TTIP talks ready to accelerate
The U.S.-EU Transatlantic Trade and Investment Partnership (TTIP) talks are ready to resume after a quiet time since the last meeting in mid-December. U.S. Trade Representative (USTR) Michael Froman and EU Trade Commissioner Karel De Gucht will focus on the overall time frame and scope of the agreement at a February 17-18 ministerial level stocktaking session in Washington, DC. The fourth round of full negotiations for the TTIP will take place March 10-14 in Brussels.
The negotiating process received a jolt on January 21 when the EU Commission announced a three month pause on the investment portion of the TTIP talks after the March negotiating session while it conducts a public comment period. Commissioner De Gucht said the public consultation is in response to the wide public interest in the issue and the need to strike a balance between protecting EU investors and upholding governments’ right to regulate in the public interest. Some policy analysts said the action was meant to divert criticism on the investment issue ahead of EU parliamentary elections in May. USTR Froman is not bothered by the pause noting that investment issues are debated in the U.S. and he has ongoing consultations on the issue. Investor-state dispute settlement mechanisms have become an issue recently in other trade agreement negotiations and will be in future negotiations.
The EU Commission also created a special expert group on TTIP representing a wide range of interests to give the Commission ‘high quality,’ but nonbinding advice on TTIP issues. EU chief negotiator Ignacio Garcia Bercero will chair the group and work directly with the experts. The group’s members represent environmental, health, consumer and workers’ interests of various industries. The Commission is sensitive to criticism from interest groups that it does not listen to the general public and non-government organizations and is trying hard to overcome that criticism by increasing channels for input.
The announcement that the U.S. and EU will exchange their initial tariff rate offers for goods on February 10 does not substantially change the situation for U.S. agriculture. The EU’s agriculture tariffs are generally higher than those of the U.S., and the EU’s initial offer on agricultural market access is likely to be less aggressive than the U.S. plan and include some items where tariffs are not immediately free or phased out over 3-7 years. Lower tariffs on products that have regulations that restrict market access are not viewed as progress.
In trying to defend the EU Commission’s position in the talks, Commissioner De Gucht has made statements that raise red flags for U.S. agriculture. He said that the EU would not give up its policies on genetically modified food or restrictions on beef raised with artificial growth hormones. He did acknowledge they will be talking about the present and future barriers between Europe and U.S. related to regulation, but all regulations will not be eliminated. He did not indicate if there is a negotiator’s middle ground between those two statements.
Regardless of the various political needs to adjust messages on more open trade, most of the economic analyses on TTIP show that most of the increase in trade value will come from achieving regulatory convergence. That does not mean more regulations or fewer regulations. The issue is how can two heavily regulated economies put their regulations on common terms so that products produced under one set of regulations can easily be sold under the other set of regulations. That is sometimes referred to as regulatory equivalence. There is no point in talking if that is not the goal.
That is where the issues get worrisome for U.S. agriculture. In a recent speech, Commissioner De Gucht said regulations in the U.S. and the EU often differ for “cultural reasons, beliefs, or societal differences.” That appears to be a reasonable assessment of the situation. With that as a starting point, how do the negotiators move toward regulatory convergence or equivalence?
The starting point for a trade agreement may be to ensure that the two regulatory systems dealing with food safety issues have the full range of information that is available on each side as they continue to set regulatory policies under their current systems. There is some concern now that not all scientific test data is being fully weighed as regulations are developed. Additional procedures that ensure full airing of views during the regulatory process of the other will allow each side to more clearly see where the disconnects exist and how they may be bridged.
Over time, the additional information will lead to more understanding of the issues and some convergence of thinking on how regulatory equivalence could be achieved. That process will take some time because deep-rooted concerns in industries and the general public will not be changed quickly. When the TTIP talks were in their pre-launch stage, some officials on both sides argued that some issues would not be resolved in the talks, but a process could be put in place to work through issues after an overall agreement was reached.
A solution to food safety issues based on science within the TTIP agreement is still the preferred outcome, but that does not appear any more likely now than when the pre-launch talks began a year ago. The stocktaking meeting in February and the full negotiations round in March will likely confirm that situation.
President Obama will be in Europe ten days after the end of the March round of talks. He will attend the U.S.-EU Summit in Brussels and is scheduled to meet one-on-one with European Council President Herman Van Rompuy and EU Commission President Jose Manuel Barroso. This will be an opportunity for the political leaders to discuss the outcome of the talks and the next steps forward.
Despite the increase in activity for the TTIP, the talks will likely continue on a slow track. Legislative authority from Congress for the President to negotiate trade agreements and have them considered by Congress on an expedited timetable, called Trade Promotion Authority or TPA, will likely be delayed until after the Congressional elections later in fall of this year. If approved then, the Trans-Pacific Partnership trade agreement which is almost completed is likely to be taken up first. That would push consideration of the TTIP well into 2015 at the earliest.
Ross Korves is a Trade and Economic Policy Analyst with Truth About Trade & Technology.