trade and investment negotiations with the United States of America
Vital Moreiraon behalf of the Committee on International Trade
European Parliament resolution on EU trade and investment negotiations with the United States of America
The European Parliament,
– having regard to the Joint Statement of the EU-US Summit issued on 28 November 2011 and the Joint Statement of the EU-US Transatlantic Economic Council (TEC) issued on 29 November 2011,
– having regard to the Final Report of the High Level Working Group on Jobs and Growth (HLWG) of 11 February 2013,
– having regard to the Joint Statement of 13 February 2013 by US President Barack Obama, European Commission President José Manuel Barroso and European Council President Herman Van Rompuy,
– having regard to the conclusions of the European Council of 7-8 February 2013,
– having regard to its earlier resolutions, in particular the resolution of 23 October 2012 on trade and economic relations with the United States,
– having regard to the Joint Statement of the 73rd Interparliamentary Meeting of the Transatlantic Legislators’ Dialogue (TLD) held in Washington on 30 November-1 December 2012,
– having regard to the Final Project Report by the Centre for Economic Policy Research (London) of March 2013 entitled “Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment”,
– having regard to Rule 110(2) of its Rules of Procedure,
A. whereas the EU and the US are world’s major global traders and investors, accounting together for nearly half of world GDP and one third of world trade;
B. whereas the EU and the US markets are deeply integrated, on average close to 2 billion EUR of goods and services being traded bilaterally each day supporting millions of jobs in both economies, and whereas EU and US investments are the real driver of the transatlantic relationship, bilateral investments totalling more than 2.394 trillion EUR in 2011;
C. whereas according to the Impact Assessment Report prepared by the European Commission, on the basis of a report by the Centre for Economic Policy Research, an ambitious and comprehensive transatlantic trade and investment partnership –once fully implemented – could bring significant economic gains as a whole for the EU (119,2 billion EUR a year) and the US (94,9 billion EUR a year), including that EU exports to the US could rise by 28% and total EU exports could increase by 6%, benefitting EU exporters of goods and services as well as EU consumers;
D. whereas the EU and US share common values, comparable legal systems and high, even if different, standards of labour, consumer and environmental protection;
E. whereas the global economy faces challenges and the emergence of new actors, and both the EU and the US must exploit the full potential of closer economic cooperation to leverage the benefits of international trade in overcoming the economic crisis and for a sustained global economic recovery;
F. whereas, following the EU-US Summit in November 2011, the HLWG was tasked to identify options for increasing trade and investment to support mutually beneficial job creation, economic growth and competitiveness;
G. whereas the HLWG has jointly analysed a wide range of potential options for expanding transatlantic trade and investment, and has in its Final Report reached the conclusion that a comprehensive trade and investment agreement would provide the most significant benefit to both economies;
H. whereas the EU is convinced that developing and strengthening the multilateral system is the crucial objective, but whereas that does not preclude bilateral agreements going beyond WTO commitments and being complementary to multilateral rules, since both regional agreements and free trade agreements lead to increasing harmonization of standards and broader liberalization favourable to the multilateral trading system;
I. whereas the Commission has, on 12 March 2013, proposed authorising the opening of negotiations and draft negotiating directives for the consideration of the Council;
The strategic, political and economic context
1. Believes that the strategic importance of the EU-US economic relationship should be re-affirmed and deepened, and that the EU and the US should design common approaches to global trade, investment and trade-related issues such as standards, norms and regulations, in order to develop a broader transatlantic vision and a common set of strategic goals;
2. Considers that it is crucial for the EU and the US to realise the untapped potential of a truly integrated transatlantic market, in order to maximise the creation of decent jobs and stimulate smart, strong, sustainable and balanced growth potential; considers this to be particularly timely in the light of the ongoing economic crisis, state of the financial markets and financing conditions, high level of public debt, high unemployment rates and modest growth projections on both sides of the Atlantic, and of the benefits offered by a truly coordinated response to these shared problems;
3. Believes that the EU should draw on its vast experience negotiating deep and comprehensive bilateral trade agreements to achieve even more ambitious results with the US;
The HLWG Final Report
4. Welcomes the release of the HLWG Final Report and fully endorses the recommendation to launch negotiations for a comprehensive trade and investment agreement;
