TTIP FAQ – Negotiation phase
(Transatlantic Trade and Investment Partnership)
- Latest update: 25 September 2014 -
- The pre-negotiation phase TTIP FAQ can be accessed here -
1. Upcoming meetings, events & studies
On 20 January, Commissioner De Gucht announced that he will hold a three month public consultation on the investor-state-dispute-settlement (ISDS) mechanism. The consultation contains explanations and draft texts, more information here. The consultation has now been closed. A preliminary report can be found here, but a full report will probably only be available at the end of 2014.
In the US Congress, the Trade Priority Act has been introduced. This bill sets out Congress’ priorities, including the modernisation of ISDS, for all running trade negotiations of the US and, if passed, would grant the Administration the Trade Promotion Authority which allows it to ‘fast-track’ negotiations.
The seventh negotiating round will take place in the US starting on the 29th of September.
On 29 September, the European Parliament will hear the Trade Commissioner designate for the new European Commission, Cecilia Malmström. TTIP is sure to feature in the questions from MEPs.
On 15 October, the trade ministers of the European Union will meet in Rome. Commissioner De Gucht will also be present and TTIP will be discussed.
Political groups in the European Parliament for now have decided not to adopt another political Resolution on TTIP; a proposal by the Greens political group to freeze the TTIP negotiations because of the NSA revelations was rejected. There was a debate in the Parliament’s plenary session on TTIP on 15 July, it can be found here.
2. Past meetings and events
For a comprehensive overview of all past meetings, events and negotiation rounds, please click here.
3. State of play / timeline
The first phase – or ‘pre-negotiation phase’ was concluded with the granting of a negotiating mandate by the European Member States to the European Commission, and by the expiring of the 90-day consultation period (on 18 June 2013) of the US Congress after the Obama administration formally notified it of its intent to engage in trade negotiations with the EU. The second phase – or ‘negotiation phase’ started with the first talks on July 8th in Washington DC.
Since then, six rounds have taken place and the US Trade Representative and the EU Trade Commissioner have met to discuss the progress made and to set the course for the future. The seventh round starts on 29 September.
The European Commission, as the exclusive negotiator for the European Union, has a binding obligation to duly inform the European Parliament before and after the negotiation rounds. The Commission’s chief negotiator therefore meets with the Parliament’s specially selected US Monitoring Group before and after every round.
Commissioner De Gucht does not envisage finishing the negotiations within the current Commission’s mandate, as he did at the outset. He has also called for TTIP becoming a ‘living instrument’, meaning that he thinks there should be ways to update the treaty and to make sure the agreement can adapt to future challenges. The first political stocktaking moment took place on 17 and 18 February 2014, after the first three formal negotiation rounds. Negotiators now seem to have a good picture of what needs to be done and are well into more detailed, technical aspects of negotiations. A next political stocktaking meeting is expected in the autumn.
There is no official timeline, but the Commission has indicated that a deal will probably not be foreseeable before the end of 2015.
Trade Promotion Authority
In the US the White House wants to be granted so-called “Trade Promotion Authority” (“TPA”), by the US Congress (where the House Ways and Means Committee is in the lead). TPA sets the guidelines by which the Administration must consult with the Congress during trade negotiations. Most importantly, it will set the procedures for Congress’ consideration and approval of negotiated trade agreements before they are implemented.
By granting the White House TPA, the Congress would agree to a simplified consideration procedure for the negotiated trade deal, meaning that no amendments could be made and it has a limited amount of time to approve or reject the agreement. That is why TPA is also called ‘Fast Track’.
The Trade Priorities Act, which also contains TPA, has been introduced and is currently being considered. It seems the debate is not so much on the content of the Bill as such, but more on which role the Congress will be able to play in trade negotiations. The President is facing quite some opposition, including from his own Democratic party and the discussion on TPA looks stuck for the moment. The European side has said that it does not regard TPA as essential at the moment, because talks are nowhere near being completed. However, De Gucht has said that at some point TPA will be essential to conclude a final deal.
Read an analysis by Politico here, written just after the introduction of the Trade priorities Act in January 2014. It sets out the different stakeholders and sides in the discussion about TPA.
4. Key figures/data
Data: CEPR
Total bilateral trade in goods between the EU and US in 2011 amounted to €455 billion, with a positive balance for the EU of just over €72 billion.
