24 January 2014

EPC/NotreEurope: The TTIP negotiations - A Pirandello play

This report is based on a seminar organised by Notre Europe and the EPC, during which key issues of the current TTIP negotiations were explored, such as geo-economic and geo-strategic goals, rules, main players and impact on world trade.

The negotiators on both sides claim that the aim is not to forge a single transatlantic market akin to the European single market, which rests on a common judicial system, common rule-making procedures, a common enforcement system and so forth. The primary lever in this agreement which, according to the mandate, is intended to impart a fresh thrust to economic growth both in the EU and in the United States by boosting their mutual trade, concerns regulatory convergence.

The economic benefits will depend on the degree of regulatory convergence already achieved between the two shores of the Atlantic in the economic sector, and on the degree of ambition and perseverance of the negotiators – the wider the original gap, the greater the benefits that can be achieved through regulatory convergence. Furthermore, the benefits of the TTIP are going to depend in the longer term on the two partners’ ability to promote transatlantic standards on the world market.

Trade policy may have its own rationale, its own language and its own sphere of autonomy, but it remains tied to broader strategic issues. Trade policy is inextricably bound to soft power: its importance and its autonomy tend to decrease when hard power takes over. At other times, however, trade policy can become a vehicle for strategic shifts.

It is in the United States’ interest to contain China’s economic expansion and to ensure access to the region’s markets in order for it to maintain its status as the world’s leading power. Unlike its partner, who is engaging simultaneously on both the Atlantic and Pacific fronts, the EU seems for its part to have a less clear strategy towards the Pacific, despite the recent start of negotiations on an investment agreement with China or previous agreements signed with South Korea and the agreement currently in force with Japan, which are designed to allow it to work its way into the trade networks in the constantly growing Asian markets.

The method to be adopted (Harmonisation and/or mutual recognition) in the march towards regulatory convergence has not yet been decided. The Europeans can benefit from the lessons that they have learned from their daily experience of harmonisation and mutual recognition in the construction of the single market.

The EU and the United States hold different views regarding the choice of a horizontal or sectoral approach. Europe would prefer prior framing in a horizontal approach, which would then make it possible to address the issues from a sectoral viewpoint. This, because the unique way in which Europe’s institutions function means that the European Commission is inclined to seek a preemptive agreement among its member states with regard to certain crucial principles before engaging in sectoral negotiations. The United States, on the other hand, is accustomed to intense sectoral lobby activity and so it does not wish to waste time in theoretical debates about the horizontal approach, preferring to engage directly in a sectoral approach. 

The TTIP is seeing the light of day in a global context characterised by an increasing number of bilateral agreements. The EU is strongly committed in verbal terms to multilateralism in the field of trade promoted by the WTO, but like the United States before it and like other countries since the Doha Round ground to a halt, it has developed a new bilateral liberalisation strategy. It is still too early to determine whether this increase in the number of bilateral agreements at the global level is a stumbling block for multilateralism or whether, on the contrary, it may make it possible to impart a fresh boost to the method. But the volume of transatlantic trade developed by the TTIP and the attraction exercised by this major market will give it a central role in the global governance of regulatory environments and raise questions regarding its potential impact on the dynamics of the international trade system, on the WTO’s role and, ultimately, on multilateralism itself. 

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