5. Welcomes the emphasis in the Final Report on: (i) ambitiously improving reciprocal market access for goods, services, investment and public procurement at all levels of government; (ii) reducing non-tariff barriers (NTBs) and enhancing the compatibility of regulatory regimes; and (iii) developing common rules to address shared global trade challenges and opportunities;
6. Supports the view that, given already-existent low average tariffs, the key to unlocking the potential of the transatlantic relationship lies in the tackling of NTBs, consisting mainly of customs procedures, technical standards, and behind-the-border regulatory restrictions; supports the objective proposed by the HLWG to move progressively towards an even more integrated transatlantic marketplace;
7. Welcomes the recommendation to explore new means of reducing unnecessary costs and administrative delays stemming from regulation, while achieving the levels of health, safety and environmental protection that each side deems appropriate, or while otherwise meeting legitimate regulatory objectives;
8. Reiterates its support for a deep and comprehensive trade and investment agreement with the US, that would support the creation of high-quality jobs for European workers, would directly benefit the European consumers, would open new opportunities for EU companies, in particular small and medium-sized enterprises (SMEs), to sell goods and provide services in the US, would ensure full access to public procurement markets in the US, and would improve opportunities for EU investments in the US;
9. Calls on the Council to follow up on the recommendations contained in the HLWG Final Report and to authorise the Commission to start negotiations for a Transatlantic Trade and Investment Partnership (TTIP) agreement with the US;
10. Underlines that TTIP should be ambitious and binding on all levels of government on both sides of the Atlantic, including all regulators and other competent authorities; stresses that the agreement should lead to lasting genuine market openness on a reciprocal basis and trade facilitation on the ground, and should pay particular attention to structural ways of achieving greater transatlantic regulatory convergence; considers that the agreement should not risk prejudicing the Union’s cultural and linguistic diversity, including in the audiovisual and cultural services sector;
11. Considers it essential for the EU and its Member States to maintain the possibility of preserving and developing their cultural and audiovisual policies, and to do so in the context of their existing laws, standards and agreements; calls, therefore, for the exclusion of cultural and audiovisual services, including those provided online, to be clearly stated in the negotiating mandate;
12. Stresses that intellectual property is one of the driving forces of innovation and creation and a pillar of the knowledge-based economy and that the agreement should include strong protection of precisely and clearly defined areas of intellectual property rights (IPR), including geographical indications, and be consistent with international agreements; believes that other areas of divergence in IPR should be solved in line with international standards of protection;
13. Considers that the agreement should guarantee full respect for EU fundamental rights’ standards; reiterates its support for a high level of protection of personal data, which should benefit consumers on both sides of the Atlantic; considers that the agreement should take into account General Agreement on Trade in Services (GATS) provisions on the protection of personal data;
14. Recalls the importance of the transport sector for growth and jobs, especially in aviation where the EU-US markets account for 60% of world air traffic; stresses that the negotiations should meaningfully address current restrictions on maritime and air transport services of European business, including in relation to foreign ownership of airlines and reciprocity on cabotage, as well as maritime cargo screening;
15. Highlights the value of risk-based assessment and information sharing between both parties regarding market surveillance and the identification of counterfeit products;
16. Welcomes, in particular, the HLWG’s recommendation that the EU and the US address environment and labour aspects of trade and sustainable development; considers that the experience of previous EU trade agreements and the long-lasting EU-US commitments should be taken into account to strengthen the development and enforcement of labour and environmental laws and policies and promote International Labour Organization (ILO) core standards and benchmarks, decent work and sustainable development; encourages to harmonize Corporate Social Responsibility (CSR) standards; recognises that the achievement of the common standards is likely to present both technical and political challenges, and emphasises that the common goal should be to ensure that there is no diminution in the environmental ambitions;
17. Emphasises the sensitivity of certain fields of negotiations, such as the agricultural sector where the perception of Genetically Modified Organisms (GMOs), cloning and consumer health is divergent in between the US and the EU; sees an opportunity in enhanced cooperation in agriculture trade and stresses the importance of an ambitious and balanced outcome in this field; stresses that the agreement must not undermine the fundamental values of either side, for example the precautionary principle in the EU; calls on the US to lift the import ban on EU beef products as a trust-building measure;