The US was the EU’s third largest supplier, selling it €192 billion of goods (representing around 11% of total EU imports) and the EU’s main export market, buying €264 billion of EU goods (representing around 17% of total EU exports).
Top sectors for trade in goods for the EU were machinery and transport equipment (some €71 billion of imports and €104 billion of exports), followed by chemicals (roughly €41 billion of imports and €62 billion of exports).
In 2011 trade in commercial services was worth €282.3 billion (according to the latest available figures from Eurostat) with a positive balance for the EU of €5.5 billion.
The US was the EU’s top partner for trade in commercial services, with its imports reaching €138.4 billion (around 29% of total EU imports) and its exports €143.9 billion (around 24% of total EU exports).
In total, the commercial exchanges of goods and services across the Atlantic average almost €2 billion per day.
In 2008 around 5 million jobs across the EU were supported by exports of goods and services to the US market.
In 2011, US companies invested around €150 billion in the EU and EU firms some €123 billion in the US. In the same year, the US stock of investments in the EU reached over €1.3 trillion and the total of EU stock of investments in US over €1.4 trillion.
An ambitious and comprehensive TTIP could generate 119 billion Euros in economic gains for the EU as a whole every year. A Comprehensive TTIP would also structurally increase salaries for both skilled and unskilled workers by 0.5% on average. Aside from wages, the agreement would stimulate the growth of jobs due to the increased output in most industry sectors.
The TTIP would boost exports in almost all sectors, but would be especially beneficial to certain sectors in both the EU and the US. In the motor vehicles sector, EU imports are expected to go up by 42% and exports by 43%. EU exports of motor vehicles to the US would increase by 149%. Other EU sectors that have a lot to gain from the TTIP by increased sales to the rest of the world would be the metal products (+12%), processed foods (+9%), chemicals (+9%), other manufactured goods (+6%) and other transport equipment (+6) sectors.
It must be said that all predictions are based onassumptions about how broad the treaty will be. This means that a completely accurate prognosis is hard to make. Different studies have given different figures, but all predict a positive effect. A study on the impact assessment done by the European Commission indicated that the impact assessment was based on valid assumptions and that its predictions could be taken as representative.
5. Transparency
Based on Article 207 (3) and Article 208 of the Treaty on the Functioning of the European Union (“TFEU“) the European Parliament has to give its consent to any international agreement, including trade agreements, before these can enter into force. While the Parliament is not officially engaged in the negotiations with the US the European Commission has a binding obligation to fully inform the Parliaments about the progress and process of the negotiations (before and after each negotiation round). The Parliament has made it very clear in its two resolutions of October 2012 and May 2013 that maximum transparency and involvement of all stakeholders is required in order to build trust and legitimacy of both the negotiations and the outcome:
“Recalls the need for proactive outreach and continuous and transparent engagement by the Commission with a wide range of stakeholders, including business, environmental, agricultural, consumer, labour and other representatives, throughout the negotiation process, in order to ensure fact-based discussions, build trust in the negotiations, obtain proportionate input from various sides, and foster public support by taking stakeholders’ concerns into consideration; encourages all stakeholders to actively participate and to put forward initiatives and information relevant to the negotiations;”
While the Commission has taken steps to improve transparency for the TTIP negotiations in comparison to other free trade agreement negotiations, there is more that could be done. There is a special US Monitoring Group in the Parliament which meets with the EU negotiators before and after every round. The Commission also makes some of its negotiating documents available to this group. During the negotiating rounds, the Commission has held several stakeholder meetings and there is a special TTIP advisory group, with representatives from different stakeholders.
In response to questions and criticism from the European Parliament, the Commission will now also make available so called ‘consolidated negotiating texts’. These are bracketed texts which contain both European and US proposals for final texts. These texts are made available in a special reading room to specific members of the Parliament. This is just a first step however.
The Commission should make more efforts to make more texts available to the Parliament and the public and more of the meetings should be open, instead of behind closed doors. A more constant engagement from the Commission is needed to explain what the impact of this deal could be.
The commission has opened a website showing different ways of contacting the negotiating team. The European Ombudsman has opened a consultation into transparency in the TTIP negotiations.
