The case for concluding a new transatlantic deal on trade and investment has never been stronger. The EU has entered a period of near-stagnation while the emerging markets, receptive customers for EU exports in the past, have markedly slowed down. Every injection of fresh dynamic would be priceless and TTIP’s contribution to growth can be meaningful. And yet the belief that the agreement can be worked out before the end of the Obama presidency in 2016 is increasingly seen as a sign of unsubstantiated optimism. The doomsayers need a firm and resolute response.
As things stand, the biggest difficulty for the deal lies in the asymmetry between the US and European economic trajectories since the height of the economic and financial crisis. Although the crisis originated in the US, it is Europe that has found it much more challenging to return to the pre-crisis rate of growth. European policy-makers are fully aware that the benefits of the trade and investment deal would take years to feed into the real economy. They have therefore switched their attention to the more immediate forms of salvation such as unconventional monetary policy and a weak exchange rate.
There is also perception of the growing structural divide between the US and European economies. The US is bound to reap the benefits of the digital revolution, given its strong role as a content provider. Meanwhile in Brussels, Commissioner Oettinger, the normally pro-business new digital chief, has prided himself on blocking the Commission’s settlement with Google earlier this year. Although Europe’s ideas to develop its own cloud-based innovation model have not moved beyond incubation stage, the irritation at being America’s junior partner in the area is huge.
The third factor in the equation has to do with Europe’s civic unease, which has its roots in the traumatic experience of the crisis. Where else would Europe’s leaders want to vent this disquiet than in exploiting America’s tainted image as the “nasty West” – less respectful of citizen rights and more prone to give ground to big corporations. The anti-TTIP protests, which saw their latest reiteration around many EU capitals on 11 October, are relatively easy to answer. Some of them were about an “imaginary TTIP”, which supposedly involves an unconditional green light for mass surveillance and government intrusion. More than many times in the past, the Europeans are prepared to forego economic benefits for the sake of privacy and a peace of mind.
Finally, the broader equation has not looked as favourable as the EU had assumed at the outset. TTIP was meant to be part of an effort to restore the multilateral economic order. Given the failure of the Doha Round, the new set of bilateral agreements was intended to recover the sense of dynamic for global trade, hijacked by a number of developing countries. However, TTIP has made the going more difficult for some of the EU’s bilateral agreements, such as the one with Canada. In many corners of the emerging world, the EU is seen as a poodle of the United States while Turkey and Brazil are anxious about being excluded.
Last but not least, the conflict with Russia, which has provided much of the geopolitical boost for the transatlantic deal has now subsided. US Secretary of State Kerry and the Russian Foreign Minister Lavrov have just discussed ways back to broader cooperation on issues of the international agenda. Europe is left with the cost of sanctions and a tarnished dream of its stable neighbourhood.
Nevertheless, TTIP remains the most relevant global agreement currently under negotiation. It can give Europe and the US what they need most – benefits of scale, sense of opportunity and a renewed entrepreneurial zeal. But for all that, TTIP needs a colossal revamp. If it is to move from the slow lane of both Washington and Brussels, it needs to be treated as a flagship project, worth its name. Uncertain of each other’s determination, the EU and the US have hedged their risks and kept their cards close to the chest. President Obama and the new EU leaders, Jean-Claude Juncker, Donald Tusk and Martin Schulz, should call for a special TTIP Summit in the late Spring of next year, to thrash out the remaining disagreements and seal off key elements of the deal. It is this way that things have worked in the European Union in the past years. Without top-level political involvement, it will be hard to get progress.
In parallel, not only full transparency has to be achieved but also engagement of the different stakeholders. Some of the loudest voices in the TTIP debate have come from the people who are genuinely concerned about weakening democratic accountability and importing other nation’s way of going about regulation. However, there are also many spoilers whose agenda is to undermine transatlantic trust and confidence. The latter have had many different masters, including among Europe’s and America’s foes. There is finally the silent majority of citizens and entrepreneurs, many of whom believe in the transatlantic project but have been left in doubt about the determination of their leaders. TTIP is an economic agreement but it is also a test of those leaders’ ability to raise to the opportunity.