18. Stresses that the financial services must be included in the TTIP negotiations, and calls in this context for particular attention to be paid to equivalence, mutual recognition, convergence and extraterritoriality as those are central considerations for both sides; underlines that convergence towards a common financial regulatory framework between the EU and US would be beneficial; highlights that whilst market access must be regarded as a positive step, prudential supervisory processes are vital to obtain proper convergence; stresses that negative impact of extraterritoriality should be minimised and should not be allowed to detract from a consistent approach to financial services regulation;
19. Re-affirms its support to the dismantling of unnecessary regulatory barriers and encourages the Commission and the US Administration to include in the agreement mechanisms (including early upstream regulatory cooperation) aiming at avoiding future barriers; considers that better regulation and the reduction of regulatory and administrative burdens are issues which must be at the forefront when negotiating the TTIP, and that greater transatlantic regulatory convergence should lead to more streamlined regulation which is easy to understand and apply, in particular for SMEs;
20. Reiterates its conviction that an EU-US comprehensive trade and investment agreement has the potential to lead to a win-win situation, beneficial for both economies, and that a deeper degree of integration would multiply the gains considerably to both economies; is convinced that the alignment of EU and US regulatory technical standards, where possible, would ensure that the EU and the US will continue to set global standards and would pave the way for international standards; takes the firm view that the benefits of this agreement in terms of international trade and standardisation must be carefully considered and formulated;
21. Recalls the need for pro-active outreach and continuous and transparent engagement by the Commission with a wide range of the stakeholders, including business, environmental, agricultural, consumer, labour and other representatives, throughout the negotiation process, in order to ensure fact-based discussions, build trust in the negotiations, obtain proportionate input from various sides and foster public support by taking stakeholders’ concerns into consideration; encourages all stakeholders to actively participate and put forward initiatives and information relevant to the negotiations;
22. Cautions that quality should prevail over time, and trusts that the negotiators will not rush to a deal that does not deliver tangible and substantive benefits to our businesses, workers and citizens;
Role of Parliament
23. Looks forward to the launch of negotiations with the US, following them closely and to contributing to their successful outcome; reminds the Commission of its obligation to keep Parliament immediately and fully informed at all stages of the negotiations (before and after the negotiating rounds); is committed to address the legislative and regulatory issues that may arise in the context of the negotiations and the future agreement; reiterates its basic responsibility to represent the citizens of the EU and looks forward to facilitate inclusive and open discussions during the negotiating process; is committed to take a proactive role to collaborate with its US counterparts when introducing new regulation;
24. Is committed to working closely with the Council, the Commission, the US Congress, the US Administration and the stakeholders to achieve the full economic, social and environmental potential of the transatlantic economic relationship and strengthen EU and US leadership in liberalization and regulation of trade and foreign investment; is committed to encourage a deeper bilateral EU-US cooperation to assert their leadership in international trade and investment;
25. Recalls that Parliament will be asked to give its consent to the future TTIP agreement, as stipulated by the Treaty on the Functioning of the European Union and that therefore its positions should be taken in due account at all stages;
26. Recalls that Parliament will endeavour to monitor the implementation of the future agreement;
27. Instructs its President to forward this resolution to the Council and the Commission, the governments and parliaments of the Member States, and to the US Administration and Congress.
Texts Adopted, P7_TA-PROV(2012)0388.
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.”
By Doug Palmer and Douwe Miedema – WASHINGTON | Thu Apr 18, 2013 8:15pm EDT
(Reuters) – The United States and the UK aim to include financial services in a proposed free-trade agreement between Washington and the 27-nation European Union, the British ambassador to the United States said on Thursday.
The accord would aim to smooth out regulatory differences that have stunted U.S.-EU trade in areas such as agriculture, chemicals, pharmaceuticals and autos. The EU is already the largest U.S. trading partner.
“We are pretty keen, pretty clear, that as the owners of the two most significant international financial centers, on either side of the Atlantic … that we would both like to see financial services covered by these negotiations,” said Peter Westmacott, the UK ambassador to the United States.