6. Specific issues
SPS measures, food & product safety regulation
Both the EU and the US have high standards for food and product safety regulation. The EU treaty includes the so-called ‘precautionary principle’ (Art. 191 TFEU) that seeks to enable a rapid response by authorities in case of a direct danger to human, animal or pant health, or to protect the environment. The principle leads to preventive decision-making (‘better safe than sorry’) in the case of risk, which means that certain products are not allowed to be exported to the EU. The EU can invoke the principle if a scientific “evaluation does not allow the risk to be determined with sufficient certainty”, and puts the burden of proof on the manufacturer of the product to show there is no danger. The EU has invoked the precautionary principle to ban the import of US hormone-treated beef. Other areas of concern are chlorine-washed chicken, cherries, molluscan shellfish, tallow, raw milk and genetically modified/engineered crops (GMO/GE). High levels of consumer protection and current practices will make it difficult for both sides to compromise or adapt standards on these highly sensitive issues.
Karel de Gucht has repeatedly said that the EU will not compromise on existing legislation, such as on the ban on hormone beef. In this press conference, he repeatedly answers questions concerning the subject.
Public procurement
The EU and the US (except for 13 of the 50 individual States) have both signed up to the revised Agreement on Government Procurement (“GPA“), currently being implemented. The GPA rules and coverage will be the baseline for the procurement chapter in TTIP. Public procurement in the US is not a competence of the Federal Government, which cannot bind public procurement markets of the individual States. This is a concern for the EU which has a major interest in the opening up of US State procurement markets and wants TTIP to be binding on all levels of government. The EU is specifically worried about existing “Buy America (n) clauses which excludes EU companies from tendering. The US also maintains a preferential regime for national SME’s (Small and Medium seize Enterprises). Under the revised GPA commitments (yet to be implemented) only 32% (178 bln. EUR) of the US procurement market is open for EU businesses (source: EC estimates). The new GPA has not changed the current commitments of the US at state level, with the coverage in the 37 States varying but excluding the procurement of cities, municipalities (in charge of procurement in the domain of utilities). The EU’s public procurement market is de jure open.
The EU was pushing the US for a fast and comprehensive exchange of public procurement offers. However, this seems to have stalled for the moment. The EU is now preparing a request for the US. This is expected later in 2014.
Air and maritime transport
While it is impossible for EU airlines to hold more than 25% of an US carrier and the US cabotage market is totally closed to EU business both in air and maritime transport, the reverse does not hold for the EU. This has serious negative effects also on the EU express and courier services industry. Many of the additional regulatory barriers stakeholders brought to the attention of the Commission are on the US sub-federal (i.e. state) level. For the maritime sector the US Jones Act establishes the biggest barrier. The Jones Act (formally The U.S. Merchant Marine Act 1920) is a 1920 law that protects the U.S. maritime industry from competition. It also raises costs for many other industries, keeps foreign ships from helping when disasters like the BP oil spill strike. The Jones Act requires all waterborne shipping between US ports to be carried out by vessels built in the US and these vessels have to be owned, registered and operated by Americans. As a consequence of the Jones Act and its subsequent revisions, European shipping companies and the shipbuilding industry, including ship repair and maintenance, has been effectively excluded from selling vessels to be used in American coastwise trades. If the Jones Act would be partially lifted for European companies, the European shipbuilding industry (including ship maintenance and repair, marine equipment) will be able to enter a new ‘market’ and to compete with the US industry on a fair level playing field.
ISDS
Investor-to-state dispute settlement has developed into one of the most controversial aspects of the negotiations, especially in the EU. Reacting to questions from the European Parliament, national parliaments and civil society, the Commission has launched a public consultation on ISDS. During this consultation and awaiting the outcome, negotiations on investment protection have been halted. There have been over 150,000 replies to the consultation so it will take a long time to pool all the results. A comprehensive report is expected by the end of 2014. Hopefully, this consultation and its outcome will help to answer the main question, why such a clause is needed in the first place between the EU and the US, which both have a well-functioning rule of law. Please find a blog about it here.
