Malmström: We can finish TTIP during the Obama administration

malmstrom_ttip_kommission_usa_freihandelsabkommen_regulierungsrat.jpg [EC]

The EU’s Trade Commissioner Cecilia Malmström was amazed at German criticism over the planned EU-US Transatlantic Trade and Investment Partnership (TTIP) and emphasised its benefits in an interview with Tagesspiegel.

Cecilia Malmström has been EU Trade Commissioner since November 2014. Before that the Swedish Liberal was Commissioner for Home Affairs. From 1999 to 2006 Malmström was a Member of the European Parliament and from 2006 to 2010 she served as Sweden’s Minister of European Affairs under the Reinfeldt administration.

Mrs Malmström, are you jumping out of the frying pan and into the fire? First, as Commissioner for Home Affairs, you were responsible for dealing with the refugee crisis and now as Trade Commissioner you are overseeing the no-less-controversial TTIP agreement.

It is true, both issues are challenging, controversial and trigger many emotions. Trade is important but there is a huge difference. When people are drowning in the Mediterranean, demons follow you in the night. If I have a lousy day in trade negotiations, it’s bad but it doesn’t move me to the core.

Still, let’s talk about the task at hand: Most recently there was political backing for TTIP. The European Parliament gave its conditional approval and US Congress gave President Barack Obama a broad negotiating mandate. Are you more optimistic than you were, perhaps, one month ago?

Those have in fact been very positive developments. The mandate from Congress enables the government to conclude the trans-Pacific trade agreement and make progress with us Europeans. After extensive discussions, the European Parliament has decided to support my position. There was also backing from the G7 Summit at the beginning of June in Elmau.

Does this backing help you reach the target faster? The EU Summit has indicated the end of the year as the date for concluding negotiations and in the past they have been more cautious.

TTIP cannot be finished by the end of the year. That was never realistic. If we have all offers and demands on the table by the end of the year and make rapid progress, the skeleton of the agreement could be assembled – its outline. In that case we would have good chances at finishing negotiations with the Obama Administration, which is our goal.

Why must it necessarily be in the bag during Obama’s term in office? One could argue that it would be easier with the free-trade-friendly Republicans in the White House.

Perhaps it would be in some areas, but we would lose a lot of time with hearings, training sessions, and getting to know each other. We need the agreement soon, to boost our economy.

Critics are worried that you are sacrificing Europe’s standards for less-than-impressive growth figures. Surveys in Germany indicated a majority is against TTIP. In the UK or France attitudes seem to be shifting – also moving towards opposing the agreement.

It would be crazy for me to dispute the fact that there are heated debates in many countries. In the EU, there is probably a majority in favour but that is more of a silent majority. Criticism is very loud, on the other hand. I am also under the impression that scepticism is on the rise in certain countries.

Are you actually surprised that opposition against the trade agreement is at its strongest in Europe’s biggest export nation?

I am aware that there is a traditionally strong green alternative movement in Germany. On the other hand, Germany would benefit from TTIP more than all the other countries in Europe. In that sense, I am sometimes surprised at how heavy the criticism is in a country that highly reliant on exports and is already closely interwoven with the US economy.

How do you hope to confront the critics?

I can only pick up where I left off. Since I have been in office, I have created an unprecedented level of transparency. More documents are online, 400 representatives from civil society were present at the latest round in Brussels and we reported to them on negotiations.

My team and I have been travelling all over Europe to talk with citizens, MPs and NGOs. But the central responsibility lies with the countries in whose name I am negotiating. I cannot convince the citizens in Germany. German politicians must do that. I know Chancellor Merkel and Vice Chancellor Gabriel are very committed but maybe they should do more at the national, regional and local levels.

There is wide recognition of your transparency initiative. But real transparency is missing because the US side does not release their documents for public access. Is there any chance that could change?

The Americans have a different tradition. They involve a very large group of around 5,000 people who receive the documents, but these are not released to the public. It is not in my power to release US documents. But I can ensure that I will push for a maximum level of transparency. We talk about it every time we meet – about how we can increase transparency together once negotiations over the individual chapters of the agreement are completed.

