Policy proposals to boost support for the Transatlantic Trade and Investment Partnership

By Jared Angle

October 19, 2015

*Note: this article is a hypothetical policy memo for a graduate school assignment and does not necessarily reflect my exact opinions on aspects of the TTIP negotiations.

ACTION SUMMARY

Despite strong indications that the Transatlantic Trade and Investment Partnership (TTIP) will be successfully concluded in the near future, the European Commission must take several steps to ensure the agreement’s ratification by European Union member states.

  • Increase public and media access to TTIP negotiation texts and draft proposals
  • Dismantle the existing investor-state dispute settlement (ISDS) framework and establish an investment court system that is equitable, democratically accountable, and publicly accessible
  • Establish a comprehensive food labeling system to protect regional agricultural traditions, identify GMO products, and facilitate consumer choice in European and American markets

GENERAL ASSESSMENT

For the past two years, citizens of EU member states have paid considerable attention to the ongoing TTIP negotiations. Multiple public consultations have demonstrated significant dissatisfaction surrounding the quality and impact of TTIP as it currently stands. This public opposition gives the European Commission renewed incentive to use the next round of negotiations as an opportunity to coordinate with our counterparts at the Office of the United States Trade Representative (USTR) to make key revisions to the proposed text of the agreement in a manner that addresses the concerns of European civil society while also reconciling the economic interests of private individuals and enterprises in each sector.

Although DG Trade and the Commissioner for Trade direct the Commission’s technical approach during trade negotiations, both parties must coordinate “with other Commissioners and DGs which have, or which claim that they have, overlapping, or at least affected, interests,” especially those responsible for agricultural and energy policies. DG Trade must also work closely with the Council of Ministers to ensure that the various policy objectives of member states are not neglected, as doing so could prompt a veto from that member state’s representative in the Council. In the course of negotiating a complex agreement such as TTIP, “the Commission may return to the Council for clarification of the negotiating directive, or for an amended directive that might break a deadlock.”[1]

The potential for tensions with the Council of Ministers come primarily in the form of opposition to certain elements of the current TTIP text, such as the recently-scrapped ISDS,[2] as well as non-technical issues of a political nature, such as distrust stemming from recent scandals involving foreign intelligence activities undertaken by the United States government. In both aforementioned examples, the German government and various interest groups have demonstrated strong opposition, while member states such as Greece under the new Syriza government have announced their intention to veto the agreement over concerns of economic complications stemming from ISDS.[3] Additionally, six committees in the European Parliament have explicitly rejected ISDS.[4] Compounding government opposition, many nonprofits and grassroots interest groups have a particularly strong voice at the European level, and pose a serious challenge to TTIP’s viability if they can convince one or more member states to block a unanimous vote in the Council of Ministers.

Other key elements of the Commission’s strategy to eliminate non-tariff barriers, including the strengthening of regulatory coherence to cut research and development costs and avoid the costs and delays caused by redundant product approval regimes in the United States and European Union, have also faced formidable opposition, primarily from civil society groups. While the European Commission has previously asserted that the EU’s mutual recognition agreements with the United States and Canada “could be the basis for a general free-trade agreement between the EU and [NAFTA],” the Commission must approach this opposition with a set of constructive solutions that will assuage concerns over a “race to the bottom” that would undermine EU consumer protection standards.[5]

In addition to handling tensions with member states, the Commission must also address the challenges posed by the strength of the left-wing GUE/NGL and Greens/EFA political groups in the European Parliament, as well as the anti-globalization rhetoric espoused by Eurosceptic MEPs. Major civil society coalitions such as Friends of the Earth and the Stop TTIP initiative have arguably reached a critical mass in terms of their ability to influence the GUE/NGL and Greens/EFA, as well as less centrist elements of the establishment S&D, a feat demonstrated through their success in holding public parliamentary hearings and publishing harsh critiques of the agreement.[6] Rather than being seen as a threat to TTIP, these groups should be seen as potential partners whose position can be used to incorporate greater consumer and environmental protections into the negotiation texts.

POLICY RECOMMENDATIONS

In an effort to facilitate the negotiation process as well as the agreement’s eventual signatory and ratification phases, the European Commission should present the following proposals to the United States Trade Representative during the upcoming round of negotiations to ensure that several key concerns of European manufacturers, consumers, governments, and civil society are adequately addressed.

Transparency

In accordance with changes implemented during the Lisbon Treaty, the European Commission is obliged to “make regular reports to the [European Parliament] on the progress of trade negotiations, and trade agreements must receive parliamentary consent.”[7] During earlier phases of TTIP negotiations, the European Commission faced sharp criticism from MEPs and civil society coalitions over the nature in which the agreements were conducted. While initially only a limited number of MEPs on the international trade committee were permitted to review negotiation texts, all MEPs now have access to the documents, but are restricted from copying the documents or informing others as to the contents of the negotiation texts.[8] This practice risks generating significant distrust among MEPs and the public, as the level of secrecy over the agreement’s contents may be construed by some as to imply the codification of potentially harmful policies under a fully-implemented TTIP agreement, including unfavorable language in terms of investment arbitration, agricultural regulations, and environmental protection. In order to remove obstacles to parliamentary consent, the Commission must take a more assertive stance to transparency, pushing to open up the quarterly release of negotiation texts to the public without alienating the USTR.

