Transatlantic Trade and Investment Partnership (TTIP) negotiators must soon strike deals on market access for services and certification of regulatory standards, sources have said, if the EU-US trade deal is to be struck before the end of the Obama Administration.
President Barack Obama will step down in 2017, which could usher in a fresh era of uncertainty for the free trade deal, depending on his successor.
Potential Republican frontrunner Donald Trump, and potential Democrat candidate Bernie Sanders have expressed their reservations about free trade – a major theme of the US presidential primaries.
Sources close to the talks, which have dragged on for three years, said the pace of discussions had finally picked up in the last seven months. Both the EU and the US have said they are aiming to sign TTIP this year.
EU Trade Commissioner Cecilia Malmström and US Trade Representative Michael Froman have met face to face three times in the last six weeks, as well as having regular calls. The European Commission is handling the negotiations on a mandate handed to it by EU leaders.
Malmström said in Washington in March she wanted to settle major differences over US “Buy American” government procurement standards, how to resolve investment disputes, and over Europe’s many geographical rules that govern food products from Parma ham to feta cheese, by the summer.
No time to waste
EURACTIV.com understands the burst of activity stands in stark contrast to earlier periods of negotiations, which saw lulls of months at a time.
During that time, the EU has battled with distractions such as the migration crisis, the Greek crisis, the Ukraine crisis, and Brexit.
Similar lulls could not be afforded if the end-2016 deadline is to be met, sources said. One source described the next couple of months as “really critical”.
But, EURACTIV was told, efforts to corner off easier aspects of the deal will need to be stepped up before the negotiations enter the endgame phase, when the most difficult areas of dispute will be tackled.
Negotiators are looking to strike a bargain on services and on conformity assessment bodies to send a strong signal that the fresh burst of activity would be sustained into the final stretch of the talks, when the toughest areas to agree will be tackled.
Those major sticking points include the tariffs on agricultural products, market access for financial services, and the extremely controversial investor-state dispute mechanism (ISDS).
A compromise must be found, beginning with crunch talks in Hannover between leaders including Froman, Malmström, and German Chancellor Angela Merkel on 24 April, to reassure skittish negotiators. The 13th round of negotiations begins in New York the following day.
Talks on services have been bogged down in disputes over different treatment of the audiovisual and maritime sectors.
Despite that, EURACTIV was told, there are many areas where the EU and US markets are quite open to each other.
That existing market access needed to be enshrined in the deal, at this stage of talks, with tougher aspects being shifted to later or the endgame.
Both sides are at loggerheads as to where exceptions to this can be agreed. Sources said US negotiators wanted 56 exceptions, while the European Commission, helming talks for the EU, was pushing for 120.
Conformity assessment bodies (CABs) can certify that potential exports meet the regulatory standards of the target country.
EU CABs can certify that exports to the US meet American standards and be based in the EU. That means companies will know their products will be accepted before shipping.
But US CABs are not allowed to certify to EU standards in the US, meaning companies must go to Europe without certainty their products will be accepted.
That mismatch remains a source of friction between the two sets of negotiators.
Sources stressed that any services and standards deal was not a safety net to save the whole TTIP deal, by providing a fall-back position if some areas proved too difficult to agree.
As has become traditional during the negotiations, they said that the plan was to reach as ambitious an agreement as possible and that “nothing was agreed, until everything was agreed.”
Any final deal will be subject to a vote in the European Parliament, and the deal remains controversial with some MEPs, over issues of transparency and ISDS, and in some EU countries.
ISDS, which allows corporations to sue governments in international tribunals, has become a cause celebre in the EU, inlcuding in the UK and Germany.
Such was the furore that the European Commission was compelled to propose a public court to handle such investor cases. The proposal has not yet been accepted by the US, which has reservations about the idea, but discussions are continuing.
Financial services has been another source of disagreement. Commission efforts to push the final deal beyond a market access bargain look to have stalled, but it has still not put market access on the table.
The ratification of the EU-Canada trade deal CETA still hangs in doubt, despite talks beginning in 2009, and officially ending in 2014.
Even if trade talks for a Transatlantic Trade and Investment Partnership (TTIP) are accelerating, reaching a deal by the end of the year is unlikely, Joseph Quinlan, Senior Fellow, Center for Transatlantic Relations, Johns Hopkins University recently said in an interview with EURACTIV.
The European Commission has estimated that an ‘ambitious’ TTIP deal would increase the size of the EU economy by around €120 billion (or 0.5% of GDP) and the US by €95 billion (or 0.4% of GDP). Economically, TTIP can benefit consumers from creating cheaper products, according to the Commission.
A study by the Centre for Economic Policy Research estimates that in total the average European household of four will see its disposable income increase by an estimated €500 per year, as a result of the combined effect of wage increases and price reductions.
This would be a permanent increase in the amount of wealth that the European and American economies can produce every year.
But the deal has been beset by controversies centring on accusations that the talks are too secret, will drive down environmental standards or leave governments at the mercy of lawsuits brought by rich multinational companies.
- 24 April: US, EU and German leaders meet in Hannover.
- 25 April: 13th round of TTIP negotiations
- 7 June: Final presidential primaries
- End-2016: Target date to sign TTIP
- January 2017: Obama steps down