A selection of experts answer a new question from Judy Dempsey on the foreign and security policy challenges shaping Europe’s role in the world.
Timothy AdamsonResearch specialist at the American Chamber of Commerce to the EU
Yes—because this is an opportunity too important to pass up.
The economic gains of the proposed Transatlantic Trade and Investment Partnership (TTIP) are significant: lower tariffs, more consumer choice, and increased competitiveness for small and large businesses. But TTIP is also about boosting the transatlantic relationship, the most significant and prosperous partnership in the world. The deal could bring the EU and the United States closer together and allow them to build trading standards for the future—rules that are based on fair, open, and sustainable markets and that promote prosperity and equality around the world.
Given the challenges posed by globalization and the rise of emerging markets, there is a small window of opportunity. EU and U.S. leaders understand this—both sides continue to speak out in favor of TTIP, despite opposition from some sections of civil society.
The two sides have set an ambitious goal of completing the talks in 2016. What is critical is that in trying to meet this goal, both sides retain a comprehensive approach. Ultimately, the substance of any deal is more important than the timing. If it takes longer to secure the right deal, so be it. In any case, neither side will ratify an agreement that doesn’t meet citizens’ high expectations.
Krzysztof BledowskiDirector of economic studies at the Manufacturers Alliance for Productivity and Innovation
Yes, the Transatlantic Trade and Investment Partnership (TTIP) will happen, although its conclusion will likely stretch past U.S. President Barack Obama’s term in office, which ends in January 2017.
This deal enjoys the near-universal backing of the ruling class across the Atlantic. Crucially, the timing is right, too. Unleashing new trade, new investment, and new jobs in the accord’s wake would come at the right moment in times of secular stagnation. If Europeans (and some Americans) worry about a fraying of the fabric that has held the two continents close for five centuries, they won’t find a better vehicle for repairing it anytime soon. This tie will strategically complement the more tenuous military alliance. TTIP has a major strategic value vis-à-vis the rest of the world for setting high standards on regulations, consumer protection, and business dispute resolutions.
If everything is so clear-cut, where’s the rub?
It lies in a constellation of political forces that hover over the horizon. Today’s leaders in Europe, in the White House, and in the U.S. Congress understand the import of coming to an agreement. Yet governments on both sides of the Atlantic are under pressure from populist waves of discontent. These counterarguments will make the negotiations more arduous but will not derail them. The treaty ticks all the right boxes for the majority of Americans and Europeans. Beneath the veil of doubt lies a realization that TTIP is a better deal than any of the alternatives.
Reinhard BütikoferCo-chair of the European Green Party and member of the European Parliament Delegation for Relations With the United States
It is hard to imagine more high-level support for finalizing an agreement on the Transatlantic Trade and Investment Partnership (TTIP) by the end of 2016 than the backing offered by U.S. President Barack Obama, German Chancellor Angela Merkel, and the transatlantic business community in Hannover on April 24. Still, the chances of achieving a deal by December 2016 or January 2017 that will stand up to scrutiny have not really improved, and the likelihood of success is way below 50 percent. That is because the rules of the game have changed.
While both sides express the will to move forward fast, in reality different deals would be acceptable to the public in the United States and the EU. And the public, increasingly skeptical of trade on both sides of the Atlantic, is a newly powerful player that cannot be ignored without the risk of failing altogether. TTIP has been negotiated so far by trade elites, as if it were just another free-trade agreement. But it isn’t. In the present political environment, bridging existing divides needs more time, more transparency, and more willingness to listen to critics. TTIP is just not ripe.
Obama and Merkel seem to assume they can rush through a deal before trade skepticism prevails. By rushing, they would energize the opposition. The political costs would be extraordinarily high.
Uri DadushSenior associate at the Carnegie Endowment for International Peace
I expect that the Transatlantic Trade and Investment Partnership (TTIP) will one day conclude, but I doubt it will be a deep agreement. Wide differences remain, and rushing it—as U.S. President Barack Obama and German Chancellor Angela Merkel are trying to do—is bound to make any agreement shallower still. There is no unstoppable force driving TTIP; it is a case of an immovable object facing another immovable object.
