Thomas Lahey is a student at the Catholic University of America and aspiring jurist.
EU and US negotiators will meet in New York City between 25-29 April to continue discussions about finalising the Transatlantic Trade and Investment Partnership (TTIP). Commissioner Cecilia Malmström and US Trade Representative Michael Froman have undertaken an ambitious agenda to agree on a framework for this historic trade deal.
The EU has been very busy in the past several years negotiating expansive free trade agreements across the globe, from the EU-Vietnam deal concluded on 2 December 2015, EU-Canada CETA deal finalised in early March, the EU-Singapore deal concluded last summer and of course the DCFTA with Ukraine that came into force on 12 April. The United States, on the other hand, has finished negotiating the Trans-Pacific Partnership (TPP) after nearly two dozen rounds of talks concluding in Atlanta, Georgia, but the Senate is reluctant to move forward on ratification in the election year.
But TTIP negotiations have seemed to stall, in large part because both sides have fundamentally different views on a range of issues, as broad as the creation of a tribunal body to hear appeals on regulations to as simple as whether poultry can be washed with chlorine solution before being sold. It might seem trivial, but a lot of disagreements centre around specific issues. The EU and the United States have fundamentally different policies concerning food and agriculture regulation, transparency and financial oversight. These differences have put a lot of pressure on negotiators to reconcile disputes, but have run into a wall.
Is TTIP in danger?
So far, TTIP is much like most other trade deals. Reduced barriers on imports, specifically on agriculture and automobiles, aero technology and pharmaceutical products, will help open 50% of the world’s economy to tariff-free trade. The arguments in favour of TTIP aren’t purely pro-business. The EU and US are negotiating some of the toughest environmental protections and labour rules in any FTA ever.
That doesn’t mean there aren’t significant challenges ahead, however. An April 24 meeting at the Hannover Messe trade fair between Obama, U.S. Trade Representative Michael Froman, German Chancellor Angela Merkel and EU Trade Commissioner Cecilia Malmström is being billed as the “last chance” to wrap up the deal before the White House changes hands in January 2017. The US Presidential election has seen candidates for both the Republicans and Democrats criticise President Obama’s trade agenda with TPP partners and many worry the same could happen with TTIP and could potentially derail the talks completely.
In addition to the US Presidential election this year, France and then Germany will have elections coming up in 2017 and 2018, respectively. If TTIP fails to be completed by the end of this year, Europe may no longer be on board, either. Chancellor Merkel raised the stakes last week at a meeting with the heads of international economic organisations like the World Trade Organization, International Monetary Fund and World Bank, saying in a press-release, “We welcome the conclusion of the Trans-Pacific Partnership and expect significant progress in the negotiations on a Transatlantic Trade and Investment Partnership in 2016”. World leaders know what is at stake if TTIP doesn’t move forward at the 13th round in New York and they’re trying to light a fire under the negotiators to get it done.
But can it get done in New York?
In all likelihood, no. There are still significant gaps to bridge in the areas of Intellectual Property, product labeling, GMO foods and produce, and environmental regulations. The Commission has set out a far more ambitious carbon elimination agenda than the United States has and has taken action that many would argue is targeting GMO production in Europe, something the United States has embraced to keep food prices low. The negotiations have so far been slow- a result of pressure from lobby-groups on both sides of the Atlantic, election season heating up in the US and just generally different ideas about even simple issues. Many of the 24 chapters outlined by negotiators when this deal began in 2013 have yet to be resolved, even though some are simple areas for agreement. The president of the European Parliament, Martin Schulz, expressed doubt the two sides could reach a deal unless the United States moves closer to the EU’s position in areas like investment, public procurement, financial services and protection for regional food names. The US has, for example, lower financial regulatory standards, which Europeans worry could harm EU consumer protection laws.
I have previously written that trade benefits all societies, not just the advanced economies. In this case, it makes sense for the advanced economies to trade freely with one another. If we trade with developing economies, why wouldn’t the already developed economies trade with one another without tariffs and shared regulatory processes?
TTIP will open up the world’s largest trading partners to barrier-free movement of manufacturing, science technology, capital and innovation. With 50% of the world’s GDP in play, TTIP- along with TPP- will allow for a vast geographic and economic advantage for 70% of the global economy. There are barriers to TTIP’s ratification that have already been mentioned, but there are others too- the lapse of the Safe Harbour agreement and the EU’s proposal to scrap visa-free travel for Americans and Canadians in the Schengen Area- just to name a few.
If the United Kingdom votes to leave the European Union, however, it will not have the opportunity to negotiate its way into this massive liberalisation of trade. The UK would have to negotiate a separate trade deal with the United States (and Europe too, for that matter) which could take years and see Britain miss out on a potential global economic advantage. With the United States as Europe’s largest trading partner, no Member State will want to miss out on the huge benefits TTIP will bring to Europe’s sluggish economy. Hopefully, the 13th round in New York City will bring the EU and US closer to free trade cooperation.
For more information about TTIP and the negotiations, please visit the following links:
The Twelfth Round of Negotiations for the Transatlantic Trade and Investment Partnership (TTIP)
TTIP: Towards an EU–US Trade Deal
White House Fact Sheet: Transatlantic Trade and Investment Partnership (TTIP)
TradeEU Country Profile- United States
