Even as negotiations for the Transatlantic Trade and Investment Partnership (TTIP) stall because of the US government’s shutdown, trade negotiations between Canada and the EU continue to drag on without progress. Negotiations between Canada and the EU on a Comprehensive Economic and Trade Agreement (CETA) began in May 2009 with objectives similar to TTIP’s—regulatory cooperation, greater investment, and procurement access—in addition to more traditional market access aims. However, after 4 years of talks CETA has made little perceivable progress in the last year. Canadian negotiators have done everything in their power, and the Prime Minister is now responsible for reaching an agreement.
The EU has never concluded a comprehensive trade and investment agreement with another advanced economy. What lessons, then, can CETA offer for TTIP’s negotiations? There are three main lessons to be learned from CETA: 1) procurement access is highly complicated; 2) market access for agricultural products is one of the greatest possible gains from an agreement and simultaneously one of its major hurdles; and 3) complicated negotiations between advanced economies can defy political timetables.
One issue that continues to be a roadblock to the completion of CETA is public procurement, or the ability of investors in one economy to vie for the right to sell goods or services to governments in the other economy. This is particularly difficult on the Canadian side, because the federal government does not have the power to agree to all the necessary terms without state-level governments’ consent. For legal reasons, this may also complicate TTIP negotiations. US negotiators may have to bring states to the table, and EU Member States will have to come to agreement with each other on the terms of access.
Agricultural products, particularly processed foods, are subject to some of the highest tariff barriers in Canadian and European markets, and in the US the situation is similar. Thus, this sector stands to make some of the greatest gains if tariff barriers are lowered or eliminated. Yet in CETA this market access issue has become be one of the major roadblocks to the completion of the agreement. Beef and pork quotas are proving particularly problematic for the Canadians. The vast majority of the agreement is finalized, but the Prime Minister still has to pen in those numbers and determine what producers will lose protection. There are signs for optimism, however, as the EU seems to have granted Canada limited access for agricultural products and has accepted negative lists.
Finally, free trade agreements between large, advanced economies that address investment and regulatory barriers can defy the political timelines set for them. Like TTIP, CETA was supposed to be concluded quickly. This should serve to either lower the lofty ambitions that TTIP can be concluded quickly or push negotiators to achieve the best possible agreement in the allotted time and create a process for further integration.
Hopefully, both the EU and the US can learn from from watching CETA negotiations unfold, and tackle the barriers that can stall the TTIP or prevent it from being a truly comprehensive trans-Atlantic FTA that benefits US exporters.
To learn more about the TTIP, check out USTR’s website. To learn how the TTIP might benefit your company, contact TradeMoves. We are here to help.
Melanie Wheeler MWheeler@TradeMoves.net 240-389-9003