The agreement would likely address issues such as what percentage of people on the board of a foreign bank need to be U.S. citizens, and what stake foreign banks can hold in U.S. financial institutions, another UK diplomat said.
That letter outlined the administration’s desire to negotiate new market openings for U.S. services companies and to improve regulatory cooperation across the Atlantic. It did not specifically mention financial services sectors such as banking or insurance.
But working groups from the U.S.-EU business coalition are already looking at market access barriers and regulatory issues related to insurers and banks and considering comments from companies, a U.S. business official said.
“We think it might be sensible drawing the world’s attention to the importance of (the trade pact) before, during or after the G8 summit … that might be a good time to get it all going,” Westmacott said.
(Reporting by Doug Palmer and Douwe Miedema, writing by Anna Yukhananov; Editing by Xavier Briand and Peter Cooney)
Article written by Benjamin Fox and published by www.euobserver.com
BRUSSELS – The French government has dismissed as “naive” suggestions that a transatlantic trade deal with the US could substantially benefit the EU economy and take it out of crisis.
Speaking on Thursday (18 April) following a meeting of EU trade ministers to discuss the draft negotiating mandate, French trade minister Nicole Bricq said “it would be naive to think that the discussions, which will be long and difficult … will really save Europe from the current anaemia.”
EU ministers are expected to sign off on the commission’s negotiating mandate in mid-June. The talks are then expected to take up to two years, although trade commissioner Karel de Gucht is hoping to strike a deal in time for next May’s European elections.
Bricq also said that Paris would insist on the exclusion of Europe’s audiovisual sector from the talks.
“The position of France is that we want exclusion from discussion of cultural items. This is non-negotiable. It is not a surprise. I have said it and if we don’t have exclusion, we will have no agreement,” she said.
The French demands – with the traditional focus on cultural issues – indicate the delicate balance EU negotiators will need to strike to broker a deal. Officials and other EU governments are concerned that keeping certain sectors away from talks could encourage the US to draft its own ‘red lines’.
Irish business and employment minister, John Bruton, who chaired the meeting, struck a more optimistic tone. Ministers had made “real progress towards achieving an agreement,” he said.
De Gucht and Mike Froman, International trade advisor to Barack Obama, were also present at Thursday’s talks. Froman’s presence marks the first time that a US government representative has discussed EU-US trade policy directly with trade ministers.
Officials in Brussels have been talking up the Transatlantic Trade and Investment Partnership with the US which they say could be worth as much as 0.5 per cent of EU GDP and create 400,000 jobs.
A recent paper by the Centre for Economic Policy Research (CEPR), a London-based think tank, indicating that a US trade deal could increase EU economic output by up to €119 billion a year, the equivalent of €545 a year for the average family of four.
But failure to go beyond agreement on tariff barriers would lead to economic gains of no more than €23.7 billion, according to the CEPR. Liberalising the services market and public procurement rules would be worth an additional €5.3 billion and €6.4 billion.
Article published by Huffington Post – Posted: 04/03/2013 7:30 am EDT | Updated: 04/03/2013 10:58 am EDT
WASHINGTON — The Obama administration is pursuing a free trade agreement with the European Union that would grant corporations new political power to challenge an array of regulations both at home and abroad, according to an administration official involved in the negotiations.
While the plan is still in its early stages, the effort alarms consumer and environmental advocates who worry it will lead to a rollback of important rules and put multinational companies on the same political plain as sovereign nations.
If states are unable to pass and enforce laws within their borders, it could change the nature of their community and government, nonprofit groups emphasize. Exactly how broad these corporate political powers will be is undetermined, but one aspect of the agreement, known as “investor-state dispute resolution,” would allow a company to appeal a regulatory rule or law to an international court, most likely the World Bank. The international body would be given authority to impose economic sanctions against any country that violated its verdict, including the United States.
A spokesperson for the Office of the United States Trade Representative confirmed to HuffPost that the agency “will seek the inclusion of procedures for expeditious, fair and transparent investor-state dispute resolution” under a new pact with the EU, but said that the new legal framework will be “subject to appropriate safeguards and the protection of legitimate government regulatory interests.”
