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| TTIP: No Public and only limited political support |
The future of the Transatlantic Trade and Investment Partnership
(TTIP) between the US and European Union seems bleak. Beset by doubts
and stumbling alongside the
UK’s referendum on EU membership,
the TTIP is starting to look like an awful lot of effort for
unremarkable gains.
US president Barack Obama may have given the
negotiation process
a shot in the arm
in recent weeks, but there is a good possibility that a deal will not
be struck during his administration. After that, all bets are off.
So why has such a major piece of international deal-making found it
so hard to make headway, and what are the chances of a deal ever being
done?
Well, the first reason for the impasse is that no one can agree on
what it should cover. It is deeply complex, but there are essentially
two choices: should TTIP only apply to the tariffs that countries place
on imports, or should it also address other barriers to business, mostly
technical regulations on things like car safety, or the procedures for
testing new chemicals?
Estimates for the economic benefit
to the EU from a tariffs-only deal come out at just 0.3% of GDP for the
EU as a whole. If we abolish all non-tariff barriers, then we get a 4%
boost.
That makes it seems like an easy decision from an economic point of view, but it’s highly contested.
The reason for the logjam is clear. Going far enough to make it
economically valuable drags into play all sorts of political and social
issues. Our reading of
the draft texts
is that it won’t, in fact, lead to significant harmonisation or even
mutual recognition of existing rules.
There are procedures to make sure
future regulations are as compatible as possible, but there is nothing
explicit to say that regulatory decision making powers will be
transferred. Indeed, it is hard to see the US Congress accepting
anything else.
That might seem like an effective compromise, but of
course, any weakening of the approach to non-tariff barriers may in turn
dampen the economic advantages.
The less complicated route – a TTIP which only removes tariffs –
would bring very limited gains. Both EU and US tariffs are generally
very low, except for cars, chemicals and agriculture. Their removal
would have only a small effect.
At its heart, the far more valuable non-tariff route drags up fears,
founded or unfounded, of a regulatory race to the bottom on things like
food safety, and objections from NGOs about the loss of domestic policy
power on things like health or government procurement. Crucially, TTIP
has also raised the (contested) possibility of
major corporations suing states.
There is another obstacle. In short, governments love handing out
contracts for public works to domestic companies; it keeps local
industries happy, and maybe a few political donors too. No huge surprise
then that after 13 rounds of negotiations the TTIP impasse on public
procurement remains.
Both the EU and US are parties to the World Trade Organisation’s plurilateral
agreement on government procurement
but the EU’s big picture was for TTIP to trade access to European state
agriculture spending for inroads into highly protected US procurement
markets, particularly at the state level. But the US steadfastly refuses
to concede to market access demands, due to its traditional and
entrenched domestic lobby groups – the steel industry, small and
medium-sized firms, and disadvantaged communities.
It’s a missed opportunity. We could have increased transparency with a
standardised e-procurement system and tender forms. Much more could be
gained through harmonising definitions of integrity and conflict of
interest concepts, along with strengthening corruption control measures.
It’s a win-win for improving the governance of public procurement
markets – but negotiations have been dominated by intractable trade
issues and the fears of ISDS.
In such a confrontational atmosphere, it is doubtful that a
meaningful TTIP can be concluded. Sceptics’ doubts may be exaggerated,
but they still reflect genuine public alarm.
The general confusion is
highlighted by supporters of a
UK exit from the EU, who argue both that the UK could sign a TTIP deal very quickly after Brexit,
and
that that leaving the EU is the only way to stop it. In any case,
unless a deal is rushed through before the end of 2016, prospects for a
deal are bleak.
Of the likely presidential candidates, neither Hillary
Clinton nor Donald Trump are likely to make TTIP a top priority in a
future US administration.
Meanwhile, public opinion – and crucially the
German government – move closer to outright opposition.
Read more: The TTIP trade deal is lost at sea