The conclusion of the Trans-Pacific Partnership (TPP) among twelve Pacific Rim countries has emboldened TTIP negotiators. Yet, under TPP, the United States made only minimal concessions. Even so, opposition to TPP in the U.S. Congress and among the presidential candidates is extraordinarily broad at present.
The TTIP negotiating agenda is no less treacherous: agricultural tariffs, geographic indications, genetically modified organisms, government procurement at the state and local levels, harmonized automobile standards, food safety regulations, and investor-state dispute settlement (ISDS) are some of the more politically intractable questions. Still, if serious progress can be made on just a few of these issues, the effort will have been worth it.
Shawn DonnanWorld trade editor at the Financial Times
There are 1.1 trillion reasons why the EU and the United States should be negotiating a trade agreement. That—in dollar terms—was the size of the trade in goods and services across the Atlantic in 2015. But it is hard to see how the mooted Transatlantic Trade and Investment Partnership (TTIP) will be concluded anytime soon.
U.S. President Barack Obama and Germany Chancellor Angela Merkel pushed on April 24 for the talks to be concluded by the end of 2016. Three years into the negotiations, the officials involved claim they are making progress, and at the end of the thirteenth formal negotiating round in New York on April 29, they will do so again.
There is a long laundry list of sticking points and redlines. The real issue, though, is that politics—and political calendars—are conspiring against TTIP. Opposition in countries like Austria and Germany is only growing. In private, French officials have been telling their EU and U.S. counterparts that they dread the idea of TTIP negotiations being concluded before elections in 2017. In the United States, meanwhile, the politics of trade are looking toxic after a presidential primary season that has seen strong support for isolationists like Republican Donald Trump and Democrat Bernie Sanders.
TTIP may make economic and strategic sense for both sides. But that appears to mean little right now.
Rem KortewegSenior research fellow at the Centre for European Reform
Let’s hope it does. The proposed Transatlantic Trade and Investment Partnership (TTIP) could produce economic and strategic benefits for Europe and the United States. A deal could give a boost to U.S. and European economies, enable the West to set global trade norms and standards, and move the international agenda for rules-based trade forward. An accord could strengthen transatlantic ties at a moment when the United States is increasingly focused on Asia, Europe is distracted by internal problems, and other powers are waiting to take advantage of a divided West.
But an agreement has not yet been reached, and there are three ways in which it could fail. First, the negotiations could collapse over disagreements of substance, for instance regarding investment protection or public procurement. Second, the talks could drag on indefinitely and momentum could dwindle—a distinct possibility as elections approach in the United States, France, Germany, and elsewhere. And third, even if a deal is reached, it could flop at the ratification stage. Each EU member state, the European Parliament, and the U.S. Congress will likely have to ratify the accord. One parliament’s no, or a rejection in a referendum, would be enough to torpedo an agreement. Amid rising Euroskepticism and anti-Americanism, this cannot be ruled out.
So U.S. President Barack Obama has pushed for a deal sooner rather than later. But if it is rushed, TTIP could also underdeliver; politicians would declare victory, but many of TTIP’s fruits would remain out of reach.
The trade-off therefore seems to be between no deal, a postponed deal, and a rushed deal. None is ideal.
Stefan MairMember of the executive board of the Federation of German Industries
I’m sure the Transatlantic Trade and Investment Partnership (TTIP) will happen, because it is ultimately in the economic and strategic interests of both Europe and the United States. Globalization is a fact, and Europe should be at the forefront when it comes to developing global rules. A failure to conclude or ratify TTIP would not only be a missed opportunity to create jobs and increase competitiveness. It would also undermine Europe’s ability to shape international trade policy and the rule book of globalization.
For TTIP to be a success, at least four things need to happen. First, the agreement must be truly ambitious. Second, negotiations need to make visible progress soon. Third, negotiators have to make true on their promise to uphold and strengthen standards and the rule of law. Fourth, more stakeholders, including leaders from business, academia, and politics, should get engaged and make the case for a balanced and modern agreement. TTIP will happen—but more work still needs to be done.
Gianni RiottaMember of the Council on Foreign Relations
“Time is not on our side,” U.S. President Barack Obama said on April 24 in Hannover, Germany, and he was right: the Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated is very unpopular with voters on both sides of the Atlantic and risks waiting a long time in the political freezer. U.S. and European diplomatic sources privately confirm what the president said officially: “If we don’t complete negotiations this year, then upcoming political transitions -- in the United States and Europe -- could mean this agreement won’t be finished for quite some time.”