Investment Arbitration

The negotiators should coordinate with the USTR to develop a draft plan for the proposed Investment Court System (ICS) that is compatible with the US and EU legal frameworks. This process should involve the development of impartial and cost-effective judicial procedures, as well as the establishment of safeguards preventing frivolous litigation, especially case filed in response to regulatory legislation enacted to address legitimate environmental or consumer protection concerns, even if such actions adversely effect returns on investments. The Commission’s firm stance on investment protection should discourage expropriation and promote confidence among investors while reconciling the economic interests of corporations with the private interests of individuals and communities. The abandonment of ISDS constitutes critical progress in alleviating the aforementioned concerns of Germany and Greece, but significant work remains to be done in terms of ensuring that the ICS is palatable to American negotiators.

Food Labeling

The negotiators should propose the establishment of a strict food labeling regime that is compatible with EU food safety regulations and promotes fair and open access to the broadest possible range of goods in European and American markets. This system should specifically require the appropriate labeling of European food products intended for export to the United States, with the indication géographique protégée (IGP) or other regulatory markings clearly visible.[9] To promote consumer choice and protect European agricultural traditions, the negotiators should further stipulate that American products produced in the style of European IGPs must be labeled in a manner that allows consumers to differentiate between regionally-protected and non-protected products. In the event that USTR is unwilling to adopt a labeling system to differentiate imitation products from European IGPs, DG Trade should instead propose the establishment of subsidies for European SMEs that specialize in IGPs.

Furthermore, member state laws should be amended to allow GMO and non-organic food imports from the United States for domestic consumption and restaurant use, provided that such products are clearly labeled to allow consumers to differentiate between GMO and non-GMO foods. However, member states should retain their ability to ban cultivation of some or all GMO crops at the regional and/or national level in the interest of avoiding unintentional cross-breeding between crop varieties, and to support independent production choices for individual farmers. Finally, the negotiators should propose an inspection mechanism ensuring that products that fail to meet established food safety standards or pesticide restrictions are diverted from Europe-bound supply chains in the interest of maintaining regulatory compliance.

RISK ASSESSMENT

  • USTR will likely push back against increased transparency regarding access to the TTIP texts. While it is unlikely that USTR will end negotiations over a push for greater transparency, it is advisable to reach a mutual agreement on increased, but not absolute, transparency. One additional concern that must be addressed is whether access to the draft texts will increase opposition to the agreement due to the proposals contained within, potentially causing more discontent than the lack of transparency has.
  • USTR has included ISDS in most prior trade agreements, and insists that it is impartial and neutral. While the European Commission has moved away from ISDS, some vestiges of ISDS may need to remain within the new ICS to maintain US support for proposed investment protection measures.
  • Significant challenges will arise from individual states in the United States, specifically in terms of refusals to re-label certain American wines, meats, and cheeses as imitation products. While many of these products are produced by smaller firms, they may be able to convince representatives from their districts to vote against a bill approving the final TTIP agreement texts. Additionally, subsidies for European SMEs may be countered with subsidies for large American manufacturers that produce imitations of European IGPs.

CONCLUSION

The European Commission’s negotiation position should ensure that the interests of all Europeans are taken into account to secure the broad support necessary for TTIP’s successful implementation. European SMEs, not just corporate and multinational entities, must be protected to maintain economic and cultural diversity, and the Commission must be firm in its commitment to expand transparency in a way that improves public access to the TTIP texts. Finally, ISDS must be replaced with a modernized arbitration framework that is equitable, provides an even balance of power between private economic activity and legitimate government interests, and is acceptable to the broad range of political interests in the member states and the European Parliament. Provided that they are diligently executed, these recommendations will place the European Commission on an even footing with the USTR during TTIP negotiations, and will ensure that European Union citizens see greater value in the agreement.

[1] Laurie Buonanno and Neill Nugent, Policies and Policy Processes of the European Union (New York: Palgrave Macmillan, 2013), 257.

[2] Jared Angle, “The role of ISDS in contemporary EU trade agreements,” Europe in Focus, October 9, 2014.

[3] Sarantis Michalopoulos, “Syriza-led Greek parliament ‘will never ratify TTIP,’” EurActiv, February 2, 2015.

[4] Cécile Barbière, “Parliament’s opposition to TTIP arbitration on the rise,” EurActiv, April 21, 2015.

[5] Simon Hix and Bjørn Høyland, The Political System of the European Union, 3rd ed. (New York: Palgrave Macmillan, 2011), 310.

[6] Jared Angle, “At S&D TTIP panel, interest groups warn of trade deal risks,” Europe in Focus, November 22, 2014.

[7] Buonanno and Nugent, 259.

[8] James Crisp, “US to open TTIP reading rooms across EU,” EurActiv, April 29, 2015.

[9] A regulatory mechanism that identifies protected agricultural and food products based on regional traditions and established production methods. Please refer to the European Commission’s Common Agricultural Policy.

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About Jared Angle

I am an international relations professional based in the Washington, DC metropolitan region, specializing in European politics, international economics, and political risk analysis. I hold an MA in International Relations from the School of International Service at American University in Washington, DC, and currently work in the field of international trade policy.

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