EU, US Negotiators Push for 2016 Deal, Though "TTIP Light" Not an Option

4 May 2016

Negotiators for an EU-US trade and investment deal concluded their thirteenth round of talks on Friday, with both sides reiterating their wishes to conclude an agreement this year, so long as it does not force a compromise on substance.

Meanwhile, public debate has escalated over the deal’s potential content, particularly in the wake of a “leak” of alleged trade deal texts by an environmental NGO this week.

The latest round of Transatlantic Trade and Investment Partnership (TTIP) negotiations was held in New York from 25-29 April, coming on the heels of high-level meetings between US President Barack Obama and various EU national leaders, including UK Prime Minister David Cameron and German Chancellor Angela Merkel. (See Bridges Weekly, 28 April 2016)

Those meetings came with a strong political push to advance the trade talks as much as possible in the coming year, before Obama leaves office, with a view to reaching a completed deal if possible. Ratification, however, is not expected in 2016, even if an agreement is concluded.

Tariff phase-outs

At the level of market access, the two sides are aiming to make progress in TTIP under three main pillars: goods, services, and government procurement.

On goods, the US and EU exchanged second offers on tariffs last October, which they noted at the time had put them on “comparable” levels in terms of tariff line coverage. (See Bridges Weekly, 29 October 2015)

Discussions on tariffs continued during this round, officials said, specifically on the 97 percent of tariff lines covered in the latest offers.

“We had agreed earlier to eliminate tariffs on 97 percent of tariff lines, and at this round, we worked to increase the number of those tariff lines that would be zeroed out upon entry into force of the agreement,” said US chief negotiator Dan Mullaney at the closing press conference.

He added that the two sides will work in the coming months on the elimination of those tariffs not included in those offers, along with speeding up the phase-out times for those already covered.

EU chief negotiator Ignacio García Bercero confirmed that the three percent of tariff lines not covered in each side’s offer – the “most sensitive” – were not discussed during the New York meeting.

Regarding public procurement, the EU official suggested that there is a disparity in how far along the text on that subject is, versus the market access offers that were exchanged earlier this year. (See Bridges Weekly, 3 March 2016)

“For us, it is clear that we need to reach a similar level of progress in market access procurement as we have already done in tariffs and services in order to move the negotiations towards the end game,” he told reporters.

A “bridging round”

Besides market access, one of the main goals this week was on consolidating texts in as many areas as possible, building on the efforts of the last three years of talks.

“The round was a bridging round, between the huge amount of technical work that we have already done, and the task we now face in creating joint texts and finding compromises where necessary, in particular in the regulatory and rules pillars of these negotiations,” said García Bercero.

Officials noted that the TTIP chapters regarding small- and medium-sized enterprises, as well as those relating to customs, trade facilitation, and competition, are “very advanced” at this stage, while other areas such as good regulatory practices having made “good progress.”

Among the texts that are now “consolidated” – in other words, that incorporate “joint text” agreed in whichever areas possible – are the chapters on good regulatory practices and regulatory cooperation.

At the sectoral level, officials reported advances in the areas of automobiles, pharmaceuticals, medical devices, and cosmetics, with a view to having “text on the table” for the majority of sectors by the time they meet again in July. On pharmaceuticals, the EU has said that its proposal on this area will soon be released to the public.

Controversy builds in wake of Greenpeace “leaks”

Just days after the conclusion of the round, the Netherlands branch of the Greenpeace environmental group released a series of documents which it claims are “leaked” versions of TTIP consolidated texts, dated prior to this latest negotiating round. The release has fuelled a media frenzy in its wake.

The advocacy organisation claimed that the leak was meant to spur debate and prompt officials to release the latest negotiating texts. Greenpeace also made a series of allegations based on its analysis of the texts, arguing that the documents they have seen appear to indicate EU compromises on areas such as the “precautionary principle” and a lack of explicit mentions on climate protection.

In response, EU Trade Commissioner Cecilia Malmström released a statement the same day which, she said, was needed to respond to some of the “misconceptions” that appear to exist about these “supposed leaks” being reported in media outlets.

“First of all, and contrary to what many seem to believe, so-called ‘consolidated texts’ in a trade negotiation are not the same thing as an outcome. They reflect each side's negotiating position, nothing else,” she said, adding that it is normal for the two trading partners to have different views on some issues.

She also noted that it is not unusual for each side to be pushing hard for their respective negotiating priorities, and that doing so does not mean that the other side will make concessions or that some middle ground will necessarily be reached.

For example, she referred to the EU’s proposal under TTIP on regulatory coherence, which she noted has references to the precautionary principle.

“In areas where we are too far apart in a negotiation, we simply will not agree. In that sense, many of today's alarmist headlines are a storm in a teacup,” the EU trade chief said.

She also pledged that the EU will never sign on to a trade deal that would require changes to laws on genetically modified organisms (GMOs) or force less stringent environmental protections, nor would they limit the 28-nation bloc in making rules aimed at protecting consumers and the environment.

“I am simply not in the business of lowering standards,” said Malmström.

However, in the wake of the leak, French President François Hollande said that, at this stage of the negotiations, TTIP would be unacceptable for his country.

“We will never accept questioning essential principles for our agriculture, our culture, and for the reciprocity of access to public [procurement] markets,” he said on Tuesday. What this might mean for the trade deal’s next steps is not yet clear, with French Trade Minister Matthias Fekl suggesting the same day that a likely option could be putting the talks on hold.

Time running short?

With Obama due to leave office on 20 January 2017, the pressure to reach a deal before a new administration enters the White House is on, given the likely transition period once a new president takes office, as well as the uncertainty of what stance the next US leader will have on the TTIP talks.

“From the European Union point of view, we are ready to work hard to try to conclude these negotiations in 2016, but of course, only if the substance of the deal is right,” said Garcia Bercero to reporters on Friday.

“TTIP light, as has been said very clearly by Dan [Mullaney], is not workable either for the US or for the European Union,” he added.

Another negotiating round is tentatively slated for July, prior to the summer break. The focus, according to the EU official, will be to continue consolidating texts as much as possible in all areas, leaving only politically difficult issues to be resolved later down the road.

By the time of that next round, the results of the upcoming “Brexit” referendum in the UK should be known, with British voters set to go to the polls on 23 June, adding another dimension to the TTIP talks.

In separate remarks to a Geneva audience on Monday, EU Trade Commissioner Cecilia Malmström responded to a question on the “Brexit” situation by saying that “I really hope that the Brits will choose to stay.”

However, she noted, “should the Brits choose to leave, it is then up to the Brexit camp to formulate what relationship they want with the European Union,” adding that the UK would not be part of current or future EU trade talks if it leaves the 28-nation bloc.

The pace of progress in the talks has provoked frustration in some quarters, with French Trade Minister Matthias Fekl reportedly suggesting that the negotiations be put aside if they continue to move slowly, according to comments in Reuters last week.

ICTSD reporting; “U.S., European trade negotiators battle political headwinds,” REUTERS, 29 April 2016; “François Hollande: ‘No’ to TTIP at this stage,” POLITICO, 3 May 2016.

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