With the recovery in the US remaining stubbornly slow and the Eurozone struggling to emerge from its double-dip recession, ongoing negotiations for the Transatlantic Trade and Investment Partnership (TTIP) could provide the means for both economies to grow in the medium- and long-term. Yet these negotiations are about more than tariffs or quotas—they are about the standards and regulations that serve as market access barriers in this highly interconnected market. Great ambitions, however, come with great risks. High culture, high finance, high tech, and high politics could all serve to bring ambitions lower. Each of these four pivotal policy areas could potentially trip up TTIP, for they all reflect deeply-held beliefs that are not easy to compromise away.
High Finance: If the Americans want to exclude any sector from negotiations, it will be the financial industry. The Treasury Department does not want any trade negotiators treading on their turf, and Congress members and policymakers alike are concerned that the work they have done to prevent another financial crisis, namely the Dodd-Frank Act, would be diluted in any such agreement. Moreover, they are somewhat cynical about accepting financial advice from the Eurozone, where the banking sector remains fractured along national lines, there is no clear resolution mechanism, and they are toying with the idea of a tax on financial transactions. Europeans, meanwhile, want to make sure the excesses of American capitalists do not deal another blow to their markets, as they did in 2007. It seems likely that not much will be done in this policy area, and that the US and the EU will reaffirm their commitment to implement Basel III and continue to push for progress together at the multilateral level.
High Tech: Data security was already set to be a major area of concern in negotiations, for as more and more commercial and personal transactions take place via the internet, it is important to ensure that these transactions can be done safely. Recent revelations about the NSA spying on foreigners have upped the ante. The fact that major US companies such as Google and Facebook shared some of their data with intelligence officials only compounds European privacy concerns. The EU Parliament’s rejection of ACTA (the Anti-Counterfeiting Trade Agreement) last summer and France’s recent suit against Google are evidence that Europeans were already more concerned about controlling the uses of metadata in the public or private sector. TTIP negotiations will likely test whether the two parties can find a common balance between national security and privacy concerns.
High Politics: Last but definitely not least, political timetables and interests could also jeopardize negotiations. Both sides have agreed that they would like these complex negotiations to be completed within two years (which is an ambitious goal in and of itself), which coincides with the end of EU Trade Commissioner Karl de Gucht’s tenure, but issues on each side of the Atlantic could prevent that goal from being reached. Before Obama can conclude this agreement, he must persuade Congress to renew his Trade Promotion Authority (TPA), which ensures that Congress will hold a straight up or down vote on any negotiated trade agreement. Yet Tea Party Republicans and protectionist-leaning Democrats could stall that process. On the other side of the Atlantic, the EU Parliament has shown itself willing to shoot down negotiated agreements if they do not reflect popular interests. Moreover, USTR is working with limited resources and will be hard-pressed to balance TPP, TTIP, and ongoing WTO Doha round negotiations, and the EU Commission has a wide array of trade agreements on the table with countries across the globe. The longer these negotiations drag on, the greater the risk that changes in the cast of political characters or popular attitudes will limit the scope of TTIP.
High Culture: The French are highly protective of their renowned film industry specifically and audiovisual sector more generally. It should come as no surprise, therefore, that the French stood their ground in the run-up to these negotiations, insisting that audiovisuals be excluded from the mandate for negotiations (the so-called “exception culturelle”). The status of audiovisuals in the final mandate remains somewhat ambiguous, but the effect was clear. The Europeans have included them to a limited degree in the mandate itself to make it appear that they are willing to negotiate, but public proclamations from the Commission that they will under no circumstances alter the complex system of subsidization, protection, and financing supporting audiovisuals in TTIP negate this inclusion. Now that the Europeans have excluded a sector it opens the door for the Americans to do the same, limiting the overall scope of the final agreement.
US and EU negotiators should do what they can to make TTIP as wide-reaching as possible. Successfully bringing the world’s two largest economies closer together means jobs and growth in each, and an ambitious agreement could establish rules and norms for the global economy in the years to come. Remaining focused and committed to resolving tough issues are essential to ensuring that TTIP does not get tripped up.
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
Shawn Marie Jarosz SJarosz@TradeMoves.net 240.389.9001/ 240.389.9003