This Policy Brief is co-authored with Bob Vastine and J Bradford Jensen
The Transatlantic Trade and Investment Partnership (TTIP) was launched with highest of ambitions. Yet after more than 500 days of negotiations, the results are plainly discouraging. The EU and the US misunderstood each other’s intention on market access, and deteriorated into retaliatory behaviour. Each side has also its set of politically sensitive issues, but TTIP negotiations stimulate sensitive issues when European governments are at their weakest. The revelations of US electronic surveillance and wiretapping coincided with the first round of TTIP talks; Europe’s decision to open up public consultations on ISDS gave the opposition space to congeal public opinion, and the anti-trade forces appear better organized and possibly even better funded than business groups.
It is in the interest of the US and EU to fashion a new, open and fair global trading system for the 21st century. But time is running out. Getting TTIP back on course will require, three elements. First, the EU and the US need a common understanding of ambitions. Are the parties negotiating a regular FTA, or a new form of an economic partnership going beyond any existing precedent? The second element concerns political leadership and mobilizing support – in the end, this question comes down to: Who is willing to pay for TTIP? The last element concerns the overarching objective of TTIP, which must be approached as strategic in its purpose. TTIP could be the third pillar of a new global economic governance together with TPP and EU-Asia agreements. TTIP should be the most comprehensive and sturdiest of these three pillars – not the weakest.
The Transatlantic Vision
It was launched with the best of intentions and highest of ambitions. The Transatlantic Trade and Investment Partnership (TTIP) was embraced by President Obama and every European head of government as the world’s two largest economies fulfilling their destiny. Prime Minister Cameron called it ‘the most important trade agreement of all time’. USTR Michael Froman pledged to finalize the agreement quickly: on ‘one tank of gas’.
At the outset, leaders of the transatlantic business community published a vision statement as an advisory to the High Level Working Group on Jobs and Growth. This statement was extraordinary in its high-flown expressions of ambition for the new FTA: It must seize new ground, be rooted in the distinctive nature of the partnership. It must be grounded on the rules of the WTO, but use ‘synergistic strategies’ to boost innovation and to enhance the digital economy, while addressing more obvious issues, like agriculture and GMOs. The new FTA would address virtually every aspect of the commercial relationship.
But, with prescience, the authors of the vision statement laid down a warning: ‘There will be a natural inclination to do what we all know best – focus quickly on the granular elements of either a standard bilateral free trade agreement or targeted sectoral trade, investment and regulatory negotiation’. It warned that remaining barriers are so embedded that they ‘run a high risk of deadlocking the negotiations’.
Indeed, the optimism soon waned as the parties became engaged in the usual effort to achieve tactical advantage. Longstanding irritants that had derailed previous attempts to creating a transatlantic market space resurfaced. New controversies like investor-state dispute settlement (ISDS) emerged, but so did imaginary ones, like how TTIP might force the British healthcare system to privatise.
The post world War II commercial relationship between Europe and the US has a long history of achievement and of false starts. After successive rounds of GATT negotiations, officials realized that true growth would come through elimination of non-tariff barriers and a new focus on services and regulation. Joint efforts to jumpstart work on this new agenda like the New Transatlantic Agenda and Transatlantic Business Dialogue (1995), and the Transatlantic Economic Council (2007), did not produce meaningful results, leading to frustration and a deep scepticism on both sides that another European-US effort – like TTIP – could possibly succeed. Yet, as this new Partnership negotiation opened in July 2013, negotiators went about their business as they would in organizing an ordinary negotiation with a lesser power. In other words, the stage was set for an accident at the outset.
At the time of the writing, after more than 500 days of negotiations, the results are plainly discouraging and worse, political support for TTIP in Europe has badly eroded. How did we arrive at this state of play?
 Forging a Transatlantic Partnership for the 21st Century, Business Roundtable, Transatlantic Business Dialogue and the European Roundtable of Industrialists, April 18, 2012