The investor-state resolution is opposed by many public interest groups.
“These provisions elevate corporations to the level of nation states and allow them to sue governments over nearly any law or policy which reduces their future profits,” said Ilana Solomon, trade specialist for the Sierra Club, an environmental protection group.
She said investor-state resolution is “terribly risky for communities, the environment, and our climate.”
The U.S. Chamber of Commerce has been advocating for a new trade deal between the U.S. and EU for more than a year, and President Barack Obama endorsed the project in his 2013 State of the Union address.
Since EU nations and the U.S. are already party to World Trade Organization treaties, there are relatively few tariffs that could be eliminated among the countries. In written reports, the Chamber, a lobbying group representing large corporations, has pushed for increased “regulatory compatibility” and “updated and comprehensive” investment terms to “prevent discrimination against investors” in the trade pact. The Chamber declined to discuss the deal for this article.
Investor-state resolution has been a common component of U.S.-negotiated pacts with individual nations since the North American Free Trade Agreement in 1994. But such resolution is not currently permitted in disputes with the U.S. and EU, which are governed by the WTO. All trade deals feature some kind of international resolution for disputes, but the direct empowerment of corporations to unilaterally bring trade cases against sovereign countries is not part of WTO treaties. Under WTO rules, a company must persuade a sovereign nation that it has been wronged, leaving the decision to bring a trade case before the WTO in the hands of elected governments.
Traditionally, this proposed political empowerment for corporations has been defended as a way to protect companies from arbitrary governments or weakened court systems in developing countries. But the expansion of the practice to first-world relations exposes that rationale as disingenuous. Rule of law in the U.S. and EU is considered strong; the court systems are among the most sophisticated and expert in the world. Most cases brought against the United States under NAFTA have been dismissed or abandoned before an international court issued a ruling.
But companies have grown increasingly ambitious in recent years, with major outfits including Exxon Mobil and Dow Chemical challenging Canadian rules that apply to offshore oil drilling, hydraulic fracturing (“fracking”) and the use of pesticides. In December, drug giant Eli Lilly brought a NAFTA case against the Canadian government after it invalidated a patent for one of the company’s medications.
“The Chapter 11 investor state arbitration mechanism provided for in NAFTA has been used more than 60 times since the treaty was signed,” Eli Lilly spokesman Michael McDougall told HuffPost in a written statement. “Many trade treaties have dispute resolution and compensation mechanisms. We believe the current test for determining whether an invention is ‘useful’ under the patent statute in Canada has become deeply flawed, inconsistent with international norms and treaties, and needs correction.”
Companies have won some of those rulings, but opponents of investor-state rules argue that the mere threat of an international case can be enough to dissuade governments from adopting or enforcing important rules.
“The dirty little secret about [the negotiation] is that it is not mainly about trade, but rather would target for elimination the strongest consumer, health, safety, privacy, environmental and other public interest policies on either side of the Atlantic,” said Lori Wallach, director of Public Citizen’s Global Trade Watch. “The starkest evidence … is the plan for it to include the infamous investor-state system that empowers individual corporations and investors to skirt domestic courts and laws and drag signatory governments to foreign tribunals.”
The Obama administration is also pursuing an aggressive investor-state resolution system under the Trans-Pacific Partnership, a trade deal with several Pacific nations.
Talks with the EU are at the earliest stages and will take several months to conclude. A USTR spokesperson told HuffPost that it will consult with public interest groups and Congress before pursuing any specific language for the treaty.
Is Europe hungry enough to accept a deal with the US? A first comment to the EU draft mandate for the TTIP
Following its non-transparent practice in trade and investment policy making, last 13 March the EU Commission adopted a “restricted” mandate proposal1 for the Transatlantic Trade and Investment Partnership (TTIP), between the European Union and the United States of America. The European Council is expected to endorse it in the Foreign Affairs Council dedicated to Trade of 18 June. The adopted mandate will be still a “restricted” document, with limited access from Parliamentarians and no access for NGOs and social movements. The launch of negotiations should follow during a EU-US Summit.