Where do you see the crucial points in negotiations? Can you name a few examples?

Agriculture remains a difficult issue. Indications of protected geographic origin are very important for us. Eight EU member states have made it clear that there will be no deal without them. Public procurement is also tricky because we have a very active interest in it but the United States have their “buy American” clause.

So far, the Americans have refused to involve the US states here, whose orders would be of particular interest to Europe’s medium-sized businesses.

That is true. In autumn we will start to concretely negotiate procurement. At that point there should be no more taboos. Of course both sides will have to make concessions in the end.

Talks will be intensified?

Yes. We had planned to hold negotiations in October and December. Now there are likely to be talks in November as well.

There is also the controversial question over whether TTIP is a so-called mixed agreement, which all national parliaments would have to approve, rather than just the European Parliament.

It will probably be a mixed agreement, especially if it is as comprehensive and ambitious as we want it to be. Then 42 parliaments, six in Belgium alone, would have to vote on TTIP. But the European Commission cannot release its legal assessment until the agreement is finished.

Let’s talk about its most controversial issue: the investor-state dispute settlement clause, also known as ISDS. It was taken off the table after concerns it would led to corporations suing national governments in international arbitration tribunals. When will it return to the agenda for negotiations?

In autumn. The foundation for this will be my proposals from May, which are now considered to be the right course in the European Parliament and the Council of Ministers. Internally, we are working on a legally binding proposal on how to anchor it within TTIP: publicly appointed, independent justices would give judgements in a transparent procedure with a possibility for review.

Have the United States agreed to this?

I do not know that yet. But ISDS is a topic in Congress. The whole world is talking about it. That is why it is right that the EU is taking on a leading role in modernising the outdated system. Investments must be protected. In the fifties, when the current system was created, one did not see the need to protect national legislative sovereignty. At the same time, we are thinking about new multilateral systems – a kind of UN investment court – which will take longer, of course.

Critics would like to see ISDS disappear all together. Why does it still have to exist between two functioning legal systems? So that at some point China cannot claim it is worse off than the United States?

That is one reason. The second is that nine EU member states already have bilateral investment protection agreements with the United States, which are much more questionable and will not disappear if we do not replace them with an EU agreement. And third, the investment protection is in my negotiating mandate. Regardless of what you might happen to read: not one of the 28 member states has demanded that I put the matter of investment protection to rest.

What you have in mind for TTIP could create problems in the agreement with Canada. It already contains reformed clauses but they lag behind the new ideas. Who is supposed to agree to that?

Of course there will be opposition when it is presented to the Council of Ministers and the European Parliament at the beginning of next year. But one must respect that a deal has successfully been closed – and a very good one for Europe’s economy, I might add. We are talking to the Canadians about whether we can make individual adjustments on ISDS. I am hopeful. Otherwise there is the review clause, allowing for the treaty to be adjusted at a later date.

Common standards are of the utmost importance for TTIP. It makes sense to avoid redundant approval for machines and cars but TTIP also plans to create a Regulatory Cooperation Body with the industry, which will be consulted before new laws are enacted. Critics see this as a gateway for lobbyists.

There are already many lobbyists in Brussels. In the end, the European Parliament or the member states’ national parliaments will have the final say. A Regulatory Cooperation Body will not change this. It will be open to everybody and its work will be completely transparent. In the future, we will need many standards for new technologies, such as for e-cars or in the field of nanotechnology. In my opinion, it makes sense to have the best people of these industries, but also from environmental groups and consumer associations, seated together at one table before a law is made. The advantage is that we will have common norms and security standards in the EU and in the United States.

The transatlantic standard is intended to become the global standard. It comes as no surprise that Hillary Clinton called TTIP an “economic NATO”.

I would not speak of an “economic NATO”. That goes in the wrong direction. But, despite all the disagreements, we have the most in common with the Americans. Take consumer protection, for example, or the fact that children do not have to worry about playing with toys, which they also do not have to produce themselves under child labour. If we set these common standards together, they will apply globally. If we miss this chance, others will set global standards – but at a much lower level.

Subscribe to our newsletters