6 May 2016

TTIP leaks prompt speculation the deal could effectively be dead

Around half a year ago, we noted that due to numerous delays and a tricky political environment on both sides of the Atlantic, progress in negotiations between the EU and US over TTIP “has been slow and painful.” Since then, although talks have continued in the background, politically the situation has deteriorated further to the extent that during Wednesday’s session with the Commons’ Liaison Committee, Prime Minister David Cameron was asked if the deal was dead.

Certainly, there has been a spate of bad headlines for TTIP in recent days stemming from Greenpeace’s leaking of key negotiating documents which it claimed prove that the deal would result in the dropping of long standing environmental protections, making it harder to combat climate change and exposing the EU market to GM products. This prompted French President François Hollande to state “At this stage, France says ‘No’.”

Over in Germany, the latest Deutschlandtrend poll found that by a margin of 70% to 17%, Germans currently believe that TTIP has more disadvantages than advantages. Even supporters of pro-trade parties like the FDP and CDU tend towards this view.

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Meanwhile, the US Presidential primaries on both the Democratic and Republican sides have been characterised by a strong backlash against trade and globalisation in general. The focus has been on trade relations with less wealthy countries better able to compete with the US on the basis of cost, with the under-negotiation Trans Pacific Partnership (TPP) – which encompasses the likes of Mexico, Vietnam and Malaysia – singled out for criticism. TTIP itself has not featured in the campaign specifically and in theory a deal with the more developed economies of the EU ought to be less controversial, but given the overall anti-trade climate it could still prove challenging. As we noted in the previous blog, dispute resolution and EU access to public procurement markets at the state and local level remain sticking points for the US side.

Greenpeace leaks are underwhelming but could still reinforce negative perceptions

It is however easy to get carried away by the talk of TTIP’s demise. For a start, despite Greenpeace’s spin that TTIP represents some kind of environmental Armageddon, the leaked materials are in fact distinctly underwhelming. For example, the idea that by not explicitly referencing the Paris agreement in TTIP will undermine attempts to address climate change is manifestly absurd – the two issues are completely unrelated. In addition, the leaks only represent the US sides’ negotiating positions, not the final agreement. As EU Trade Commissioner Cecilia Malmström has noted,

It shouldn’t come as a surprise that there are areas where the EU and the US have different views… It is only normal that both parties in a negotiation want to achieve as many of their own objectives as possible. That does not mean that the other side gives in to those demands.

Meanwhile, Hollande’s line that France rejects TTIP at this stage represents only a slight toughening of the French position compared to last month when he said that “France can always say no… If there’s no reciprocity, if there is no transparency, if there’s a danger to farmers, if we don’t have access to public markets while the US has access to everything we do here, then I won’t accept it.” Given that such a caricatured version of TTIP will never be proposed much less agreed, it is safe to say Hollande’s comments are primarily aimed at shoring up his dire approval ratings. Let’s not forget Front National’s protectionist rhetoric has proved attractive to some of the French Socialist party’s supporters. Crucially, Chancellor Angela Merkel continues to back TTIP despite its unpopularity, arguing that “We believe the speedy conclusion of an ambitious agreement is very important.”

That said, the leaks, and more specifically the way in which they have been reported, will further fuel public opposition to TTIP. Most people will not look into the details, while the headlines will reinforce existing concerns about TTIP lowering environmental protections and it being a shady corporate stitch-up more generally. The question is whether, especially with upcoming elections in France and Germany, this will feed through to the level of politicians and decision makers. Given that TTIP will have to be ratified by the European Parliament and by each national parliament, there are plenty of banana skins, especially given the febrile, anti-establishment climate. Even if national parliaments approve TTIP, there is likely to be pressure in some member states for a referendum as there was in the Netherlands over the EU-Ukraine agreement.

Although a formal breaking off of the talks is very unlikely given how much political capital has already been invested in TTIP and how badly this would reflect on transatlantic relations, the risk is that either the negotiations will get bogged down for the foreseeable future or that in order to maximise the prospects for ratification, the deal is significantly scaled back.