The democratic deficit that affects the EU procedure in trade and investment is notorious (e.g.secret mandates, secret negotiating texts, rare public discussion, a limited role of the European Parliament on trade and investment issues to only approve or disapprove agreements after the negotiations have been closed). In most cases the texts of agreements remain secret long after the conclusion of the negotiations – as was the case with the EU-Colombia/Peru FTA. It is clear that this non-transparent and exclusive approach falls far short of democratic governance, especially in view of the very broad scope, the high “ambition” of the agreement and the many implications it may have for people and nature on both sides of the Atlantic. As many recent “free trade” agreements show, they have not much to do with “freedom” and “trade”: they mainly aim to reduce non-tariffs barriers, that is they reduce the possibility and power of the state and public authorities to regulate in the public interest.
The draft mandate proposal is short, general and vague, and therefore – if approved like this – will give a free-hand to the Commission to negotiate. It confirms the ambition of the High Level Working Group Report. How this will turn into concrete handling of a wide range of hot issues is too early to say. President Obama believes that a deal is now possible . He expects “to see more pressure from more countries on the other side of the Atlantic to get this done than we have seen in the past,” especially because “they are hungrier for a deal than they have been in the past”2. The mandate seems to confirm: the EU elites are hungry for a deal because they want to use the crisis as an opportunity to advance deregulation in the interest of Europe’s big business.
Interestingly, despite the fact that Obama has made it clear that agriculture will have to be part of the negotiations, the draft mandate does not mention agriculture let alone agricultural subsidies, although trade in agricultural products may be implied in the paragraph on market access. So far the EU seems to uphold its position that agricultural subsidies are an issue that can only be dealt with at the WTO, because EU farm support, with the exception of direct export support which has become very small, is not country specific. Given the clearly voiced position of the US on this, it is difficult to see how agriculture would be excluded and subsequently how t the issue of agricultural subsidies could be avoided. The mandate in any case includes sanitary and health questions which are closely related to agricultural products, but it does not offer more clarity on how for instance the beef hormones or chlorine chicken issues will be addressed. When the Commission states that sanitary measures should be “science based” does it intend to allow GMOs, hormone beef and chlorine chicken into the EU market?
The draft mandate is also extremely short and thus open-ended on another sensitive issue since the ACTA-debacle, namely Intellectual Property Rights. Apart from the need to include geographical indications it does not say much more than that “the agreement shall cover issues related to intellectual property rights”.
The mandate also speaks of “addressing long-standing market access barriers in services” but proposes that “the agreement shall not contain provisions that would risk prejudicing the Union’s cultural and linguistic diversity, namely in the audio-visual sector”. However the Commission does not explicitly exclude audio-visual services, nor any other sensitive sectors like education, health, water distribution, maritime transport, cabotage, etc., nor does it mention the need to strongly regulate the financial sector.
Equally sensitive is the approach to government procurement where it is clear that the Commission intends to target the sub-federal level in the US.
The paragraph on investment protection confirms the approach already used in the EU-Canada-CETA negotiation, designing a model which still offers tremendous privileges to investors (the investor-to-state dispute settlement mechanism; ISDS) but adds some specifications that supposedly would mitigate excessive/unjustified use of it. The draft indeed still speaks of the “highest possible level of protection and certainty” and of the promotion of the “European standard of protection”. If “European” means, “as in the EU member states BITs” this would imply “unspecified” protection standards, very broad definitions, no transparency, etc. The insistence on an investor-state dispute mechanism in an EU-US agreement in spite of the robust legal systems in both parties can only be seen as an attempted assault on these systems and on democratic governance.
Finally the mandate includes a number of misleading references to “sustainable development”, social and environmental standards etc. But as evident in the paragraph on Trade and Sustainable Development the Commission does not foresee in the requirement to ratify the ILO conventions that the US has not ratified, or in an effective enforcement mechanism.
In sum the draft confirms the will to impose greater regulatory “convergence” and “harmonization” of future regulations between the EU and the US in the only interest of transnational corporations and the financial industry. The vagueness of the draft would allow the Commission great freedom to achieve this. Social, labour and environmental rights in both sides of the Atlantic are under fire.
