Free Trade Deal

Waking Up to Trade Opposition

TTIPProtest2-Reuters
Can these people still be persuaded?
  • Why it matters

    Why it matters

    The U.S.-E.U. free-trade deal known as TTIP could be a boon or a burden for the European economy, depending on who you ask.

  • Facts

    Facts

    • U.S. and E.U. negotiators are hoping to reach a deal by the end of this year on a free-trade deal between the world’s two largest economic blocs.
    • Germany has led opposition to the free-trade deal, fearing it will limit the ability of governments to regulate consumer goods.
    • Over 40 percent of all E.U exports to the United States come from Germany.
  • Audio

    Audio

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Thilo Bode is anything but a fan of the U.S.-E.U. free-trade deal. In fact, the former head of Greenpeace is among its toughest critics in Germany, a country that has shown more resistance to the trans-Atlantic deal than perhaps any country in Europe.

But even Mr. Bode doesn’t deny that companies would profit enormously from the Transatlantic Trade and Investment Partnership, or TTIP, currently being negotiated by the European Union and the United States.

“It is clear without a doubt that companies will profit from TTIP,” said Mr. Bode, who is now managing director of food industry watchdog Foodwatch.

For Mr. Bode, economic benefit is not the only measure of whether it’s a good deal for Europe. He thinks the agreement would intervene too much in a state’s ability to develop and maintain standards.

Is what’s good for the economy really also good for a country? And for its population? That, in a nutshell, sums up the deep disagreements in Germany over the merits of a trans-Atlantic free-trade deal, which would reduce trade barriers between the world’s two largest economic blocs.

The fears that TTIP might destroy European consumer standards – whether justified or not – is a dynamic that has caught many free-trade supporters by surprise. Many had expected the deal to get a much easier ride. Now, it seems that many are starting to wake up to the threat that opposition could torpedo the whole free-trade experiment.

“We engaged in dialog way too late.”

Stormy-Annika Mildner, Trade policy expert, BDI

Lutz Güllner, from the Directorate of Trade at the European Commission, disagrees with Mr. Bode. He says regulatory agencies would be allowed to work more closely together, rather than be limited in their actions.

Mr. Güllner has been on the offensive for the last several months. His latest comments – and those of Mr. Bode – came this week at a panel discussion organized by Handelsblatt and the BDI, Germany’s largest trade association for business, which has lobbied strongly in favor of the free-trade deal.

Mr. Güllner also discussed the controversial arbitration process for investors and corporations, which many critics fear undermines democratic rule by giving private arbitration too much power over parliaments and national law, thereby letting big companies set the rules.

Mr. Güllner claimed that these types of arbitration arrangements have been around for more than 50 years and Germany had concluded no less than 129 such investor protection agreements.

For many on the political left of Germany like Thilo Bode, the arbitration proposal is a non-starter.

“Private enterprise doesn’t need special rights,” Mr. Bode said.

For months, TTIP advocates had hoped protests in Europe, and especially in Germany, would die away as negotiations wore on and the outlines of a deal became clearer. However, many have recently appeared more willing to compromise, acknowledging that deeper changes in the deal might be needed to get it passed by European parliaments.

“We’re open for investment arbitration to be part of a court,” said Stormy-Annika Mildner, a trade policy expert at BDI.

The idea of investor arbitration proceedings being staffed by professional judges has been gaining ground over the last several months.

The European Commission, which is responsible for negotiating TTIP with the United States, has taken up the idea too.

The shift by the Commission has even been welcomed by some of the free-trade deal’s key critics – a sign that an agreement might be possible after all if only the United States agrees to the proposed court reforms, something that is not yet clear.

Anton Hofreiter, head of the German Green Party, which has long warned that TTIP brings more risks than rewards, suggested he could be on board with the idea of a professional, open arbitration court.

Whether such openings will be enough to turn around a skeptical German population remains to be seen. Ms. Mildner admits that TTIP proponents underestimated the vehemence of the opposition they have encountered.

“We engaged in dialogue way too late,” she said.

Germany would have a lot to lose if the deal isn’t completed, according Burkhard Schwenker, chairman of the consultancy Roland Berger. Over 40 percent of all E.U. exports to the United States are from Germany.

There’s also a risk that the recently signed Trans Pacific Partnership would disadvantage German companies, such as the battery components industry, which could find itself facing higher tariffs than Japanese competitors.

Delays in the negotiations could jeopardize the agreement as a whole, warned U.S. Ambassador to Germany John B. Emerson. There was a risk that U.S. President Barack Obama’s successor could revisit the entire agreement if it wasn’t finalized by the end of his term.

Mr. Emerson was clear that Germany in particular would benefit greatly from TTIP. It was therefore ironic that it is precisely in this country, where protests were so impassioned, he argued.

Committed Atlanticists such as German Finance Minister Wolfgang Schäuble are convinced TTIP will end up being a success.

While he’s concerned about the vehemence of the protests in Germany, Mr. Schäuble said: “I won’t let myself be dominated by it.”

 

Klaus Stratmann is one of Handelsblatt’s leading political correspondents in Berlin. To contact the author: Stratmann@handelsblatt.com

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