So the best way forward is to hurry and stitch together a text, hoping that the next U.S. president musters the guts to sign it. While observers wait and see, it is important to ponder why privacy, data, Monsanto seeds, and genetically modified steaks divide Europe and the United States so violently in a sort of consumers’ cold war that rages online and on the streets. TTIP should bridge the ocean that many are trying to widen or even poison.
Marietje SchaakeVice chair of the European Parliament Delegation for Relations With the United States and member of the European Parliament Committee on International Trade
Whether citizens and lawmakers will support the final outcome of negotiations on the Transatlantic Trade and Investment Partnership (TTIP) depends on the tangible results achieved. Only a broad and balanced agreement that brings real benefits to both sides will win the backing of the European Parliament.
Key concerns are being addressed successfully. There are commitments that standards won’t be lowered, public services will be excluded, and investment protection will be modernized. While these are steps in the right direction, some key stumbling blocks remain: public procurement, intellectual property rights, and energy are just a few examples. Although it may be tempting to push the tough topics off the table, only a comprehensive and ambitious TTIP will be able to achieve the goal of strengthening the rules-based system and Europe’s global position. Content should go before speed.
A failure to bring negotiations to a good end will send a bad signal to the rest of the world. If the two strongest allies and trading partners cannot modernize the rules framing their trade and investment flows, who can?
In recent comments, U.S. President Barack Obama and European leaders renewed their commitments to concluding a good TTIP. With these pledges, and if EU governments overcome their shyness to actively engage their populations, the final months of the Obama administration can create new momentum. What is certain is that without more engagement with various stakeholders, it is difficult to imagine that a good TTIP will see the light of day. Now is the moment to avoid that.
Claudia SchmuckerHead of the Globalization and World Economy Program at the German Council on Foreign Relations
U.S. President Barack Obama emphasized in Hannover on April 24 that “the United States is prepared to make every effort to reach an ambitious, comprehensive, and high-standard agreement this year.” The EU and the United States want to reach a deal on the Transatlantic Trade and Investment Partnership (TTIP) by December 2016, when Obama will still be in office. But is this feasible?
TTIP negotiations have been going on for three years with mixed success. So far, both sides have explored their respective goals and are now proceeding to exchange their offers. The aim is to reach a consolidated text by the summer and resolve the politically sensitive issues by the end of the year. The most contentious areas are the liberalization of the U.S. public procurement market, an EU proposal for a standing investment court to replace the investor-to-state dispute settlement (ISDS) system, and the protection of geographic indications.
Both sides are far from a possible compromise, and TTIP lite does not seem possible. The EU and the United States want an agreement, but not at any cost. German Minister for Economic Affairs Sigmar Gabriel stressed that “if the Americans stick to this position [of not wanting to open public tenders to European companies], we don’t need a free trade agreement. Then TTIP will fail.” But it is doubtful whether the EU and the United States would let this happen. The political cost would be too high. Therefore, the most probable outcome is a political framework agreement at the end of 2016 that will provide the basis for further negotiations.
Ashley J. TellisSenior associate at the Carnegie Endowment for International Peace
U.S. President Barack Obama is determined to complete the Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated between the United States and the EU before he leaves office in January 2017. He will most likely succeed, because the deal is on balance a good agreement for both sides. At the national level, it promises elevated GDP growth, increased income gains, and decreased consumer prices. TTIP would also bind the two largest concentrations of economic power globally, set pathbreaking rules for international commerce, and provide increased trade gains that would help offset the losses deriving from China’s new ascendancy in the global economy.
Despite these benefits, however, TTIP is controversial on both sides of the Atlantic. The contention arises primarily from the widespread suspicion that globalization has not yielded inclusive rewards. Whatever its macroeconomic benefits to any nation may be, the internal dislocations that globalization brings—job losses in some sectors of the economy, the weakening of unique national standards, and the likely income shifts in a given society—are often perceived as not worth the candle.
Notwithstanding these risks, European and U.S. citizens ought to have faith because an accord will be reached only if it represents an improvement on what currently exists in transatlantic trade. Because both sides believe TTIP would be, the deal will likely be concluded in 2016.