Seattle to Brussels Network, 5 April 2013
1The Recommendation for a Council Decision authorising the opening of negotiations on a comprehensive trade and investment agreement, called the Transatlantic Trade and Investment Partnership, between the European Union and the United States of America has been disclosed by the online Magazine Inside US Trade on http://insidetrade.com/.
2Inside US Trade, Obama Expresses Guarded Optimism On U.S.-EU Trade Deal, But Sees No Guarantee, 12 March 2013
Following its practice of untransparence in trade and investment issues, last 13 March the EU Commission adopdet a “restraint” Recommendation for a Council Decision authorising the opening of negotiations on a comprehensive trade and investment agreement, called the Transatlantic Trade and Investment Partnership, between the European Union and the United States of America. The online magazine Inside US Trade published this draft mandate on 28 March 2013.
In the EUROPEAN UNION
- The EU Commission drafted a proposal and sent it to the Council on 12th March 2013 (see EC Press Release . The draft proposal, a “restraint” document, will be discussed by the Council in the Trade Policy Committee (TPC) and is expected to give the final mandate to the Commission on 15/16 June.
- In the INTA Committee of the European Parliament a standing monitoring committe has been created and it is composed by: Moreira (Chair, S&D, Portugal), Quisthoud-Rowohl (EPP, Germany), Schaake (ALDE, Netherlands), Sturdy (UK, ECR), Jadot (Greens, France) and Scholz (GUE, Germany)
- The INTA Committee will prepare a Plenary Resolution on the TTIP for the May or June Plenary. A first discussion happened in INTA meeting on 20 March 2013 (see video of the meeting at minute 10.32.41)
- A Draft Report on the role of the EU in promoting a broader Transatlantic Partnership (Rapporteur MILLÁN MON Francisco José) awaits Parliament first reading (this does not come from INTA, but from Foreign Affairs Committee)
In the USA
- The Obama administration sent the Notification to the House of Representatives to announce the intention to negotiate with the EU
When it comes to face-to-face meetings, German Chancellor Angela Merkel and United States President Barack Obama have had a somewhat one-sided relationship so far. The chancellor has been to Washington several times, but Obama has never been to Berlin as president, despite several invitations.
It could finally happen in June. Obama’s advisors are mulling whether the president should visit Berlin during his trip to Europe. There would be two reasons to do so. First, this year marks the 50th anniversary of former President John F. Kennedy’s legendary Berlin speech, in which he proclaimed: “Ich bin ein Berliner.” And negotiations are set to begin this summer over a trans-Atlantic free trade agreement between Europe and the United States, which the president announced two weeks ago.
Industry representatives are already waxing lyrical about the prospect of the free world, with its 800 million consumers, joining forces to form a gigantic trading bloc with common rules. The American Chamber of Commerce in Germany sees the agreement as a promise of more growth, while officials at the Federal Chancellery call it the cheapest way to stimulate the economy. The old industrialized countries intend to confront China’s expanding economic might by creating a shared market of common standards, patents and laws.
But the planned trading union isn’t going to be an overnight success. Europe and the United States face years of painful negotiations, and many critics see the whole thing as a flight of fancy. Consumer advocates, as well as environmental and Internet activists, are preparing to fight the treaty with all means at their disposal. They fear that bad compromises will be made at the expense of consumers in secret negotiations between the European Commission and the Obama administration.
“The treaty cannot fail because of chlorinated chickens this time,” says German Foreign Minister Guido Westerwelle. He is referring to the Europeans’ distaste for US meat products that are disinfected in chlorine baths, products that are currently banned from importation to Europe.
Major Differences Over GM Foods
Contentious issues like this have brought down many a trans-Atlantic agreement. They may sound petty, but elementary questions of consumer and citizen’s rights are at stake. What do we want to eat? How are our personal data treated in the Internet? In recent years, very different traditions have developed in the United States and Europe in this regard, creating considerable potential for conflict. For instance, there are much greater restrictions on the sale of genetically modified food products in Europe, while most Americans have no problem with such products, as long as they are cheap and look good.
