Political Hurdles Plague Trade Agreement

The sixth round of talks on the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union was held in Brussels on July 18 just as winds of political change have begun sweeping across the two continents. Shifting calculations in what is an important election year on both sides of the Atlantic cast a shadow on the timing of the deal, whose negotiations were launched with much fanfare just over a year ago, but have sputtered along since, bogged down by the obvious difficulties of crafting an agreement that satisfies the world’s two largest economies. Now new political realities mean that it will likely take much more time and effort to get to a final compromise than originally envisioned.

“The work this week has again been highly technical… [and is] essential to prepare the ground for the political decisions that would need to be taken at a later stage,” EU chief negotiator Ignacio Garcia Bercero said in a statement upon conclusion of the round. That same week, the new European Parliament, elected in May, confirmed former Luxembourg prime minister Jean-Claude Juncker to the presidency of the EU Commission. This is part of an overall leadership change happening this year, which starts with the recently installed members of the European Parliament (MEPs) themselves, and therefore a revamping of the committees overseeing TTIP-related issues, from international trade to the environment, public health and food safety. The MEPs are not involved in the negotiations, but, like the US Congress, will need to ratify the pact once it is done. In the fall the European Union will also have a new commissioner for trade, who directs the talks alongside the US trade representative. This is a sought-after position and both the UK and Germany have already made a play for it, nominating Lord Hill of Oareford and Günther Oettinger, currently the European commissioner for energy, respectively.

“TTIP’s successful conclusion remains one of the priorities of the commission, even if the new commissioner will definitely influence its direction,” says Federica Mustilli, a researcher for the Brussels-based Centre for European Policy Studies. Juncker has spoken in favor of the deal, though with some caveats, but is considered a weak president—the product of an increasingly divided Europe.

And public opinion is souring on TTIP. “One thing to watch will be the leadership of the Committee on International Trade, whose new chairman, Bernd Lange, is concerned about data privacy and a perceived lack of transparency in the talks,” says Garrett Workman, associate director of the Global Business and Economics Program at the Atlantic Council in Washington, DC. “He’s also been very outspoken against investor-state dispute settlement. He and other Socialist MEPs will be the key hinge point in the European Parliament when it considers the agreement.”

Data protection is indeed one area that could be affected. Even Juncker has hinted that he might want to see it excluded. Much will depend on the position Germany takes, since it is the Germans who reacted more negatively to the revelations that the US National Security Agency has been spying widely in Europe, even tapping the cellphone of chancellor Angela Merkel. “It will be very difficult for Merkel to sell to her voters an agreement on this,” says Antonio Roldan Mones, a London-based analyst with political risk consulting firm Eurasia Group.

The picture is just as complicated across the Atlantic. Americans will vote in November in midterm elections, when Republicans are expected to retain their House majority and may also take over the Senate. “Republicans don’t want to give president Barack Obama a major win in his last two years in the White House,” says Roldan Mones. “Moreover, Obama will first have to get the TPP [Trans-Pacific Partnership], the trade agreement with Asia, approved, which is proving much more complicated than expected.”

TTIP negotiations started out with an ambitious timeline that set their conclusion for the end of this year. Because of all the factors at play, some observers believe even the updated goal of closing the deal in 2015 is too optimistic, though broad support for an agreement remains, at least in theory, both in the European Union and in the United States. Although talks are not expected to derail, Eurasia Group, for example, does not anticipate any significant progress at least until the new EU Commission is in place in November and does not foresee an agreement on before 2017.