Saturday 15. August 2020
#173 - July-August 2014

 

The TTIP from the standpoint of the negotiators

 

The negotiators of the Transatlantic Trade and Investment Partnership (TTIP) work on the basis of a political mandate given to the Commission by the governments of the EU Member States.


The Transatlantic Trade and Investment Partnership (TTIP) has become the focus of very deep political and societal public debate in several EU Member States; this is something to which we are sensitive as negotiators. And the TTIP is indeed, at some level, more than a classical free trade agreement. It is not something more than a trade and investment agreement, but it encompasses an important "behind the border" regulatory dimension which impacts on its broader policies.

 

TTIP versus global trade and multilateralism?

Paradoxically, the most important challenge for global trade – and perhaps for global trade "justice" – is actually not the further enhancement of the transatlantic relationship, but rather the question of the better anchoring of emerging and developing economies into the global trading system.

 

The EU maintains a preference for multilateralism in trade: both because it ensures greater inclusiveness and fairness in the international system, but also because trade multilateralism is better suited to produce trade rules, which are as needed as the liberalisation of trade per se. But we have come to an assessment that the impasse in the WTO negotiations is a rather fundamental one, and therefore feel that it is justified to pursue trade initiatives bilaterally and preferentially at the present time, including with big developed economic partners. This should not prevent us, however, from working to create, at the right moment, the conditions for the pendulum to swing back from bilateralism to multilateralism in this area of international economic relations.

 

The TTIP's channels of transmission towards other/third-countries in the world are threefold: (1) in some limited way through the market access component (notably if the EU and the US create convergence between their preferential rules of origin, which further down the road could create a basis for tackling global fragmentation in this area); (2) through more alignment of the EU and the US regulatory models and solutions and (3) through the contribution that the EU and the US can jointly make in crafting - under the TTIP - some new WTO + trade rules. All three channels can be positive for future prospects for ’re-multilateralisation’.

 

In the same way that the Single Market Programme did not lead to "Fortress Europe", there is no reason for our partners in developing countries to fear "Fortress TTIP".

 

TTIP as an attempt to project transatlantic "values"?

This is a complex question even at a conceptual level. Not least because trade agreements essentially project "values" in the sense of behavioural disciplines on how governments interact with economic activity; rather than values in a moral or political sense per se. This is also the reason why we do not see an initiative like the TTIP as a zero-sum game, as a form of "West against the rest" trade policy or as an "Economic NATO".

 

Having said this, the TTIP can contribute to developing new standards or "rules of the trade game" in several areas:

- Areas that relate to the particular economic model and the role of the State, notably on issues that tend to characterise "State capitalism" (state-owned enterprise (SOE) disciplines, subsidies, forced localisation);

- Areas that have to do with the standards that relate to the limits that we may want to place on the exercise of comparative advantage: labour, environment, CSR (Corporate Social Responsibility), possibly anti-corruption and bribery. This is an important component as internationally/multilaterally there are no agreed standards to define the boundaries between legitimate and illegitimate exercise of economic comparative advantage.

 

Of course, being able to "project" some of these "values" and standards through the TTIP will require that we agree between the EU and the US on such standards. This is based on an overall assumption: that our two economies – and economic models – are similar enough. And that there are no level playing field issues between the social market economy model (by and large the European model) and the more liberal market economy model that in some respect probably characterises the US.

 

Political and societal implications of negotiating a "behind the border" regulatory trade and investment agreement?

 

The politics of trade change in such a context. Because it is not about producers resisting and consumers supporting liberalisation at the border, but more a case of business broadly supporting greater regulatory compatibility and consumers potentially fearing erosion in the standards of protection afforded by regulation.

 

Non-tariff barriers are much more politically or even ideologically ‘loaded’ than tariffs, since regulations tend to reflect a society's "collective preferences". We therefore need to clarify what we are actually seeking to do in the TTIP in this regulatory component of the negotiations.

 

We are seeking to reduce costs by reducing certain regulatory divergences between the EU and the US. But these regulatory divergences can in turn flow from two very different causes. In some cases, the regulatory divergences reflect divergences in the underlying public policy objectives of the two sides (for example, if they have a different approach to precaution in a particular area). In this case, regulatory convergence is unwarranted and unattainable.

 

But regulatory divergences can also be unintended and unnecessary and are simply the product of a lack of regulator-to-regulator cooperation without this stemming from a difference in public policy objectives. This is the zone of work for the TTIP negotiations. And this is to be established by the regulators themselves, not by the trade negotiators. Regulators are in any case bound by their mandate to regulate in the public interest.

 

This is complex, however, and affects a much wider section of stakeholders than do more traditional "at the border" trade agreements. This is why the EU institutions will continue to provide transparency to that broad stakeholder community. But this is a responsibility that is incumbent on national governments in Europe as much as on the EU institutions.

 

Denis Redonnet

Head of Unit ‘Trade Strategy’, European Commission

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