Who would pay and who is to gain from the EU-US free trade agreement

Dan Mullaney, Chief US negotiator (on the left) and Ignacio Garcia Bercero, Chief EU negotiator held the third round of negotiations aimed at the establishment of a “Transatlantic Trade and Investment Partnership” (TTIP), in Washington from Monday 16 to Friday 20 December 2013. Bercero seems to say, ‘what did you expect that there will be no cost’? (EC Audiovisual Services, 16/12/2013).

Challenging the factual reality, that the ‘gains’ from the currently under negotiation EU-US trade agreement would come mainly from deregulation in the fields of health, safety, environment, financial and data security, the European chief negotiator Garcia Bercero insisted that: “the Transatlantic Trade and Investment Partnership (TTIP) is not and will not be a deregulation agenda”. He tried to convince the world that “neither side intended to lower its high standards of consumer, environment, health, labour or data protection, or limit its autonomy in setting regulations”.

Still the relevant Press release issued by the Commission states that, “Negotiators also had substantive discussions on regulations which protect people from risks to their health, safety, environment, financial and data security. Studies suggest up to 80% of the gains from any future EU-US trade deal would come from improvements in this area”. What kind of ‘improvements’ can deliver more trade than the abolishment of protective rules?

Given that the EU-US trade tariffs are presently on the average less than 4% , there is no other magical way to substantially increase trade between the two sides of the Atlantic, than dismantling internal regulations, for example in the field of marketing and cultivation of GMOs on European soil. Of course there won’t be outright abolition of such regulations but rather indirect liberalisation, like in the case of the GMO potato Amflora, the marketing of which was authorised by the Commission, but later on annulled by the General Court of the EU.

Negotiating what?

At this point it must be noted that negotiations between the two sides, for the swift conclusion of this TTIP between the EU and the US, are being conducted by ‘weekly’ rounds. Last week negotiators from the two sides met in Washington for the third weekly round, which was concluded yesterday. The EU and US teams also spent one of their five days together talking to over 50 stakeholders and answering questions from them. Unfortunately the Commission didn’t communicate any information on the focal points that those 50 stakeholders asked questions about.

According to the Commission “Negotiators made progress on the three core parts of the TTIP – market access, regulatory aspects and rules – and these will be the focus for the round of talks expected in March 2014”. It’s more than obvious that tariffs are the last subject the two sides are interested to cover. Actually all three areas of interest have a common denominator; internal rules. Market access, regulations and rules, all are issues related to internal legislation in connection with the functioning of markets on both sides of north Atlantic.

No wonder that 80% of the expected increase of the bilateral trade would come from the abolishment of such rules. For example safety and CO2 emission rules in the US automotive market constitute a major problem, increasing the cost of German cars sold in the United States. American concessions in this field would probably be exchanged with abrogation of EU rules on imports of US meat with hormones and the liberalisation of cultivation of GMOs on European Soil.

The next major issues in the EU-US economic relations universe are government procurement contracts, the opening up of services markets and making it easier to invest. Seemingly those issues have not yet been discussed in depth during this third weekly round of negotiations.

Gains and costs

According to Commission sources the end of this third round marks the conclusion of the initial phase of negotiations and paves the way for “EU Trade Commissioner Karel De Gucht and US Trade Representative Ambassador Michael Froman to hold a political stocktaking meeting early in 2014”. The EU-US Transatlantic Trade and Investment Partnership aims at opening up trade and investment between the EU and the US, which together make up 40% of global economic output.

The TTIP is planned to produce more jobs and more growth on both sides. However nobody talks about costs. According to a study commissioned by the EU a comprehensive TTIP “could see EU exports to the US rise by over 25%, earning its exporters of goods and services an extra €190bn every year”. The question remains what will be the cost of that in terms of ‘reduction’ of health, consumer, labour and data protection regulations.

For one thing a lot of people in Europe insist that data protection should not be included in this TTIP. In any case it’s pretty clear that Germany is to gain the most out of this EU-US trade agreement, because this country is by far the largest European exporter to the United States. Other EU countries may even realise losses due to the facilitation of the American exports to the EU.