The EU and the US are motivated by similar goals in the ongoing bilateral trade talks, even on data protection, according to Peter van Ham, who says political momentum and time constraints will be the biggest challenges to concluding a transatlantic trade pact.
Dr. Peter van Ham is a Senior Research Fellow at the Clingendael Institute of International Relations. He spoke to EURACTIV Germany’s Erika Körner.
Criticism of the planned Transatlantic Trade and Investment Partnership (TTIP) is coming from both sides of the Atlantic. What are some of the main differences in perspective between US and EU regarding the agreement?
In the EU there is criticism over the lack of transparency in the negotiations, which is quite normal. If you are negotiating such a complex range of issues, you don’t start with full transparency on your red-lines and bottom-lines because then you will lose the negotiations.
Criticism has also been voiced over regulatory coherence, which is a main objective of the agreement. In Europe there is a fear over genetically modified foods and a race-to-the-bottom based on the idea that in the US everything is regulated to the detriment of the workforce. But this is a myth. In the US they have higher standards on some issues than Europe.
But the EU and the US are comparable in that they both feel the regulatory framework of the other side will lead to a loss of standards in their own domestic environment.
A difference is that the US is a country; it is a clear national environment with rules. You have the role of Congress in trade, the role of the president in trade. For Americans this is their country.
If you look at the EU, they are negotiating for 28 member states. Added to fears over the loss of standards, is the fear that the EU will make compromises that may benefit some countries and be detrimental to others or lead to a situation in which national sovereignty is being undermined.
Since the Lisbon Treaty, the Commission has gained power to negotiate on a whole list of issues in commercial policy. But because TTIP is a mixed agreement, the European Parliament has to ratify it and it is presumed that they will simply wave it through.
At the same time, the agreement has not been brought to national debate in a truly democratic way. The national parliaments are not likely to vote on it, although officially they could.
Kind of like the debate in the US related to Trade Promotion Authority (TPA): What role can Congress play when the agreement has been struck? Can they just say yes or no? Or can they change some things? But at least that is a national environment. In the EU, Brussels is very far removed from people’s concerns and their interests. So it is another layer of delegation which adds to the problems we have in this process.
NGOs are also active but I think they are basically comparable on both sides of the Atlantic.
And what about the role of data protection in the negotiations?
The problem is that the debate surrounding the NSA and Snowden changes the ‘mood music’ in TTIP. There is not an atmosphere of trust. There’s not an atmosphere of give and take on the basis of more-or-less friendship. I’m aware that these are raw negotiations. The participants are not really friends at all but there must be an atmosphere of trust and mutual understanding. With the NSA and the lack of trust this has created in Europe, it is making the negotiations much more difficult and more difficult for policy makers to sell to the public.
At the moment, Europe lacks big players in the digital market to rival US companies like Google, Amazon and Microsoft. Do you think Europe could use its high data protection standards as a selling point among US consumers to compete with US providers in a transatlantic market?
No, I don’t think so. The people I know in the European Parliament and the European Commission do not really show a difference in attitudes between the EU and the US on data protection.
For example, look at Neelie Kroes the Commissioner who is dealing with this. Even yesterday she said we have to reform ICANN, the internet governance body which is basically dominated by the US. If you read her speech on her objectives, she says, ‘We have to make it less US-centric’. But in my view it’s a kind of envy, or criticism of the system because it is dominated by the US. It’s not that the EU wants something else; they want exactly the same things.
The EU doesn’t want privacy any more than they want it in Washington. Just look at the recent European Parliament decision for putting electronic chips in cars to be effective in 2015. It means every centimetre you drive in this car will be monitored by GPS! When you have an accident it will supposedly call the road services but everything is being monitored. EU officials are saying the data will not be followed but of course it will.
This is basically an attempt at finding an equilibrium with the US so that they are not in control of everything. But it is a dangerous game to play. If control is not in the hands of the US, then whose hands will it be in? China? Russia? Is that going to be nicer or better? I’m afraid not.
So I am very reluctant to acknowledge their moral high ground. They only use it as a rhetorical instrument to get support outside of the US for what they want.
Do you think the US and the EU can agree on common data protection standards in the end?
I doubt it very much. I think it is one of those issues that is going to create a tremendous amount of acrimony. And that it is going to be dropped.
Many leaders in the EU and the US, including President Obama, claim TTIP will create jobs and boost their respective economies. Do you agree with this assessment?
It is part of their preparatory work to say this. If you do not say TTIP will create jobs then there will not be economic and political support for it. You will not be able to create the enthusiasm and the political will to overcome all the hurdles and criticism which is already coming up. Creating jobs is the narrative which is required to push this forward.
If you look at studies on free trade, a whole host of previous experiences on creating free trade areas show that, in general, lower tariffs and regulatory coherence make it easier to do business and to invest in each other’s economies. They also ensure that you do not run into all kinds of hidden regulations and so forth. So this will certainly create more economic activity.
The problem with free trade is that some sectors will win and some won’t. If you add the pluses and deduct the minuses, then you could say that jobs are created. But there are always winners and losers.
