The European Union (EU) and the United States (U.S.) have been negotiating the Transatlantic Trade and Investment Partnership (TTIP) since 2013. Intended to revive the transatlantic economies by eliminating tariffs and accepting various degrees of regulatory convergence or mutual recognition across a wide range of sectors, and solidify EU-U.S. relations, it now appears to be in trouble. There are numerous sectors and issues where, for political, cultural, and legal reasons, the EU and the U.S. look unlikely to recognize each others’ standards, potentially causing the agreement to collapse. This raises two critical concerns. First, since a deal will require legislative ratification on both sides of the Atlantic, public backing is essential. Growing public opposition, especially in Europe, is primarily focused on sectors where negotiations are stuck. Second, a failed TTIP will have far-reaching ramifications beyond trade and investments, affecting security developments in NATO, policies in East Asia, and efforts to counter Putin’s complete disregard for domestic and international law.
Unlike their previous, separate bilateral trade agreements with third countries, where the EU and the U.S. used their size and attractiveness to extract concessions and regulatory changes, negotiations between equals have proven immensely challenging. For example, the U.S. wants scientific findings to be the only basis for granting EU market access to American beef, poultry, and pork. The EU refuses. Europeans trust science to guide most policies, but food regulations are driven equally much by culture and perceptions. There is an expanded use of the precautionary principle, where products are not approved if there are any doubts of their effects and consequences. Add in that many Europeans, led by Germany, perceive the U.S. as having lower safety standards, and the result is that even though most processes used by the U.S. to ensure safe food production have likewise been deemed safe by the European Food Safety Agency, political approval has remained elusive. Interestingly, Americans also doubt German standards. My own discussions with U.S. officials indicate that Congressional support for TTIP is contingent on expanded access for American poultry. Other areas of contention include investments, financial regulations, public procurement, and public services.
Polls show continuously declining support for TTIP, especially in Europe. Support for TTIP now stands at 39% in Germany and Austria, whereas a majority of Brits, primarily concerned with privatization of public health services, doubt TTIP will serve them well. European and American public interest groups have skillfully combined traditional tactics (protests, lobbying) with savvy use of all kinds of social media and other online tools to present “regulatory convergence” as meaning bans on improvements to public safety by cementing current standards, while “regulatory compatibility” and “common standards” are interpreted as euphemisms for lowering labor, environmental, and consumer standards. The controversial Investor-to-State-Dispute Settlement system (ISDS), a mechanism to ensure that foreign investors have access to non-legislative, de-politicized, non-domestic, legal redress for compensation when a host country’s government violates the terms of the treaty (for example through an illegal expropriation), is slated for inclusion. Both parties agree on revisions to ensure transparency and limit national liabilities. Yet interest groups are opposed, presenting ISDS as “corporate favoritism.” While language manipulation and creative associations may be little better than public officials citing frequently criticized economic models in order to create overly optimistic expectations of jobs and economic growth stemming from TTIP, there is one big difference: the public believes civil society groups.
Both allies have significant geopolitical interests in Asia, but a failed TTIP will compound existing disagreements over how to approach the challenge of a globally active China. The size and importance of the transatlantic market place to the rest of the world’s producers and service providers means that common transatlantic standards would, as has been repeatedly stated by President Obama and other officials on both sides of the Atlantic, in effect set global standards before others (read China) can write the rules of the game. Samsung for instance, is reported to be undecided on whether to use American or European specifications for its next generation electronics, and if the Atlantic partners fail to agree, it may go with Chinese standards. A failure to include investor protection in TTIP will also significantly weaken prospects for its inclusion in bilateral investment treaties with China, which both the EU and U.S. are currently negotiating. Even citizen groups I have spoken with are under no illusion that the state-run Chinese judicial system will award foreign investors fair and equitable treatment. Adding to transatlantic differences over China’s currency manipulation (a huge concern in the U.S.), and Europe’s more welcoming approach to Chinese investments, was the March 2015 decision of the four largest European states to join the China-led Asian International Infrastructure Bank, much to the chagrin of the U.S. The latter is also increasingly upset that leading European countries are backtracking on commitments to increase defense spending to the commonly agreed NATO target of 2% of GDP. A further test to transatlantic cohesion arose when a number of EU states explicitly questioned the wisdom of continued sanctions against Russia, even if they eventually agreed to keep sanctions in place until December 2015. If TTIP collapses America may well lose patience with what appears to be a wavering European partner.
A strong and unified transatlantic message about not only the economic benefits of TTIP, but which also makes clear that TTIP cannot change either side’s regulatory system (a trade agreement cannot alter domestic legal processes, only domestic legal processes can do that), is essential if negotiations are to succeed. So too is an emphasis on maintaining a liberal, rules- based international order. This can only be achieved through a concerted and holistic approach that is proactive. It must unite media relations, and use all channels of communication, including online and social media, where many voters get their information. The fallout from a failed TTIP is something either partner can ill afford.
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