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May 03, 2016

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TTIP now an election issue, meaning no deal

If you are a person of leisure with a high boredom threshold, you might want to go to this site where you can download all the TTIP documents release by Greenpeace Netherlands. There is, on substance, nothing shocking about this, except a realisation of how little progress the negotiators have made. We are still nowhere near an agreement on three of the really difficult issues - the conflicting US and EU philosophies on consumer protection, on tribunals for dispute settlement between investors and governments, and on public procurement. The papers restate known positions, but there is no hint of either a compromise or some imaginative new solution.

The importance of these papers is not their specific content, but the reaction to them, which is of course why they were leaked in the first place. The German reaction in particular was predictably hysterical, especially the bits on consumer protection. German media widely reported that the US is trying to soften standards for consumer protection in Europe, and specifically to introduce genetically-modified food through the back door. We reported last week that the German opposition to TTIP has risen dramatically over the last two years - though a narrow majority still seemed to be in favour. We would now assume that even this is no longer the case.

There is a genuine incompatibility between the so-called precautionary principle of the EU and the ex-post litigation approach of the US. The US insists that you can only ban products on the basis of hard scientific evidence. But if consumers can prove that they have been damaged, they can seek large compensations in the courts. The latter is not possible in the EU with its business-friendly legal system. So if the EU were to agree to the US approach, consumers would end up with the worst of all worlds - no protection at the regulatory end, and no right to legal redress in the courts. 

In contrast, the dispute about tribunals, while unresolved, seems to be less fundamental. The dispute here is whether the tribunals should be public or not, who appoints the judges, and whether or not there will be a right of appeal. And on public procurement, the unresolved issue is whether and how this is compatible with the Buy-America policy in the US.

While we proclaim no particular expertise in trade negotiations, this list of differences appears to us not particularly extreme at this stage of the process. But we see little chance of an agreement on TTIP this year - and by extension next year given the electoral time tables in Europe. We have reported that François Hollande is considering blocking the agreement. We have also reported that the new Austrian president - whoever it will be - will almost certainly not agree either. The German grand coalition still supports it - at its own peril (see below on grand coalitions). But public opposition in Germany is growing, and the SPD in particular is coming under pressure to block it or lose its remain 20% share of the votes.

It is fair to say that the leak of the papers has turned TTIP into a major election issue in both Germany and France. This means that an agreement is unlikely this year. One option would be a mini-version of TTIP, one that excludes the controversial bits, but that would render the agreement almost pointless. The alternative would be a postponement (perhaps hoping that it will get much easier under President Trump and President Le Pen!). Or else, it just might not happen.

Our other stories

We also have stories on the fall in core inflation; on why there is no chance of a Greek deal at the next eurogroup meeting; on Germany cutting the guaranteed minimum rate for life insurers; on Italy bailing out its savers; on the lack of enthusiasm for another Spanish election; on Portugal's debt rating; on Kenny II; on Turkey miraculous fulfilling the conditions for visa-free travel; on the parallel universe of the British EU debate; on 5,000 amendments for the El Khomri bill; and on why grand coalitions are a disaster.

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