Politico | 13 September 2016
TTIP Lite, less filling — but tastes great?
By Christian Oliver, Hans von der Burchard and Alberto Mucci
U.S. diplomats are sketching out a last-ditch plan to salvage core sections of the EU’s moribund trade deal with Washington.
The U.S. and EU countries supporting free trade are increasingly worried that the landmark Transatlantic Trade and Investment Partnership will collapse if they do not secure a preliminary accord before U.S. President Barack Obama leaves office in January.
They now accept that a full agreement will not be possible by the end of 2016 because of an impasse over agriculture and public procurement, but they don’t want to surrender what they regard as concrete progress made in other fields over the past three years of negotiations.
U.S. and Italian officials are now weighing the option of a “Step 1” deal to lock in elements that can be finalized by December, possibly including joint testing regimes and mutually agreed upon standards for cars, pharmaceuticals and medical devices.
The idea has sparked immediate skepticism in the European Commission and in some EU member countries, which argue that any form of a downgraded deal will be very hard to sell politically, particularly after French Trade Minister Matthias Fekl and German Economy Minister Sigmar Gabriel turned hostile on the negotiations.
The debate over the survival of TTIP has reached fever pitch after France said that it would propose halting the talks at a meeting of EU trade ministers in Bratislava on September 22.
In legal terms, it will prove almost impossible for the French to kill TTIP in Bratislava because the deal still has broad support from Italy, Poland, Britain, Nordic countries and Baltic states. Perhaps most importantly, Germany’s Chancellor Angela Merkel also backs the accord, in direct opposition to her economy minister.
Still, the growing political threat to TTIP has spurred U.S. trade officials into a flurry of action. Michael Punke, deputy U.S. trade representative, last week visited numerous trade officials in EU countries as well Jean-Luc Demarty, the director general for trade at the European Commission.
People briefed on the meetings said that discussions focused on nailing down “tangible outcomes” so that “something is agreed on” before the end of the Obama administration. Diplomats stressed that Washington had not drawn up any formal proposal but was discussing the options for “landing zones.”
A senior official at Italy’s trade ministry said that Rome fully supported the idea of trying to conclude a preliminary political agreement before the end of the year. “Italy proposed a very similar plan during its presidency of the EU [in 2014],” the official said.
The discussions on how to save TTIP are due to continue Thursday when U.S. Trade Representative Michael Froman is slated to travel to Brussels with Punke to meet EU Trade Commissioner Cecilia Malmström.
The USTR said that it would still “prefer a fully comprehensive outcome” but noted that it had “heard conflicting statements from European leaders about their interest and ability to conclude a comprehensive deal.”
“We look forward to continued discussions,” said spokesman Matt McAlvanah.
Diplomats in Brussels and Paris noted that U.S. trade officials were ramping up pressure on their EU counterparts by arguing that TTIP had become considerably less attractive after Britain voted to leave the 28-member bloc. The U.K. accounts for about 25 percent of U.S. exports to the EU, and is a crucial market for wine, financial services and procurement.
Supporters of the “Step 1” plan say that it must only be an initial phase and must not represent an end of the TTIP talks. They reject the idea that such a step should be labeled TTIP Lite, which they argue originally referred to the idea of a deal focused on slashing tariffs, without any form of regulatory harmonization.
But other EU diplomats expressed concerns that the “Step 1” idea would kill enthusiasm for any “Step 2” which would, by definition, include more problematic and politically toxic issues such as agriculture, government procurement and geographical indications.
They also argued that supposedly “easier” topics such as convergence on safety standards on car parts would still be politically difficult. EU and U.S. trade officials argue that small companies on both sides of the Atlantic would benefit greatly if they shared common standards and testing rules for products such as paints and car seatbelts.
Two European diplomats noted that a “Step 1” deal in these sectors would also trigger accusations that Europe was surrendering “regulatory sovereignty,” even if not in sensitive areas such as healthcare and the environment.
A Commission source agreed that a downgraded version of TTIP would be politically unpalatable.
“We have agreed on eliminating 97 percent of tariffs, expecting that the Americans will also move forward on issues such as public procurement or geographical indications,” the source said. He added that Brussels was still working on the basis of goals mapped out by Malmström in July, when she called for a “highly ambitious” agreement.
Paris also insisted that there was no question of a pared down deal.
“France will not accept a TTIP Lite,” said Timour Veyri, a spokesperson for France’s Fekl. “[Such] a TTIP Lite would be inevitably made at the expense of French interests.”