July 15, 2014

Transatlantic Trade and Investment Partnership

Gardner Peckham

One year ago, the United States and the European Union began the most ambitious trade negotiation in at least a generation, the Transatlantic Trade and Investment Partnership – TTIP. Comprising nearly half the world’s economy and a third of the world’s trade, and extending from the Pacific Ocean to Central and Eastern Europe, this negotiation seeks not only to eliminate tariffs but to harmonize regulatory regimes on both sides of the Atlantic. If successful, it will establish standards and rules for every sector of the economy that will be the model for world commerce.

The economic and political importance of this negotiation cannot be overstated. For Europe, it will be a boost for sagging economies, a political win for the continent’s beleaguered governing class, a boon to a European Union bureaucracy under pressure from its member states, and a bold embrace of western values in the face of reckless aggression from the east. For the US, it will be a force multiplier for the economy and provide a crowning achievement for a President whose legacy is at issue.

Last month, the fifth round of negotiations was completed and another is scheduled for July. But, by all accounts, the TTIP process is slowing. This is due to a number of reasons. TTIP proponents were caught off-guard by the strong opposition to an agreement by labor unions, consumer advocates, environmentalists, and others, particularly in EU countries. The professional “citizen activists” are using TTIP as a “poster child” for fundraising and the business community, among others, has been slow to react. Furthermore, the ongoing Snowden revelations have substantially reduced US popularity in Europe and led to resistance to securing free flows of data so necessary in the age of internet commerce.

As the months pass, the number of issues that one side or the other proclaim are “off the table” for negotiation have swollen to include beef hormones, geographical indications, privacy, and financial services, to name a few. Meanwhile, May’s EU elections brought forth a surge of support for Euro-skeptic political parties and as the new European Parliament takes shape, deference to Brussels is at new lows. The current European Commission’s term expires in October and the US will hold mid-term Congressional elections in November. The result is that no one expects the hard lifting of negotiating politically sensitive issues to take place before 2015. The question is, can momentum and trust be maintained through this period and the process reinvigorated once the political landscape is established?

I believe it can and will. Negotiators on both sides of the Atlantic are serious, experienced professionals who will continue to negotiate through the year. Increasingly, both Brussels and Washington are aware of the need to conduct active outreach to resist those who would limit or end the negotiations. Furthermore, the value of the outcome is so great – and the price of failure so high – that the responsible center on both continents has every incentive to persevere. Failure will, in effect, cede rulemaking to those with a very different view of freedom and liberty than that we share with Europe. As Polish Foreign Minister Radek Sikorski put it in an interview in the May/June, 2013 issue of Foreign Affairs,

“If we create a transatlantic free-trade area, this might be the last moment when we can become a regulatory superpower. We need to co-opt the rising powers and give them stakes in existing institutions, because otherwise, demography being destiny, they will eventually create their own.”