TTIP Troubles

Choppy Waters for Trans-Atlantic Trade

stopschildprotest2 source PR IMago
Public protests against TTIP have gained support. Now Brussels is even threatening to pull out.
  • Why it matters

    Why it matters

    If America does not back down on its protectionist policies, European governments will find it impossible to sell the free-trade deal to their citizens.

  • Facts

    Facts

    • The so-called Transatlantic Trade and Investment Partnership, short TTIP, would create a free trade zone between the U.S. and the E.U.
    • The DGB Confederation of German Trade Unions has joined forces with anti-TTIP organizers.
    • The United States is refusing to compromise on rules for public tenders.
  • Audio

    Audio

  • Pdf

These are dark days for supporters of the Transatlantic Trade and Investment Partnership, or TTIP, the agreement that is meant to create a free trade zone between Europe and the United States.

On Wednesday, the European Parliament’s plans to vote on the subject descended into chaos. In the end the parliament, which is fiercely divided on the deal, took the rare step of postponing the vote after several members failed to agree on certain conditions.

In Germany, Europe’s largest economy, the powerful DGB Confederation of German Trade Unions has decided to join forces with anti-TTIP organizers. Most people opposed to TTIP in Europe – and especially in Germany – worry that it will allow foreign companies to override national governments, a concern that supporters dispute.

But there is another major threat, this time over the United States’ refusal to open up its markets to international competition.

The European Commission is growing increasingly concerned about U.S. intransigence over one aspect of the deal relating to foreign investment in publicly-tendered projects.

Under the “Buy American” policy, the U.S. government is obliged to give preference to U.S. companies for its big procurement projects.

European firms had hoped that TTIP would level the playing field, giving them more rights to bid for U.S. public contracts, but Washington remains opposed to that, determined to keep this piece of protectionism intact.

“It’s conceivable that sooner or later that becomes a deal breaker,” a source involved in the negotiations told Handelsblatt.

E.U. firms now only have access to roughly a third of all U.S. contracts worth around €180 billion, or $203 billion.

The European Parliament wants the European Commission, which is leading the TTIP negotiations, to push more to eliminate “the big imbalance in the openness of the markets for public tenders at both the federal and sub-federal level.”

If this matter is not resolved, sources said that Brussels is prepared to walk away from the free-trade deal.

“Without substantial changes to these restrictive tender practices, we will not agree to TTIP,” said a source at the European Commission.


Video: Anti TTIP protest in Munich.

 

The commission says that E.U. firms now only have access to roughly a third of all U.S. contracts worth around €180 billion, or $203 billion. But non-E.U. states like the United States can bid for around 85 percent of public tenders across the European Union. A quarter of Europe’s gross domestic product and 31 million jobs are tied to companies relying on public contracts.

Opening up the U.S. market would create considerable new opportunities for European companies, but only if it happens at all levels of government. At the moment, U.S. states manage their own procurement policy, so any loosening of the “Buy American” policy would have to be implemented by them as well.

“A deal allowing only access to tenders at the U.S. federal level wouldn’t be enough. The United States need to present a convincing offer for all levels of administration,” Eric Schweitzer, the president of the German chamber of trade and industry, or DIHK, told Handelsblatt. “This topic is so important to the E.U. that it must not be sacrificed over the course of the negotiations.”

Brussels has complained for years that countries like China, Japan and the United States discriminate against European companies through public procurement policies. This discrimination is doubly galling as the sectors – construction, public transport, or medical devices – are the ones in which European companies often have a competitive advantage. TTIP was meant to change things.

 

Trans-Atlantic Trade Talks3-01 TTIP citizens view

 

But the “Buy American” clause is a sacrosanct job protection measure beloved by trade unions, who are important supporters of U.S. President Barack Obama and his Democratic Party.

James P. Hoffa, head of the International Brotherhood of Teamsters, one of America’s main labor unions, warned: “It would be an enormous mistake to stop this program.”

Mr. Obama is also hamstrung by the fact that Congress has yet to give him the so-called fast track negotiation authority for TTIP and another free-trade deal, the Trans-Pacific Partnership that is being negotiated with Asia.

Meanwhile in Germany, Europe’s largest economy, free trade critics are joining forces to thwart TTIP. The DGB Confederation of German Trade Unions has decided to join forces with the movement “Stop TTIP,” which is also supported by anti-globalization group Attac, environmental group BUND and members of Germany’s left-leaning Green party.

The DGB will seal the partnership on Thursday, according to a trade union spokeswoman, and the unionists will organize the next big protest against TTIP in Berlin on October 10.

“Stop TTIP” has collected some 2.1 million signatures in an online petition calling for an end to the trade deal. Their new alliance with the DGB is a significant blow for German Economy Minister Sigmar Gabriel, who is also leader of the center-left Social Democrats.

Mr. Gabriel has campaigned aggressively in favor of the free-trade deal, but has struggled to rally the members of his center-left SPD party, which count on trade union support.

Despite the new alliance, the spokeswoman for DGB said there had been no fundamental change in the group’s position: “We’re concerned about the fairness of world trade.”

Still, the more skeptical Germany’s unions become, the harder it will be for Mr. Gabriel to convince his own party to back TTIP.

Despite Germany’s export-led economy, the country is anything but enthusiastic about the free trade deal. The public has become increasingly skeptical of its benefits in the past year, and is among the least supportive countries in Europe along with Austria, according to recent polls.

A new survey by the Konrad Adenauer Foundation found that of 372,000 relevant Internet posts on blogs, forums and online news sites, a massive 90 percent were negative about TTIP. A mere 10 percent highlighted the potentially positive aspects of free trade, such as economic growth, cutting bureaucracy and job creation.

Matthias Bauer, an economist for the Brussels-based European Center for International Political Economy who did the survey, criticized the histrionics of many free trade opponents.

“Often there’s fear-mongering about the loss of standards. Detailed questions like investor protection are only connected with negative consequences,” he said.

 

Moritz Koch, Thomas Ludwig and Matthias Streit are correspondents in Washington, Brussels and Berlin. To contact them: koch@handelsblatt.com, ludwig@handelsblatt.com and streit@handelsblatt.com

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