7. Intellectual Property Rights
TTIP will inevitably include provision on Intellectual Property Rights (IPRs) in order to protect the interests of European businesses in the United States and vice-versa. A key European interest for example is geographical indications, which lay down rules on the production and origin of special products like Parmesan and Gouda cheese, Parma Ham or Champagne.You can watch a recording of an event hosted on May 15th in the European Parliament on “What role for IPR in TTIP” via this link. The European Commission has made it clear it does not want to include online copyright enforcement provisions in TTIP. An official summary of a so-called ‘civil society dialogue’ on IPRs in trade negotiations with the US (and Japan) can be read here. The Commission has repeatedly stressed it does not seek a fully-fledged IPR chapter in TTIP.
European Trade Commissioner De Gucht has made the following statements in the International Trade Committee on TTIP and ACTA:
“ACTA, one of the nails in my coffin. I’m not going to reopen that discussion. Really, I mean, I am not a masochist. I’m not planning to do that.”
“If the Commission advances new basic legislation, which I think she should, we will revisit the question, but I’m not going to do this by the back door”.
The approved negotiating mandate explicitly states in paragraph 30 that:
“The Agreement shall not include provisions on criminal sanctions”.
8. Key positions
EU:
ETUC position on TTIP – http://www.etuc.org/a/11228
Joint BUSINESSEUROPE, NAM and TABC letter on Trade Secrets in the TTIP – http://www.businesseurope.eu/content/default.asp?PageID=568&DocID=32257
Open letter to Commission, CEN / CENELEC – http://www.geosynthetica.net/wp-content/uploads/CEN-CENELEC-Open-Letter-20131004.pdf
Position paper TTIP and technical barriers to trade, CEN / CENELEC – http://www.cencenelec.eu/News/Policy_Opinions/PolicyOpinions/PositionPaperTTIP.pdf
A Brave New Transatlantic Partnership, Seattle to Brussels Network – http://www.s2bnetwork.org/fileadmin/dateien/downloads/Brave_New_Atlantic_Partnership.pdf
Full list of contributions submitted to a public consultation round by the European Commission following the HLWG – http://trade.ec.europa.eu/doclib/docs/2012/july/tradoc_149761.pdf
European Commission initial TTIP position papers published after the first round of negotiations – http://trade.ec.europa.eu/doclib/press/index.cfm?id=943
Association for Ships and Maritime Equipment, SEA Europe – http://www.marietjeschaake.eu/wp-content/uploads/2013/06/20130405-SEA-Europe-position-paper-for-TTIP-on-the-Jones-Act.pdf
FoodDrinkEurope – ‘Europe’s Food Manufacturers welcome EU – USA trade talks. http://www.fooddrinkeurope.eu/news/press-release/europes-food-manufacturers-welcome-eu-usa-trade-talks/
European Chemical Industry Council CEFIC – ‘Kick-off of EU-US Free Trade Agreement at G8 summit’ http://www.cefic.org/PressReleases/EU%20US%20Trade%20Agreement.pdf
Medica Technology Industry (AdvaMed, COCIR, Eucomed, EDMA, MITA) http://insidetrade.com/iwpfile.html?file=apr2013%2Fwto2013_1148a.pdf
IATP (Institute for Agriculture and Trade Policy) position: http://www.iatp.org/files/2013_06_25_US_EU_letter.pdf
Orgalime (European Engineering Industries Association): http://www.orgalime.org/position/negotiations-comprehensive-transatlantic-trade-and-investment-partnership
(Something missing? Please send your suggestions to marietje.schaake@europarl.europa.eu)
US:
American Chamber of Commerce position on TTIP – http://www.amchameu.eu/DesktopModules/Bring2mind/DMX/Download.aspx?TabId=165&Command=Core_Download&EntryId=9826&PortalId=0&TabId=165
Joint BUSINESSEUROPE, NAM and TABC letter on Trade Secrets in the TTIP – http://www.businesseurope.eu/content/default.asp?PageID=568&DocID=32257
ANSI Supports Continued Dialogue on Standards for EU-U.S. Transatlantic Trade and Investment Partnership, American National Standard Institute – http://www.ansi.org/news_publications/news_story.aspx?menuid=7&articleid=3754
