European and American negotiators gather on Monday in Washington DC for the third round in the negotiations for a Transatlantic Trade and Investment Partnership (TTIP). These latest talks will give a better idea of whether the United States and the EU are likely to reach agreement by their ambitious December 2014 deadline.
Since the start of negotiations in July, there has been considerable effort to move things forward on both sides of the Atlantic. Progress has been made at recent meetings, but elections in America and Europe in 2014, the need to harmonize regulations and differences in consumer attitudes may not allow enough time to complete the process on schedule.
Supporters of trade liberalization were encouraged by the limited agreement reached recently by the World Trade Organization in Bali after 18 years of negotiations between 159 countries. Another positive note is that, after four years of talks, the Canadian European Trade Agreement could become active early next year. The chief European Union negotiator for TTIP, Ignacio Garcia Bercero, has stated this could become a benchmark for the US-EU agreement, particularly in areas where there may be overlap.
The WTO proved that agreement on trade is possible, but this multilateral deal will only improve modestly the flow of products across borders. Furthermore, it has none of the complexities of the proposed bilateral TTIP, which addresses about 25 industries in a transatlantic economy that represents approximately half of the world’s gross domestic product.
There are considerable hurdles to overcome in the form of existing EU and US legislation, current product standards, and market regulation for consumers around labelling and weights and measures. This will take time but each side can rely on enough expertise to bring about a favourable outcome. In negotiating the individual trade categories, ranging from pharmaceuticals to intellectual property, both are using outside experts from the industries affected, stakeholders and government.
Both sides have stressed the need for transparency, which is rare in trade agreement negotiations. This openness has helped to keep all parties informed, including answering questions from industry stakeholders. Following the November round of negotiations in Brussels, an open question-and-answer session was attended by more than 400 groups interested in the outcome of the TTIP talks. Among them were stakeholders as diverse as the World Wildlife Fund, manufacturers of generic drugs and cosmetics, and representatives of the insurance, intellectual property and automotive industries.
Electoral factors in the EU and America could have an impact on TTIP in 2014. Elections to the European Parliament will be held in May, with new MEPs taking their seats in November. While the negotiations mandate from the European Commission continues until a treaty can be proposed to the Council and the Parliament, the election results could change the balance of opinion in the parliament and even the Commission’s view, especially if they lead to the appointment of a different trade commissioner.
In the United States, the November 2014 midterm elections could alter the composition of the House of Representatives and the Senate. Particularly if the Republicans win the Senate, the elections could create a different balance on TTIP, though this seems unlikely at the moment. A lot will also depend on what view the next Congress takes towards granting the president ‘fast track’ authority in the negotiations. Furthermore, the chairmanship of the pivotal Senate Finance Committee will be up for grabs as Senator Max Baucus, a strong advocate of TTIP, steps down.
Too important to fail
Politics may be of concern, yet even the shutdown of the US government did not slow down the negotiations. US Trade Representative Mike Froman and EU Commissioner for Trade Karel de Gucht do not seem worried about progress towards the deadline, even as they acknowledge the challenges that remain. The political will displayed by President Barack Obama and European Council President Herman Van Rompuy in supporting their negotiators, in particular, has been an important driver for the talks. There is a strong view that TTIP is too important to Europe and the United States to be allowed to fail.
Ultimately, boosting jobs, growth and exports will be the greatest incentives for both sides to reach an agreement. A recent poll by the Bertelsmann Foundation found that TTIP would have a clear positive economic impact in each of the 50 US states. This could bode well for a draft approval by the end of 2014 and a treaty in 2015 – before the United States turns its attention to the next presidential elections.
Whatever happens to the 2014 deadline, however, efforts towards the creation of the world’s largest trading bloc will continue. As one pundit said in response to a question on the timescale for the negotiations, ‘If the TTIP negotiations run out of gas by the end of 2014, they will go back to the gas station and fill up the tank.’ This is another way of saying that Washington and Brussels will remain committed to the success of TTIP regardless of whether they meet their tight deadline. Nonetheless, for the reasons above, their focus will remain as long as possible on concluding negotiations by the end of 2014 and signing a treaty, possibly in the first quarter of 2015.
It is to be hoped that the persistence shown so far will continue after this round of talks and in subsequent ones throughout next year. With political will, the negotiations will hopefully produce a treaty whose time – for historical, political and economic reasons − has come.
Beyond a successful trade agreement between Europe and the United States, a true Transatlantic Trade and Investment Partnership could even be a benchmark for standards and regulations for the rest of the world.
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