EU-US to miss 2015 deadline and even lose Germany’s support in TTIP’s darkest week yet

Cecilia Malmström

“Let’s come closer”, the body language of Mrs Malmström says openly, probably having in mind also TTIP. Press conference by Cecilia Malmström, Member of the EC, on the positive impact of trade on the economy – the example of the trade agreement with South Korea (EC Audiovisual Services, 26/03/2015)

What many TTIP supporters were afraid of – and many acute observers were expecting – was announced officially last week: The EU and United States will likely miss a 2015 deadline to conclude what would be the world’s biggest-ever free trade deal. Latvian Foreign Minister Edgars Rinkevics, whose country currently holds the rotating EU presidency, told reporters that the EU-US negotiations would not “most likely be concluded” nether during Latvia’s nor the upcoming Luxembourg’s presidency.

Taking longer

“We have been discussing the overall strategy how to achieve the agreement but we cannot exclude that it may take longer,” Mr. Rinkevics said last week from Riga, Latvia’s capital, during what will probably be remembered as one the worst weeks ever for the gigantic EU-US trade agreement. “The political will is there but in order to tango you need two”, he added, with a cricital scent of “romanticism”.

No date can be put

EU Trade Commissioner Cecilia Malmstroem was way more concise, on the other hand, and simply said that “you cannot put a date” on the conclusion of the talks, but she also added that both the European and the American sides wanted to conclude talks “under the Obama administration”, or before January 2017.

American elections loom

It’s a bit funny that this negative TTIP announcement comes only a week after EU leadership reiterated that they were committed to finalizing the talks by the end of this year. Now it is really the time to worry, as many TTIP fans are now concerned that the point of no return has been reached. The Presidential campaigns to find a successor to Mr Obama will begin this autumn, when the Democratic and Republican parties will open the nomination process ahead of the presidential election in November 2016. Many then fear that American elections would drag away the attention of most of the TTIP supporters at the other side of the Atlantic, causing extra delays and possibly the shipwreck of the TTIP deal.

The German case

But this wasn’t the only big dark cloud that covered TTIP’s horizon in the last few days. TTIP supporters were shaken by a much more worrying news. Germany, which was traditionally among the countries which backed the mammoth EU-US trade agreement with more determination, is experiencing a fall in support for TTIP, and might have changed route.

German Economy Minister Sigmar Gabriel, who only a month ago urged business leaders to promote the benefits of TTIP, has recently pledged to prevent any clauses in a US-EU trade deal that go against the ideals of his party, the Social Democrats – including protection clauses called for by the US.

A critic SPD

“What the SPD doesn’t want, won’t happen”, Mr. Gabriel, who is also Germany’s deputy Chancellor, told the Sueddeutsche Zeitung newspaper in an interview published last Saturday.

Mr. Gabriel then promised to block any clauses in the trade deal that would go against the ideals of his centre-left Social Democrats (SPD), he declared, including investor protection clauses that the Americans push for. “We won’t accept any pressure for further liberalization, or privatisation. We won’t lower any social, environment or consumer protection standards,” he said, very resolute. “And we will not – I am completely sure of this – see any privatization of arbitration”.

ISDS trivia

The “hot potato” here, as it has been called by Mr Rinkevics last week, is still the controversial ISDS clause, as usual, the investor protection mechanisms that would allow large firms to sue governments if they find evidence of business obstruction by local laws. US trade officials insist that investor protection must be included in the agreement, although many EU member states, or at least a consistent part of their local parliaments, is strongly against it.

EU trade chief Malmstroem has been nodding along insisting that an investor protection clause has to be included in the deal, but other proposal to make the clause “much more transparent and legitimate”. Commissioner Malmstroem earlier this month stressd that she is also in favour of the idea of creating a permanent investment court to replace the ISDS mechanism.

Estimates to be lowered?

But that is not all as far as German resistance is concerned. The Federation of German Industries (Bundesverband der Deutschen Industrie, or simply BDI) has been recently forced by a German NGO to review downwards considerably the economic benefits of the TTIP deal. The BDI had been one of the main supporters of the ambitious estimate saying the TTIP deal would give the European Union an economic boost of about 100 billion euros, which is basically the one TTIP evangelists – but also governments – are aligned with and are selling to support this deal.

“Grossly false info”

Following “repeated questioning” by Foodwatch, a German non-governmental group which has openly spoken of “grossly false information” about the trade agreement, the BDI had thus to change the estimates published online, and therefore the overall positive effect that the TTIP would bring. The consequences of this reduction in EU benefit expectations could be only tremendous for TTIP.

US domination?

According to sources, the Bundesrepublik could be worried of a US domination which would follow an “uneven” agreement between the EU bloc and America; hence the enthusiasm is decreasing. Chancellor Angela Merkel insisted last week that she is in favour of a conclusion of the free trade agreement still this year, in the interests of “jobs and growth in Europe”. But truth is that within the Social Democrats party, which is part of the big German representation in the Parliament, support for TTIP has already become weak nowadays.

What progress for TTIP?

All in all, it seems that no concrete progress is being made around TTIP, but instead that all of these copious “single cases” are dragging negotiations down, causing at the same time severe discontent on the American side of negotiations.

Eight rounds of talks were concluded by negotiators so far, which were given a provisional deadline of December 2015 by EU leaders to agree a draft text. But that was only before, as many things are changing around the biggest – and most controversial – trade agreement of all times.

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