Judy Asks: Is TTIP Dead in the Water?

No, TTIP is not dead in the water. It’s still steaming ahead, albeit at a reduced speed. The Transatlantic Trade and Investment Partnership was never expected to be closed quickly or smoothly, so there is no need to panic about emerging roadblocks.

TTIP is about dollars and euros and how to make more of both. This is the same idea around which French statesman Robert Schuman and French economist Jean Monnet built the precursors of the EU in the 1950s. Others then extended the concept to include free movement of capital and labor and increasingly standardized rules and regulations for business. This lifted all boats and made Europeans richer.

If the chief business of the American people is business, as the adage goes, then TTIP speaks the language everybody in the United States understands. The sticking points, such as agricultural subsidies, European rules of origin, and the precautionary principle, will be on the table. Compromises will be struck in the name of the larger prize, which is more efficiency, lower prices, and higher wages.

Europeans have built the common market for acutely pragmatic reasons. Given the size of the transatlantic economy and the gravitas of the United States for technology transfer, innovation, and military ties, TTIP is an indispensable deal that offers gains for everyone. It will be hard to negotiate, will take a long time to clinch, and may include painful compromises—but it should be done.

Even though TTIP retains the determined support of the German and British governments as well as the administration of U.S. President Barack Obama, the partnership’s prospects are increasingly cloudy. More than most other trade agreements, TTIP’s motivation is geopolitical, and it is true that the deal has gained in relevance in the eyes of its proponents since Russia’s invasion of Crimea, the latest jihadist insurgency in Iraq, and the electoral gains of isolationists on both sides of the Atlantic.

But TTIP is a trade agreement, not an international defense treaty, and it is at risk of failing where it matters most—in convincing exporters and foreign investors that it can deliver the goods: less red tape, more predictable rules, and the elimination of remaining tariffs. Ominously, TTIP is running into the opposition of regulators on both sides of the Atlantic who feel their life is complicated enough without having to refer their decisions to both Washington and Brussels.

Agencies such as the U.S. Federal Reserve, the U.S. Department of the Treasury, and the European Commission Directorate General for Agriculture appear to see TTIP as adding complexity without offering much in return. The absence of trade promotion authority—which allows the U.S. president to negotiate deals that Congress cannot amend—as well as the sheer scope and intricacy of the negotiations do not bode well for this well-intentioned initiative.

The answer, for now, is simple: no.

There is a lot of negotiating still happening, and momentum is still there. Officials will be back in Brussels for another formal round of talks in mid-July, and they will meet en masse at least two more times before the end of the year. And then there are all the informal, often more focused talks that happen along the way.

The obsession with registering progress is understandable. The final result that observers are waiting for would be a historic agreement between two of the world’s largest economies. The truth, though, is that trade negotiations are not built for today’s short-attention-span world. Discussions on technical minutiae grind on behind closed doors over years rather than weeks or months, and negotiators are very bad at respecting political cycles.

But, that said, I did say “for now.”

To use the water analogy, the good ship TTIP has, over the past year, steamed its way from its honeymoon in the gay tropical waters where nothing could possibly go wrong into a more unforgiving Atlantic. And the politics are not getting any easier. In fact, I’m not sure—to belabor the metaphor—that the good ship TTIP is heading back to the tropics anytime soon. So it will have to weather of plenty of storms yet.

Comprehensive trade agreements like TTIP require a major sharing of sovereignty and a transfer of power to some supranational body that can enforce rules. Neither the European elections in May 2014 nor the polls ahead of America’s congressional midterms in November suggest that the political mood or will is there for a new breakthrough in supranational power sharing. The United States is not going to abolish its “Buy American” laws nor allow British Airways or Lufthansa to sell tickets for flights from New York to Seattle.

The newly elected chair of the European Parliament’s trade committee is Bernd Lange, a veteran Social Democratic member of parliament with a German trade-union background. In his considered May 2014 policy paper on TTIP, he sees advantages for German car exports (no surprise for a member of parliament from export-driven Lower Saxony), but he also sets out a long list of demands: that U.S. states adopt International Labor Organization norms; that exports of certain scientifically engineered U.S. agricultural products be banned; and that EU data privacy be respected—with a sideswipe at the NSA revelations that have done such damage in Germany.

U.S. President Barack Obama has not sought the power to present TTIP as an all-or-nothing treaty, so each member of Congress can chisel away at the agreement on behalf of local interest groups. Like the League of Nations in 1920, TTIP is a great idea whose time has not yet come.

TTIP’s future hangs by a thread. An agreement of this nature was never going to be decoupled from its broader political context. Earlier in 2014, transatlantic tension over the NSA spying scandal seemed to fade away when Russia invaded Crimea. Washington must have decided that in the new geopolitical situation, it does not need to address the underlying causes of that tension.

Today, fresh revelations of an American spy in Germany risk adding fuel to the fire. The United States can no longer underestimate the angst it is creating across Europe. An unequivocal declaration that the United States would not spy on its allies is increasingly becoming an essential part of the package that can save TTIP.

Other issues require attention as well. The Europeans are deeply frustrated by a U.S. move to sanction European banks without first exploring all political avenues to find a solution. A picture is emerging of a United States that cares only about its narrowly defined national interest. This will make it increasingly difficult for European parliaments to ratify TTIP once it has been negotiated.

In the meantime, substantive progress has been achieved on the negotiations, and attitudes to transparency have changed on both sides of the Atlantic. After initial hesitation, the European Commission has engaged in thorough public consultation on TTIP. It would be dismal if the agreement fell through because of a lack of trust and confidence. The worst fallout of all would be the signal that this would send to the world. The ball is very much in Washington’s court.

TTIP is treading water but is far from dead. Despite all the downs it has experienced lately—from the impact of U.S. spying on Germany to the lack of trade promotion authority for U.S. President Barack Obama—the strategic and economic interests on both sides of the Atlantic are too great to allow this project to fail.

TTIP will not be an economic NATO and will not in and of itself revive a transatlantic relationship that has been undervalued lately, but the agreement’s passage will give it a new impetus and new stakeholders. Failure would be greatly damaging and could mark the end of this vital relationship.

Both sides have stressed the strategic importance of deepening and widening the standards of a liberal economic and political order at a time when authoritarian powers seem to be on the rise and the West has lost its civilizational self-confidence. To pull off a major success would revive sagging morale and offer younger generations in both North America and Europe a vision for a revitalized West.

With a new European Commission in place by the end of 2014 and no major European elections in sight, and once November’s U.S. Congressional midterm elections are over, the political environment for TTIP should be favorable. U.S. President Barack Obama will face a Republican House of Representatives and possibly a Republican Senate, but TTIP is the type of initiative Republicans are likely to support. Obama’s woes have been with the Democrats and the Trans-Pacific Partnership, not wtih TTIP.

There is now too much political capital invested in TTIP for it to be sacrificed to the concerns of antiglobalization groups or to growing anti-Americanism fueled by the overreach of U.S. intelligence agencies. U.S. electronic surveillance activities are certainly becoming a significant problem for the transatlantic partnership, but the solution has to be found outside the realm of trade.

As NATO Secretary General Anders Fogh Rasmussen stated in a speech in Brussels in June 2014, TTIP is increasingly seen as the economic pillar of a rejuvenated transatlantic relationship. This common objective is ever more indispensable amid a changing world order that will be marked by a noncooperative and assertive Russia. That is an additional incentive for keeping TTIP afloat.

Indeed, what message would it send if Brussels and Washington were not even able to maintain their commitment to the creation of a better-integrated transatlantic market?