Moreira: TTIP must overcome cultural perceptions

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This article is part of our special report EU-US trade talks: moving forward?.

The issues complicating a Transatlantic Trade and Investment Partnership (TTIP) agreement are deeply cultural and will not disappear. But they can be overcome, says Portuguese MEP and rapporteur on the trade agreement, Vital Moreira.

Vital Moreira, a centre-left Portuguese MEP, is the chair of the European Parliament’s Committee on International Trade.

He spoke to EURACTIV’s editor-in-chief Daniela Vincenti

The second round of negotiations for a Transatlantic Trade and Investment Partnershiwill start on 7 October and are in full preparation right now. Is Parliament being kept in the loop on this?

The Commission tabled its draft mandate earlier to which we have access. It is the duty of the Commission to share it with us. We decided to move forward, based on the resolution of the Council, even though we have oppositions on this.

As you know it was this resolution that decided to carve out the audio-visual sector. In essence, the French didn’t want to jeopardize their policy on subsidies and quotas in the audio-visual sector. This was regarded as the most important issue – even if it was an obscure element compared to others.

Was this a deliberate move to divert the attention from other elements?

I don’t think it was; it was in the interest of France particularly to exclude the audio-visual sector. And Council followed France on this.

Do you feel the US will spell its red lines at this round of negotiations after their impact assessment is finalised? Will financial services be off the table?

No, the US stressed from the start that they didn’t want the regulatory side of financial services integrated. So this didn’t come as a retaliatory reaction to our decision. So far, we’ve seen no move on the side of the US to exclude a similar element.

Are there particularly sensitive issues the US has, and which they might take off the table later?

Of course they have prime interests, but they won’t just exclude things. They will go for substance and refuse to make substantial concessions on certain issues.

We know their sensitivities: maritime transport, public procurement, regulation of financial services, Sanitary and Phytosanitary (SPS) issues, textiles… the usual things, in fact. Many of these are connected with traditional security concerns in the US.

Could these sensitivities turn out to be deal breakers in the negotiation?

If both sides do not invest serious political capital in the TTIP agreement, there will be many deal breakers. I can think of a dozen. I prefer not to speak of deal breakers but of challenges, and don’t think we should anticipate deal breakers.

The hurdles are steep, so you need a true and far-reaching political engagement. Both sides are investing plenty of resources. [Trade Commissioner Karel] De Gucht is personally overseeing the negotiation; and the US trade representative in Washington is very close to the American government. I I’d say there is a real political investment on both sides.

What do you expect from this second round of negotiations?

To start the proper job of negotiating and have real proposals on the table. Notably on a key issue that a free trade agreement is about: tariff barriers. In general these are low, but there are peaks in textile and agriculture.

And don’t underestimate the market access issues either. This is still the first and major pillar in this agreement. We have to deal with many restrictions on import: the infamous ban on European beef import in the US; a ban on fruits, apples, pears; restrictions on investments in maritime and air transport; and so on. The US is also very interested in negotiating [access to] our agriculture market.

What about the regulatory side, what Ambassador Vale Almeida called the crown jewel of TTIP?

Regulatory issues will be the hard nut to crack. Non-tariff barriers can be much more costly than tariff barriers. Levelling technical standards might be easy, but when it comes to safety standards, things can get difficult.

Let’s be clear: the idea that we’ll address all different standards and achieve a hundred per cent convergence, is utopian.

Some of these standards are built into culture, custom and maybe even fear. Take an issue that everyone is talking about: hormone beef. Imagine if we go to the European consumer and say that, from now on, hormone beef will be on your market. You simply cannot just decide this. So it is unimaginable to have hormone beef being sold in Europe.

But don’t forget we have a market double the size of the US market. We are the biggest economy. So why don’t American producers start to produce hormone-free beef for the Europeans, who are ready to pay. That could be a solution: to allow for hormone-free beef – high quality, high prize – to be exported to the EU.

There are two things this agreement will not change. One is both our constitutions. For example, you cannot force rules upon the US states concerning public procurement; they have a federalised system with fifty state rulebooks on procurement.

A second thing is that we will not change are the minds of our people. However close Europeans and Americans are to one another, there are differences. So let’s live with them.

By the way, these are constraints to any international agreements, not only trade agreements. We have rejected three international agreements in this legislative year in the European Parliament, two of which with the US: SWIFT and ACTA. There is a clear, deep divide on these issues which we cannot solve with a trade negotiation.

The stakes of this agreement are high for other parties as well – the MERCOSUR countries, for example, going back to beef. Should we involve these third parties in the negotiation?

Free trade agreements are privileged agreements; they are aimed at the economies that negotiate them. And so a transatlantic agreement also means the erosion of trade preferences that we negotiated with other countries.

Of course, TTIP will have an impact. MERCOSUR countries will be heavily impacted if we reach an agreement on agriculture. But we are not negotiating with MERCOSUR, so Brazil and Argentina will have to find their own way of keeping a market share.

I often tell to our Brazilian friends that they should be concerned about this agreement. If we reach an agreement, they will have to compete with cheaper US commodities on the European market.

On the other hand, third parties will also benefit from future common standards. Instead of having to comply with two different standards, the EU and US one will have the same. You’ll see how much this agreement will have a positive impact on a number of countries, notably Asian ones. They will benefit from a huge market of more than 700 million consumers, with an equal standard.

Let’s get to the investor-state dispute resolution, which, as some experts point out, is one of the major hurdles. How to overcome this?

I am not a negotiator. I expect negotiators to be creative and find a compromise. As you know the Americans are very keen on investor-state dispute settlement, which would allow them to challenge a state directly, through international arbitrary schemes.

We are talking about two western partners with well-developed legal systems. Why would investors need international arbitration?

Well, European investors could share your point of view but American investors fear that courts are not that independent from states here. Also, there’s a time cost: appealing to courts could cost you years. That is the point of view of investors everywhere, not only the American ones.

Ours is a much more restrained view, but we tend to accept state-to-state dispute settlements because this is part of international trade agreements. We are much more sceptical to give a foreign investor the right to go to a third international scheme.

But maybe there are forms of compromise. That’s up to the negotiators and I am not a negotiator. My wish is that they successfully promote the interests of the EU and reach a compromise.

Negotiators had their hopes up that this could be done by September-October 2014. Looking at where we are today, that timing is improbable, isn’t it?

First of all, I think that substance should prevail over time. Timing shouldn’t influence the results of a negotiation.

Secondly, we will need a political momentum. This agreement needs permanent political support from both sides. In the EU there is a strong and consistent coalition in both Parliament and Council, who share the responsibility for trade policy. This will not change after the 2014 elections and Commission change. Our partners know they don’t need to anticipate mood swings in Brussels.

But that’s not the case in the US. Trade groups are putting heavy pressure on Capitol Hill. Plus: it concerns agriculture, maritime transport, security… These are issues that might derail the support in Washington. We need to take advantage of the particularly positive mood both on Capitol Hill and in the White House.

But we didn’t start negotiations anew: the preparatory work was done before. We know what’s on the table and how much pressure we can put on the person across the table. Things could go faster than we anticipated. 

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