American Federation of Labor and Congress of Industrial Organizations AFL-CIO – http://www.aflcio.org/content/download/83241/2300531/AFL-CIO+Comments+on+TTIP+%26+Request+to+Testify+May13.docx.pdf
National Association of Manufacturers, NAM – http://www.nam.org/~/media/26CB9C76E98C4284A9D45AEF21849587/JT_Letter_to_POTUS_on_EU.pdf
Business Coalition for Transatlantic Trade (BCTT) – http://insidetrade.com/iwpfile.html?file=apr2013%2Fwto2013_1127a.pdf
Medical Technology Industry (AdvaMed, COCIR, Eucomed, EDMA, MITA) http://insidetrade.com/iwpfile.html?file=apr2013%2Fwto2013_1148a.pdf
American Automotive Policy Council (AAPC) – http://insidetrade.com/iwpfile.html?file=apr2013%2Fwto2013_1151a.pdf
U.S. Food and Agricultural Groups – http://insidetrade.com//index.php?option=com_iwpfile&file=apr2013/wto2013_1196.pdf
Manufacturers Alliance for Productivity and Innovation – http://insidetrade.com/iwpfile.html?file=apr2013%2Fwto2013_1266a.pdf
Financial Services Sector – http://www.sifma.org/workarea/downloadasset.aspx?id=8589943558
(Something missing? Please send your suggestions to marietje.schaake@europarl.europa.eu)
9. Short history of TTIP
In 2011 the U.S. and the EU jointly established a High Level Working Group on Jobs and Growth (HLWG) tasked with a scoping exercise into measures and sectors that could strengthen and optimize the transatlantic economy in order to create new jobs and economic growth. As the world’s largest trading partners (50% of world GDP) with bilateral trade flows representing 33% of world trade the impact was expected to be huge and could alleviate the burdens of the financial and economic crisis that hit both the EU and the US. Moreover, in rapidly changing world with emerging economies displaying a more active role in global trade and politics a deepened transatlantic partnership also brings strategic benefits and robustness. The HLWG issued an interim report of the scoping exercise in June, reporting good progress, and recommended to transatlantic political leaders to launch formal negotiations as soon as possible. During his state of the Union address on February 12th President Obama politically endorsed the talk. On March 20th the US Administration formally notified the US Congress of its intend to start negotiations with the EU on a trade and investment agreement, kicking of a 90-day consultation allowing formal negotiations to start upon its expiry. On June 14th the 27 EU Trade Ministers handed gave the European Commission a broad mandate to negotiate on their behalf with the Americans. The European Parliament has adopted two political resolutions to feed into the final mandate. After the conclusion of the talks all EU Member States and the European Parliament have to approve the agreement. In the US the deal is subject to Congressional approval.
10. Official documents
April 2014 – Pew Global research mapping attitudes towards TTIP in Germany and the United States – http://www.pewglobal.org/2014/04/09/support-in-principle-for-u-s-eu-trade-pact/
March 2014 – European Parliament appraisal of Commission’s formal impact assessment of TTIP – http://www.marietjeschaake.eu/2014/04/appraisal-of-commission-impact-assessment-on-ttip/
October 2013 – Commission fact sheet on the Investor State Dispute Settlement mechanism – http://trade.ec.europa.eu/doclib/docs/2013/october/tradoc_151791.pdf and http://trade.ec.europa.eu/doclib/docs/2013/october/tradoc_151790.pdf
September 2013 – Commission fact sheet on ‘The Economic analysis of the Transatlantic Trade and Investment Partnership (TTIP) explained‘ http://trade.ec.europa.eu/doclib/docs/2013/september/tradoc_151787.pdf
July 2013 – Commission fact sheet on ‘ACTA vs TTIP’ – http://trade.ec.europa.eu/doclib/docs/2013/july/tradoc_151673.pdf
June 2013 – approved negotiating mandate for the European Commission of 14 June 2013 – http://www.marietjeschaake.eu/wp-content/uploads/2013/06/TTIP-mandate.pdf
May 2013 – Commission Memo on the audiovisual sector and TTIP – http://blogs.r.ftdata.co.uk/brusselsblog/files/2013/06/non-paper-guarantees-of-the-treatment-of-AV-in-TTIP-1.pdf