The technology is now used by most US farmers, enabling them to grow plants that are resistant to insects and produce higher yields per hectare. Last year, 88 percent of corn, 93 percent of soybeans and 95 percent of beets grown in the United States were from genetically modified seed. “Transparency, freedom of choice and the principle of foresight cannot be sacrificed to the free movement of goods in Europe,” says Christoph Then, managing director of Testbiotech, a non-profit association opposed to genetic engineering.
The American farm lobby has long fought against European trade barriers for genetically modified potatoes and hormone-treated beef. Now the free trade treaty will provide them with considerable leverage for cracking the European front.
In a letter to US Trade Representative Ron Kirk, Max Baucas, a Democrat senator from Montana, outlined what he hopes to achieve in the upcoming negotiations. His list includes EU restrictions on genetically modified grain, the use of hormones in cattle and “unscientific restrictions on the use of safe feed additives like ractopamine in beef and porks,” all positions that are anathema to European consumer advocates.
For example, American farmers use the hormone rBST, developed by the agricultural corporation Monsanto. The drug is intended to increase milk production by up to 20 percent and meat yield by up to 30 percent. But it is also suspected of causing cancer in human beings. In addition, high-performance cows require additional antibiotic treatment, because their mammary glands are more likely to become infected.
European Farmers Fear Competitive Disadvantage
“If American hormone meat reaches Europe, it will have a considerable impact on European producers,” warns Lutz Ribbe, an agricultural expert with the environmental organization Euronatur. Because production is cheaper in the United States, says Ribbe, European farmers are at a clear competitive disadvantage.
Free trade agreements with other countries show how justified the concerns are. In ongoing talks with India, the EU wanted to include a section on “sustainable development” in the agreement, but the Indians refused. Negotiations with Canada also stalled, partly because of disputes over agricultural issues.
In addition to free trade for agricultural products, the Americans want to place intellectual property rights at the center of the upcoming trans-Atlantic poker game. The business interests of Hollywood and Silicon Valley are behind the effort. They produce movies and software that are coveted worldwide but can often be copied easily. To address the problem, the Americans already negotiated a trade agreement with international partners and the EU in recent years, but then the European Parliament thwarted the effort.
The failure of the Anti-Counterfeiting Trade Agreement (ACTA) was the first major victory for an international web public that had organized a major campaign on the Internet and major demonstrations in Warsaw, Berlin and Paris. The activists felt that ACTA would threaten freedom on the Internet.
Jérémie Zimmermann, one of the organizers of the anti-ACTA movement, believes the time will soon come for new protests. The spokesman for the Paris-based organization La Quadrature du Net can prove that old paragraphs from the failed ACTA were inserted into a preliminary version of the proposed Comprehensive Economic and Trade Agreement (CETA), which the European Commission is currently negotiating with the Canadians and whch could serve as a blueprint for the treaty with the Americans.
Rift on Data Protection
“It’s a favorite game of the entertainment industry to hijack free trade agreements for their own purposes,” says Zimmermann. He sees democracy at risk when negotiations concerning the future of all people are conducted behind closed doors. “Millions of citizens can be mobilized if their freedoms are threatened,” he says.
Jan Philipp Albrecht, a Green Party member of the European Parliament, who opposed ACTA from the start, is also pessimistic about the trans-Atlantic free trade deal, unless national parliaments are brought in early on. “Otherwise the free trade agreement will collapse under opposition from ordinary Europeans.”
Albrecht, the European Parliament’s rapporteur for the proposed Data Protection Regulation, sees considerable potential for conflict. While US companies can use their customers’ personal data with almost no restrictions, Europeans are protected by minimum standards. Finding a compromise on this issue is virtually impossible, says Albrecht.
US companies like Facebook and Google see European data privacy as a potential threat to their billions in profits. Indeed, European authorities have just threatened, once again, to penalize Internet giant Google for its treatment of the personal data of European customers.Another option is to exclude contentious issues like agriculture and data protection from the free trade negotiations. But if that happened, there wouldn’t be much of a trade deal left and the whole project would be redundant. Customs duties, for example, are already so low today, at about 3 percent on average, that they play a relatively minor role.
The free trade agreement is “by far our most important project for the future,” says Chancellor Merkel. It appears that not everyone in Europe agrees.
Translated from the German by Christopher Sultan