EU Trade Ministers: TTIP Conclusion Unlikely This Year

29 September 2016

EU trade ministers affirmed last week that finishing negotiations on a bilateral trade and investment deal with the US before year’s end is an “unrealistic” goal, following informal meetings held late last week in Bratislava, Slovakia.

The 22-23 September meeting had been flagged as a potentially pivotal moment for both the Transatlantic Trade and Investment Partnership (TTIP), as the EU-US talks are known, as well as a separate trade accord already negotiated with Canada that is now awaiting formal signing and ratification. (See Bridges Weekly, 22 September 2016)

“We had very constructive and open discussions,” said EU Trade Commissioner Cecilia Malmström at the closing press conference on Friday.

However, the sobering assessment on the TTIP talks’ state of play marks a notable turnaround from just a few months ago, when both sides had been stressing the importance of finishing the negotiations before US President Barack Obama leaves office in January. (See Bridges Weekly, 21 July 2016)

TTIP pause?

The weeks leading up to the Bratislava meeting had seen several trade ministers from large EU member states – most notably France and Germany – express a potential interest in putting the bilateral negotiations on hold, amid claims from some quarters that the US was not willing to make the concessions that the EU sees as necessary for a balanced accord.

Another concern that has been repeatedly raised is about the timeframe, given that the US is due to hold presidential elections on 8 November, along with the public backlash already being seen on both sides of the Atlantic with regards to trade deals, creating an increasingly uncertain political climate going forward.

“The debate showed that a conclusion of the TTIP negotiations by the end of the year is unrealistic,” said Peter Žiga, Slovak Minister for the Economy, during Friday’s press conference.

The Slovakian official also flagged the November presidential elections in the US as a factor in TTIP’s negotiating future, and the importance of having a final accord whose quality meets the EU’s needs.

“Let me put it this way: [some] of the member states… see the glass as empty, while [some] of the member states see it as full, while the rest of the member states see the glass as half empty, so there are many things that need to be achieved in the negotiations,” he told reporters on Friday.

Additional discussions from EU member state representatives are expected on 20-21 October at the Council level. Based on those conclusions, trade ministers will revisit it in early November.

While acknowledging that the slim window left in the Obama presidency makes it increasingly doubtful that a deal will be concluded by then, Malmström told reporters that it still “makes sense to continue the negotiations.”

She added that EU negotiators will try to make as much progress as possible during the upcoming negotiating round with their US counterparts in New York, scheduled from 3-7 October, along with in the remaining months of Obama’s term.

“If we do not conclude TTIP before the 19th of January, then there would be a natural pause, because any  American administration has all of these confirmations and Senate hearings and so on, it takes five or six months,” said Malmström, adding that it was too early to surmise as to when the negotiations might then resume.

The start of a new presidency usually does involve a series of changes that often span several months, including the appointment of cabinet-level officials who often must undergo confirmation by the Senate. This includes the position of the US Trade Representative (USTR) and their various deputies and ambassadors. Whether current USTR Michael Froman and other members of his team would continue in the next administration, and for how long, remains to be seen.

Another factor would likely be the trade policy approach of the new US president, depending on how wins at the polls in early November. The two major candidates – Hillary Clinton of the Democratic Party and Donald Trump of the Republican Party – have drastically different approaches to economic and environmental policy, which would also be a key factor in how and whether the TTIP talks proceed. (For more on the US elections, see related story, this edition)

Pressing on with CETA

Another key trade deal on the EU agenda is the Comprehensive Economic and Trade Agreement (CETA), which was negotiated with Canada. The actual deal itself has been completed, and is now awaiting signing and ratification – both of which are proving to be very contentious processes.

“We have had a very interesting and excellent discussions,” said Žiga on Friday, noting that the signing of the CETA is one of the priorities outlined by Slovakia under its Council presidency. He added that some questions remain outstanding, such as how provisional application of the trade deal will work.

“Of course, the European Union’s credibility is at stake as a negotiating partner, as is its trade policy,” he added, suggesting that a failure to complete the final steps to bringing CETA into force would have severe consequences for the 28-nation bloc’s negotiating plans in other areas, given the similarities and compatibilities between the EU and its North American trading partner.

Canadian Trade Minister Chrystia Freeland attended part of the Bratislava meeting last week, officials confirmed, allowing the opportunity for EU trade ministers to discuss their concerns on CETA with her further.

The EU and Canada have now agreed to release a joint declaration aimed at “explaining” all the main issues flagged as areas for concern by stakeholders, such as public services, investment protection, and environmental rules.

The document will be an “interactive declaration that will have legal value and that could be attached to the agreement, per se,” according to Malmström.

Pending that outcome, Žiga said it was likely that an “extraordinary” council of EU trade ministers would be convened in October to endorse the accord, in order for the EU and Canada to sign the deal at a bilateral summit on 27 October.

Should the signing ceremony occur and the European Parliament then ratify the deal, CETA could then be provisionally applied, pending member state ratification at the national level. This provisional application would likely start early next year, officials said.

Similar precedent exists for other trade deals, most notably the EU’s accord with South Korea, which was provisionally applied in 2011 and was fully ratified only last year.

The Commission is currently working on what would be included from CETA under such a provisional application, Malmström told reporters. Certain parts of the investment section, including the new investment court, would not be provisionally applied, nor would a few other technical aspects.

ICTSD reporting.

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