TTIP is dead, long live transatlantic trade

Last week, Germany’s vice-chancellor Sigmar Gabriel confirmed what most experts already knew: negotiations on a Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States are failing, but “nobody is really admitting it”. TTIP was launched in 2013 as an ambitious project generating “jobs and growth”, intended to rekindle a somewhat tired transatlantic relationship. Hillary Clinton once referred to TTIP as a possible “economic NATO”, ready to take on China in the emerging game of geopolitics. TTIP was supposed to be negotiated swiftly and on “one tank of gas” (in the famous words of US Trade Representative Michael Froman).

So why has this early optimism, after fourteen rounds of excruciating negotiations, been replaced by disenchantment? The main reason is that TTIP is pushing an agenda of open markets that is fiercely opposed by anti-globalists on the political left and right, both in Europe and in the US. Vocal NGOs have successfully cast TTIP as an anti-democratic deal favouring Big Business, steamrollering consumer rights and environmental concerns. TTIP-bashing is probably the only thing Donald Trump and Bernie Sanders have in common, and they are being joined by their European counterparts. It is no coincidence that it was Gabriel, the SPD leader, who pulled the plug on TTIP. Across Europe, social-democratic parties have always been ambivalent about TTIP, offering half-hearted public support to a deal fiercely attacked by trade unions and other left-wing groups. It is little surprise that public support has plunged, with only 17 percent of Germans believing TTIP is good for them, down from 55 percent two years ago. In the US, only 18 percent support the deal, compared to 53 percent in 2014. With elections coming up in the US (November 2016), the Netherlands (March 2017), France (Spring 2017) and Germany (September 2017), few politicians are keen to endorse TTIP as this will only hurt them electorally. And without strong political support on both sides of the Atlantic, TTIP is running out of steam, making it hard for negotiators to deliver the required tough compromises.

If the TTIP project ends in tears, it will be another serious blow for the EU. TTIP is billed as proof that the EU can negotiate ambitious trade deals for its member states, defending European economic interests and values. A TTIP fiasco means that the EU will not have delivered on a promise that is a keystone of the European integration project. This is all the more painful as the United Kingdom is now preparing to negotiate numerous bilateral free trade deals with key global players, including India and (ironically) the US as well. Waning support for TTIP also puts the EU’s free trade deal with Canada (CETA) at risk, a treaty that has been signed but not yet ratified across Europe. Mr Gabriel’s SPD will take an official stand on both TTIP and CETA at its party conference in Wolfsburg on 19 September. If the SPD, a partner in Merkel’s Grand Coalition, does a volte-face on TTIP/CETA, this will resonate across Europe and beyond, sending the message that ‘Europe’, and the EU in particular, cannot push big trade deals through. Especially if a post-Brexit Britain proves adept at signing bilateral trade deals, Euroscepticism will deepen further and strengthen calls from other member states to go it alone (at least on international trade).

Still, with TTIP’s life in the balance, it is important to stress that the transatlantic economy remains healthy, generating US$ 5.5 trillion in total commercial sales a year (in 2015) and employing up to 15 million workers on both sides of the Atlantic. This reality remains a strong basis for transatlantic cooperation, even when the TTIP dream has come and gone.