Another transatlantic partnership?

The EU’s and the US’s ambitious hopes of a trade deal within two years will test already heavily burdened negotiators

On 13 February, the presidents of the United States, the European Council and the European Commission announced that they would “initiate the internal procedures necessary to launch negotiations on a Transatlantic Trade and Investment Partnership”. 

While doing so, the leaders also welcomed the recommendations from a high-level working group on jobs and growth co-chaired by Ron Kirk, the US trade representative, and by Karel De Gucht, the European commissioner for trade. The group’s recommendation was that government leaders should launch negotiations on a comprehensive, ambitious agreement that would address a broad range of bilateral trade and investment issues, including regulatory issues, and that would contribute to the development of global trade and investment rules.

The idea of institutionalising and deepening economic relations between the European Union and the United States is not new. It was part of the Transatlantic Declaration (1990), and the New Transatlantic Agenda (1995), the Transatlantic Economic Partnership (1998), and the Transatlantic Economic Council (2007). Each of these programmes provided for regular summit meetings, senior level talks, new trade-expansion goals and so on.

These successive initiatives – including the latest initiative, for a Transatlantic Trade and Investment Partnership – must be seen as efforts to promote and marshal transatlantic economic exchanges in the wake of the Cold War and of the coincident acceleration of the globalisation drive that has been re-fashioning the world economy.

The effectiveness of these projects – none of which differs substantially – has been assessed variously. In practice, though, integration of the transatlantic market, trade and investment exchanges has increased steadily over recent decades, as reflected in statistics. It is difficult to attribute these healthy results to specific governmental programmes or to the natural forces that drive a transatlantic market already deeply integrated because of previous, mainly multilateral, negotiations.

The working group was asked to review a wide range of potential options for expanding transatlantic trade and investment. In their conclusion, they favoured a comprehensive agreement, including reciprocal commitments to open markets for goods, services and investments, to approximate their two regulatory regimes, and to elaborate rules and disciplines that could be applicable to the global trading system. These general formulations suggest, however, a programme that is much more ambitious than emerges from the announcements made by the presidents on 13 February. That difference in ambition might serve as a warning against overly high expectations.

Negotiation over-stretch?

The European Commission says that it wants negotiations to be completed within two years. It is, though, unrealistic to hope that agreement on market access, on regulatory issues and non-tariff barriers, and on global issues – the three headings in the working group’s wide-ranging recommendations – can be reached at the same time and within two years.

On both sides of the Atlantic, a variety of stakeholders will be involved and intricate decision-making procedures will have to be followed. On the EU side, 27 (soon to be 28) member states and, since the Lisbon treaty, the European Parliament must be closely involved and must approve the result. In the meantime, the Commission’s negotiators will have to find time to finalise trade deals with India and some other Asian countries (such as Vietnam, Malaysia and Singapore) and to start negotiations on a free-trade agreement with Japan.

For their part, US negotiators are in the middle of negotiations on the Trans-Pacific Partnership with eight countries (and, possibly, Canada and Mexico). The US Congress will also follow the transatlantic negotiations very closely. Some have asked for new fast-track legislation, an additional element of possible delay and complexity.

Above all, the US and the EU will share responsibility for the success or failure of the next ministerial meeting of the World Trade Organization (WTO), in Bali at the end of this year. That meeting will largely determine the fate of the so far ill-starred multilateral Doha round of negotiations and, with it, the future authority of the WTO as a body.

This rich menu may initially seem attractive – but it is a menu that carries the risk of either a lurch into bulimia or negotiators retiring prematurely from the table. Both sides will probably need to reflect seriously about priorities, compatibilities and domestic processes.

The negotiating capacity of both sides will be seriously challenged. Of that, there can be no doubt.

As to the substance, if the Transatlantic Partnership is to live up to its potential, all the agencies involved will have to receive clear instructions from the highest levels. As in all serious negotiations, the negotiators will need to establish an atmosphere of trust and even to foster a degree of connivance as to the ultimate goal of the talks. They will also need to rule out classical negotiating devices that amount to organising ‘negotiations about negotiations’ and whose only goal is, in fact, to kill off talks. Protracted discussions on the scope, the modalities of talks, preconditions and down-payments belong to the register of such destructive devices. Such devices blocked the Doha round.

It should soon become apparent whether the EU and the US can agree upon a realistic work programme, with negotiating schemes and specific time-tables for each of the three components of negotiations established by the working group. Agreement on these details will be an indication that the world’s two major trading powers truly are making a serious effort to align their international economic priorities.

Hugo Paemen was head of the European Commission’s delegation to the United States from 1995 to 1999. He is now a senior adviser on EU, international trade and regulatory affairs at the American law firm Hogan Lovells.

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