May 2013 – European Parliament Resolution on draft Commission Mandate – http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2013-0227&language=EN&ring=B7-2013-0187
April 2013 – European Parliament impact assessment of Commission Impact assessment of TTIP – http://www.europarl.europa.eu/committees/en/studiesdownload.html?languageDocument=EN&file=92710
March 2013 – European Commission – Staff Working Document – Impact Assessment Report on the future of EU-US trade relations – http://trade.ec.europa.eu/doclib/docs/2013/march/tradoc_150759.pdf
March 2013 – Notification letter to the US Congress by the United States Trade Representative – http://www.sice.oas.org/TPD/USA_EU/Negotiations/03202013_TTIP_Notification_Letter.PDF
February 2013 – Final report of the High Level Working Group on Jobs and Growth – http://trade.ec.europa.eu/doclib/docs/2013/february/tradoc_150519.pdf
October 2012 – European Parliament Resolution on report High Level Working Group on Jobs and Growth – http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2012-0388&language=EN
June 2012 – Interim report of the High Level Working Group on Jobs and Growth – http://trade.ec.europa.eu/doclib/docs/2012/june/tradoc_149557.pdf
11. Studies on the impact on TTIP
(Something missing? Please send your suggestions to marietje.schaake@europarl.europa.eu)
August 2013 – United States Government Accountability Office, International Regulatory Cooperation – http://www.gao.gov/assets/660/656488.pdf
August 2013 – The Information Technology & Innovation Foundation, How much will PRISM cost the US cloud computing industry – http://www2.itif.org/2013-cloud-computing-costs.pdf
July 2013 – Congressional Resource Service, Proposed Transatlantic Trade and Investment Partnership (TTIP): In Brief – http://www.fas.org/sgp/crs/row/R43158.pdf
July 2013 – International Trade Commission, Trade Barriers that U.S. Small and Medium-Sized Enterprises Perceive as Affecting Exports to the European Union; Institution of Investigation and Scheduling of Hearing, July 2013 (report finished on 31 January 2014) – http://www.usitc.gov/press_room/news_release/2013/er0725ll1.htm
July 2013 – European Commission, How much does the TTIP have in common with ACTA? – http://trade.ec.europa.eu/doclib/docs/2013/july/tradoc_151673.pdf
June 2013 – ‘A Transatlantic Corporate Bill of Rights’, Corporate Europe Observatory & the Transnational Institute – http://corporateeurope.org/publications/transatlantic-corporate-bill-rights
June 2013 – ‘TTIP, Who Benefits From A Free Trade Deal?’, Bertelsmann Foundation, – http://www.bertelsmann-stiftung.de/cps/rde/xbcr/SID-05089388-192802B3/bst_engl/xcms_bst_dms_38065_38066_2.pdf
February 2013 – ‘EU policies on online entrepreneurship. Conversations with U.S. venture capitalists’, ECIPE – http://www.ecipe.org/media/publication_pdfs/OCC22013.pdf
March 2013 – ‘Reducing Transatlantic Barriers to Trade and Investment: An Economic Assessment’, Centre for Economic Policy Research – http://trade.ec.europa.eu/doclib/docs/2013/march/tradoc_150737.pdf
March 2013 – ‘Crafting a Transatlantic Trade and Investment Partnership: What can be done?’, Peterson Institute for International Economics – http://insidetrade.com/iwpfile.html?file=mar2013%2Fwto2013_0813.pdf
February 2013 – ‘Dimensions and Effects of a Transatlantic Free Trade Agreement Between the EU and US, Ifo Institute – http://insidetrade.com//index.php?option=com_iwpfile&file=mar2013/wto2013_0979.pdf
October 2012 – ‘Study on EU-US High Level Working Group’, ECORYS – http://english.ecorys.nl/dmdocuments/EU-US%20HLWG%20Ecorys%20Final%20report.pdf
2012 – ‘A New Era For Transatlantic Trade Leadership’, ECIPE – http://www.ecipe.org/media/publication_pdfs/TATF_Report_2012__PDF.pdf
2012 – ‘Regulatory Cooperation in the EU-US Economic Agreement’, BusinessEurope, U.S. Chamber of Commerce – http://ec.europa.eu/enterprise/policies/international/cooperating-governments/usa/jobs-growth/files/consultation/regulation/9-business-europe-us-chamber_en.pdf
2012 – ‘Jobs and Growth Through a Transatlantic Trade and Economic Partnership’, BusinessEurope – http://www.businesseurope.eu/Content/default.asp?pageid=568&docid=30028