TABC Comments on the Future of TTIP

‘Future of TTIP in flux as Trump has said little on trade with Europe’ 

Inside U.S. Trade 
Brett Fortnam
November 9, 2016

Donald Trump’s decisive win in the presidential election leaves the future of the Transatlantic Trade and Investment Partnership up in the air as the president-elect has provided little detail on his stance on the ongoing negotiations with the European Union, while his broader anti-trade rhetoric has dampened expectations that the deal will come to fruition.

The impact Trump will have on the broader trans-Atlantic relationship is also expected to go beyond TTIP, as trade policy is interwoven with other foreign economic policies, according to sources.

The European Union for its part has already invited Trump to Europe for an EU-U.S. summit and has called on Trump to help strengthen trans-Atlantic relations.

“Today, it is more important than ever to strengthen transatlantic relations,” European Commission President Jean-Claude Juncker and European Council President Donald Tusk said in a Nov. 9 letter to Trump. “Fortunately, the EU – US strategic partnership is broad and deep: from our joint efforts to enhance energy security and address climate change, through EU – US collaboration on facing threats to security in Europe’s Eastern and Southern neighbourhoods, and to the negotiations on the Transatlantic Trade and Investment Partnership – we should spare no effort to ensure that the ties that bind us remain strong and durable.”

But TTIP offers a different trade deal than the ones criticized by Trump on the campaign trail because the EU has high environmental and labor standers, according to Fredrik Erixon, the director of the European Centre for International Political Economy think tank. Similarly, TTIP is seen as non-threatening to U.S. workers and the U.S. economy and as well as being a “net positive geopolitically,” according to Tim Bennett, the CEO of the Trans-Atlantic Business Council. For this reason, he suggested, Trump could tout TTIP as the type of deal the U.S. should engage in.

Even if Trump takes a positive approach to TTIP, the deal will likely be on ice until at least fall 2017 because it would not be one of the administration’s priorities and because of elections in Europe that would not conclude until next October.

TTIP could also end up being a casualty of Trump’s broader foreign policy, according to Erixon. The deal has been touted as the “economic NATO” because of the geostrategic importance the Obama administration and European Commission have placed on the deal, he said. Trump, however, has been critical of the actual NATO on the campaign trail, going as far as to hint that the U.S. could pull out of the security agreement entirely. The damage this would do to trans-Atlantic relations would make a trade deal between the U.S. and EU impossible.

Further imperiling the future of TTIP is the political situation in Europe, and Trump’s victory could also serve to embolden anti-trade protesters on the continent, Bennett said. Additionally, a Trump administration could also encourage anti-American sentiment that has already been percolating in the EU, he said. EU member states have also been showing a greater willingness to disagree with the Commission and prevent wider EU action, like the Belgian government did with the signing of the Comprehensive Economic and Trade Agreement.

The chairman of European Parliament’s International Trade Committee Bernd Lange also told German media that he believes that “TTIP is history.”

The last straw for TTIP could also be if the European Parliament votes down CETA next month, Bennett said. CETA is seen as the less controversial trade deal when compared to TTIP and if that is unable to get the requisite support in the EU, there is little chance that TTIP would be able to garner the approval of Parliament and member states.

In the meantime, Obama administration officials are expected to continue to advance the TTIP negotiations as far as possible before leaving office, Bennett said. Trump would not be bound by any progress made by the Obama administration in its final days in office, but the new administration is unlikely to unravel that work because it would be mostly apolitical and done by career negotiators, he said.

EU Trade Commissioner Cecilia Malmstrom said the rationale to continue the TTIP talks remains as strong as ever, but there will be a natural break while a new U.S. administration gets itself situated. She said there is no timeline for when that break would end.

“It is clear that there will be a natural break in these negotiations that would have been the case with any administration because it takes some time before a new administration is in place before everybody is confirmed and so on,” she said during a Nov. 9 press conference. “How long will that break be, impossible to say. We need to know more about the future administration, who is going to be USTR. There is a lot of uncertainty. There’s still a very good case to have TTIP, to facilitate trade between the two biggest economic powers in the world makes all the sense in the world.”

The Obama administration is not expected to attempt to conclude a pared-down deal that does not address politically sensitive issues in its waning days for several reasons, Erixon and Bennett said. A tariff-only deal between the U.S. and EU is not feasible at this juncture because the tariff phaseouts of some products are linked to concessions elsewhere in the agreement that have not yet been resolved, Erixon said. Any deal would also have to benefit all 28 member states in order for them to back it, which requires unanimity, he said. A pared-down TTIP deal that focuses only on tariffs would not provide every member state with benefits they had initially expected because many of those benefits were due to come via the regulatory cooperation work envisioned in an ambitious agreement, Erixon said.

There is also no appetite in Congress, European Parliament, or the U.S. and EU business communities for a pared- down TTIP agreement, Bennett said. Finally, even in the unlikely event that the Obama administration and European Commission concluded the negotiations, the Trump administration would still have to submit the deal’s implementing bill to Congress, meaning that the deal would still have to get his approval before moving forward, Bennett said.