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Is TTIP in crisis?

, February 29, 2016, 0 Comments


The free trade negotiations between the EU and the US in Brussels this week are not going well. This time the Americans are dragging their feet, and there’s talk of a trimmed-down version of TTIP. Bernd Riegert reports.

Aside from the actual negotiators, Bernd Lange is one of the few who has access to the secret documents of the free trade negotiations between the European Union (EU) and the USA. It is fair to say that Lange is well informed. He chairs the European Parliament’s International Trade Committee and is the official rapporteur for the controversial Transatlantic Trade and Investment Partnership (TTIP).

This week, the 12th round of negotiations is taking place in Brussels. Lange, a Social Democrat from the German state of Lower Saxony, believes the talks are not making much headway. Of the 25 chapters up for negotiation, the Americans have taken a clear position on less than half, Lange told DW.

“TTIP is in crisis,” he said. “But only one of the negotiating partners is sick: the United States. They clearly have to step up their efforts and make a move towards the Europeans.”

That is not how US Trade Representative Michael Froman sees it. “We have made good progress in the past six months,” he said ahead of new negotiations on Monday.

The disagreement is likely to continue as they have yet to tackle some of the most contentious issues. For instance, where and how should investors settle disputes with states? Which industry standards will apply, for example in mechanical engineering? And what are the procedures for transatlantic public procurement? All these problems have yet to be solved.

Running out of time

Negotiations are currently in what insiders call the “middle game.” First, the uncontroversial topics are dealt with, while tough issues are put off.

But for TTIP expert Bernd Lange, this is a risky strategy. Negotiators are running out of time, he warned. They have until July to produce a so-called consolidated text. If they miss that deadline, closing the deal before US President Barack Obama leaves office will be nearly impossible, Lange predicted.

Again, US Trade Representative Michael Fromann disagreed, arguing that a deal could be reached with or without Obama.

But pulling that off would require a lot of luck, said EU Trade Commissioner Cecilia Malmström: “It will not be easy.”

In fact, with the US elections looming on the horizon, the situation is only likely to get worse, cautioned Lange. If the increasingly nationalistic Republicans get the upper hand following the November vote, they are likely to block new free trade agreements. If Democrats win, things won’t necessarily look up either. Many in the party are skeptical of free trade and worry about investor protection and workers’ rights. There is no time to lose, Lange said.

TTIP light?

The Americans, still interested in closing the deal, have been floating the idea of a trimmed-down version of the trade agreement. A “TTIP light” would leave out all the difficult issues, and could be passed by summer.

But Europeans are skeptical. The president of the German Engineering Association (VDMA), Reinhold Festge, opposes “TTIP light,” because he’s sure such a deal would not include the complicated engineering industry. “It would quickly be off the table, because it requires a lot of work,” Festge told DW.

And that would be a big loss for engineering companies, which stand to profit from a full-on trade agreement that would make doing business easier, Festge believes.

His company makes machines for packaging and other sectors. Exporting machines to the US makes them 19 percent more expensive than in other markets, Festge explained, due to varying standards for regulation, approval and documentation.

All this could be solved with a trade deal. “Not closing the deal would be a serious setback,” he said. “Because then the Americans will focus more on Asia, which is not in our interest.”

Injecting new life

The US is the biggest market for German engineering companies. For them, it is vital to maintain or increase their market share, Festge said. He hopes that Obama’s visit to the world’s biggest industrial fair in Hannover in April will inject new life into the stalled trade negotiations: “Obama might shake things up. It looks like he’s keen to close the deal during his presidency.”

When negotiations started in Brussels this week, die-hard opponents of TTIP were protesting in front of the building. Environmentalists and human rights groups are against the trade agreement. It’s “undemocratic and bad for consumers,” said Jürgen Knirsch, trade expert for Greenpeace Germany.

Bernd Lange, the European Parliament’s trade expert, said he would not support lower standards for consumer protection and workers’ rights. “We are aiming for standards that are better than what we usually have in world trade,” he stressed, pointing out that the European Parliament will have to sign off on the final deal.

The plan to set up private arbitration courts where investors could settle disputes with states has sparked particular controversy in Germany and Austria. Now, the European negotiators say they want these disputes to be settled in public courts.

The contentious issue will be addressed for the first time during this week’s negotiations in Brussels. So far, the US side has refused to comment. The question of settlement courts could be yet another topic that is left out in a “TTIP light” deal. The “middle game” is on.