Although in some sectors tariffs are more significant than in others, tariffs between the EU and the US are modest. There are only a few exceptions like ‘buy American’ clauses on transportation and aviation or in Europe you have cultural exceptions for TV and movies.
In general, jobs will probably be created despite the modesty of tariffs that will be tackled.
A lot of the criticism in the US over TTIP is based on the effects of the North American Free Trade Area (NAFTA) thus far, claiming that it has drained jobs from the US. Is TTIP very similar to NAFTA and should they be compared like this?
No, they are not comparable. If you look at NAFTA it includes Mexico. And Mexico has a work force that is at a comparable standard with the US. Just looking at the pay, it is much lower. Of course jobs will move to lower cost production.
But I don’t see this happening between Europe and the US. Some parts of the EU have relatively low labour costs but that’s not significant. I don’t think you’ll see the same kind of pattern as with NAFTA.
At the moment, what do you see as the most significant obstacle to concluding TTIP within the next two years?
Political momentum and time. Remember US Trade Representative Michael Froman said, ‘one tank of gas will push it through’ and ‘it will be the legacy of Obama and the Barroso Commission’.
If you look at the political momentum now, it is already slowing a little. Looking at previous efforts to create transatlantic convergence on trade, there has not been a lot of success. It has to be done with momentum: going from success to success to success. Then it has to be put forward to Congress for ratification and would go ahead as a huge success story. And the same goes for the EU.
But if it is going to be another two or two and a half years, people will lose interest. There will be reasons for the delays of course: differences in opinion which cannot be overcome. This will make all the headlines and things will get bogged down just as with Doha.
The biggest problem is not one thing in particular, but one small- or medium-sized problem after the other. Finally leading to the whole thing running into the sand.
What time-frame do you see as realistic for the agreement to be concluded?
Considering an American president becomes a lame duck officially during the last year of his term – for Obama 2016. Then there will be new European Parliament elections in May of this year. The Commission is on the way out, then we will have a new Commission.
Another important point is that opinion polls in most of the EU member states, are showing that Euro-critical political flanks on the left and right are likely to win a substantial amount of votes in the European Parliament elections for the first time. I’m not sure what the new Parliament’s attitude will be on TTIP because both the left and the right Euro-critical parties are not in favour of the EU doing anything. This is not going to help the process.
In the US, the Senate is much more in favour of free trade while the House of Representatives is traditionally much more critical. But in this case they will probably vote yes. They haven’t got a TPA in place yet and it is not likely to happen quickly. Still, I’m not sure if this is really important because they have been negotiating a Trans-Pacific Partnership (TPP) without it for a long time.
It is actually similar to Europe: if you come forward with something that is ‘yes’ or ‘no’, it has this momentum and this political clout of something urgent and necessary. It will be very hard both in the US Congress and the European Parliament to say ‘no’ to that.
I’m not really sure about what trajectory we are looking at, but I never believed the ‘one tank of gas’ story. That would have meant the whole thing lasting only 18 months or so. That is without precedent and technically almost impossible to negotiate. I never really believed the optimism about the time frame envisioned. But the alternative is not without its problems, let’s just put it that way.
But the TPP seems to be the priority right now in the US as the negotiations have been going on longer.
Yes, it was almost finished. And although it is not entirely a precedent, it is interesting because all the negotiating problems people foresaw for TPP without the TPA have not really materialised. The American negotiators have simply negotiated the TPP as if they had an agreement with Congress already.
And the idea that third parties would not negotiate with the US if they could not count on Congress to ratify it, has also not held up. A lot of other countries have asked to be included.
Is there anything you think that people in Europe have failed to recognise regarding TTIP? Or something that has lacked coverage on the subject of TTIP in Europe?
One of the things missing in the debate is that we are facing a situation where the transatlantic relationship – which we have cherished and benefited from for many decades – is crumbling. We have institutions like NATO, regular platforms for debate and so forth but we need something else, something new.
This is not necessarily or not only to compete with rising powers like China, although that is certainly part of the picture. But it needs to be something that could revitalise this transatlantic relationship and it cannot be built on security and strategy in a classical way. The new paradigm in world politics is, luckily, no longer military but economic competition.
In this respect, the EU has a lot to offer. It is a major regulatory power. It is a huge market. The US stands to benefit from close cooperation with the EU. The benefits would not just be jobs or growth or economic dynamism but revitalise the transatlantic relationship, creating something very useful.
We need the US because we just cannot do it on our own. Europe lacks a strategic vision and clout in world politics. To some extent it aspires to have this and works towards such a goal but it is something Europe will never acquire.
Europe is still only a collection of 28 individual countries and it does not have this unity. I don’t believe in this federalist dream and I don’t think it will work.
So TTIP, at least temporarily – for 5, 6, 7 years – can create transatlantic unity of sorts. It will not magically make things perfect for us but it will create a temporary sense of vitality which is totally under-appreciated in Europe. We are arguing about genetically modified foods and we have completely lost sight of the bigger picture. In my view, that is the greatest thing which is lacking.