Obama & TTIP

Too Little, Too Late?

HANOVER, GERMANY - APRIL 24: U.S. President Barack Obama waves during a welcoming ceremony at Herrenhausen Palace accompanied by German Chancellor Angela Merkel on Obama's first day of a two-day trip to Germany on April 24, 2016 in Hanover, Germany. Obama is in Hanover to visit the Hanover Messe, the world's biggest industrial fair, and tomorrow will meet with other western European leaders. (Photo by Michael Ukas - Pool / Getty Images)
U.S. President Barack Obama and Chancellor Merkel wave at Hanover's Herrenhausen Palace.
  • Why it matters

    Why it matters

    The U.S. and German leaders warned Sunday that a failure to agree a trans-Atlantic pact by the end of this year could well doom the entire project.

  • Facts

    Facts

    • U.S. President Obama joined some 350 U.S. businesses on Sunday for the start of the Hanover Messe, the world’s largest industrial trade fair.
    • He met with Chancellor Angela Merkel ahead of the opening and also meet with the leaders of Italy, France and Britain on Monday.
    • Both Ms. Merkel and Mr. Obama warned that the window for agreeing a trans-Atlantic free-trade pact could close by the end of this year.
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    Audio

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Barack Obama took his time writing a long, handwritten message into the “Golden Book” as he arrived at the Hanover Messe, the world’s largest industrial trade fair in north central Germany. The U.S. president may be in his final year in office, but he clearly still has something to say.

Less than an hour later, he spoke to a sympathetic audience of business and political leaders, urging Germany and Europe to back what he hopes will be one of his final legacies – a trans-Atlantic free trade pact between the world’s two largest economic blocs.

“Time is not on our side,” he said at the opening of the trade fair on Sunday, urging European Union leaders to “invest political capital” in convincing a skeptical public that a free-trade deal with the United States is in their own interests and in the interests of the struggling European economy.

At Hanover, Mr. Obama was preaching to the choir. German industry, an export powerhouse, has an interest in unifying standards and boosting trade with the United States.

And yet many here fear that the U.S. president’s push in Hanover is too little, too late. “I don’t think Obama’s speech will help,” said a manager from a German tractor maker at the event, who declined to be named.

The skepticism surrounding the Transatlantic Trade and Industry Partnership, known as TTIP, runs deep in Germany, and even the federal government in Berlin has doubts that the substance of an agreement can be hammered out by the end of this year before Mr. Obama leaves office.

If the United States sticks to its current negotiating positions, “We don’t need a free trade agreement. Then TTIP will fail,” Sigmar Gabriel, Germany’s vice chancellor and the country’s economy and energy minister, told Handelsblatt in an interview ahead of Mr. Obama’s speech.

“It's important for Obama to speak on this. We believe in his ability.”

Michael Smith, International Trade Manager, Los Angeles

Mr. Gabriel criticized how the United States has failed to compromise on critical issues, such as providing European firms with greater access to public government contracts at all levels in the United States.

“We cannot accept that. That for me is the opposite of free trade,” Mr. Gabriel told Handelsblatt.

The Social Democrat, the likely challenger to German Chancellor Angela Merkel in next year’s election, said he wouldn’t sign any deal that included private arbitration panels for settling disputes between investors and governments — one of the most contentious elements of the pact. The European Union wants to set up a permanent international court instead, which the U.S. opposes, arguing it would be more transparent.

Mr. Gabriel’s comments did not make for warm relations with the U.S. president. Entering the convention hall on Sunday at the Hanover fair’s opening ceremony, the U.S. president shook hands and spoke briefly with Mr. Gabriel before taking his seat next to Ms. Merkel.

Ms. Merkel stayed on message, lobbied for the comprehensive and ambitious free-trade deal. TTIP represented Europe’s chance to “help shape globalization rather than run after it,” she said.

“This opportunity will not come along again so quickly,” Ms. Merkel added. She said there was a “singular window” to conclude a deal before President Obama leaves office next January.

 

Mixed Opinions on TTIP-01

 

Barack Obama and Angela Merkel haven’t always had the warmest of relationships – a scandal involving the wiretapping of Ms. Merkel’s phone by U.S. intelligence agency the most high-profile slight –  but as they spent hours together on Sunday and Monday, touring the trade fair and lobbying for closer trans-Atlantic ties, the two genuinely seemed comfortable in each other’s company.

TTIP is one of the biggest building blocks of global trade today, together with a trans-Pacific deal, TPP, negotiated between the United States and 12 Asia-Pacific nations. But the outlook remains hugely uncertain.

Stephen Cheung, president of the World Trade Center Los Angeles, which promotes Los Angeles’ economic development, said both trade deals are critical for businesses in the western U.S. city, noting that Germany is the city’s third largest investor. For him, TTIP is about cutting red tape and harmonizing standards that can encourage smaller businesses to export abroad – including to Europe.

“It’s important for Obama to speak on this,” said Mr. Cheung, who presented an L.A. startup called Perception Robotics during a tour of the fair by Mr. Obama and Ms. Merkel. “We believe in his ability.”

But while the U.S. and German leaders lobbied for TTIP inside, in the outside world, the mood differed, with anti-TTIP protests taking place in Germany, Spain, France and the Netherlands. Nearly 100,000 people turned out for a protest in Hanover on Saturday.

 

TTIP demo dpa
Opponents to TTIP gathered in Hanover. Source: DPA

 

Only about one fifth of the German public supports a free-trade deal with the United States, according to a poll last week by the Bertelsmann Foundation. Many fear the pact with the world’s largest economy will erode labor, environmental and food standards.

Given the German skepticism, many business people in Hanover saw more significance in Ms. Merkel’s appearance at the trade fair than in Mr. Obama’s.

It will be up to the German chancellor to shift public opinion if the pact is to be ratified by the German parliament – one of 28 E.U. parliaments that will have to approve the deal. Like Mr. Obama, Ms. Merkel insisted that any pact with the United States would raise and not lower consumer product standards.

On the U.S. side, the fear is more about Europe’s own intransigence in the negotiations than about the public mood. Mr. Gabriel’s push for a more transparent court system for settling investor disputes has met with particular resistance in Washington.

Michael Froman, the chief U.S. trade negotiator, last week noted in a Handelsblatt interview that it would be hard to convince the United States to change the court system when the U.S. government had not yet lost a court case. Asked about the dispute during a press conference with Ms. Merkel, President Obama also suggested the German concerns were overblown.

“I think it’s important for us to look at the facts, not some hypothetical announcements,” Mr. Obama said.

Exactly how the Europeans and Americans can find a way through these tough negotiations, which enter their 13th round in New York on Monday, remains unclear. While Mr. Obama and Ms. Merkel may have been pushing for a deal at the highest level, diplomats on both sides are already warning: They’re willing to work towards a free-trade agreement, but the devil is in the details.

 

Christopher Cermak is an editor with Handelsblatt Global Edition. Sven Afhüppe, Thomas Sigmund, Klaus Stratmann, Moritz Koch and Simon Book of Handelsblatt contributed to this story. To contact the author: cermak@handelsblatt.com

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