For almost two year now, the EU and the US have been negotiating TTIP2 and as in TTIP1, civil society is frozen out and transparency is non-existent. The new Trade Commissioner Phil Hogan has an open ear for lobbying requests, and even the most sensitive areas such as agriculture and food could end up on the negotiating table.
Older trade deals of this kind were aimed at removing tariff barriers to trade – the elimination of customs duties between the contracting parties. In contrast, the ambitions of agreements of the “new generation”, as the EU Commission calls them, are much higher and are increasingly aimed at the elimination of “non-tariff” barriers to trade. Different technical standards as well as regulations in the public interest, such as environmental and environmental protection requirements, are also on the table.
Regulatory cooperation is one way of bringing this closer together. The term outlines structures and procedures established by trade agreements, which offer the contracting parties the opportunity to exchange views on planned legislative and regulatory projects at an early stage. Group and industry associations have been stridently calling for regulatory cooperation to be anchored in trade deals. For civil society, on the other hand, it has been a source of protest since TTIP negotiations commenced. But regulatory cooperation also plays a central role in TTIP 2.
The fact that the plans of the EU Commission and its US counterpart, the USTR (United States Trade Representatives), are currently attracting little attention is mainly due to the secrecy of the Commission itself.
In the course of the protests against TTIP 1 and CETA, the then Trade Commissioner Cecilia Malmström had stated that trade policy would be more transparent and democratic. Civil society would be better informed and a balanced exchange with all the interests concerned would be sought. However, in the new negotiations with the United States, the Commission is now ignoring this policy. It has good reasons for this: TTIP has now mutated into an irritant word, and a “comprehensive” deal with the US in the same way will be difficult to enforce against the will of citizens of member states.
And also, the governments of the Member States are divided. While Germany, for example, is clearly in favour of a new version of negotiations with the US, the French government is particularly opposed to plans that include agricultural goods. At the same time, the trade winds from the United States have been blowing much rougher since Donald Trump took the lead there and fired punitive tariffs towards the EU. Trump’s threat to extend these sanctions to EU car exports is causing concern, especially in Germany, with its powerful car industry.
Against this backdrop, then Commmission President Juncker and Trump announced that talks on a trade agreement would resume. In April 2019, the Council – EU Heads of State and Government – formally approved the opening of negotiations and the start of talks on TTIP 2.
The negotiating mandates with the US provide the Commission with a narrow framework and are far from the broad scope of the former TTIP mandate. The Directorate of Trade (DG Trade) is allowed to negotiate in exactly two areas: the reduction of industrial tariffs7 (1) and on questions of regulatory cooperation in product approval procedures (“conformity assessment”).
Negotiations on tariffs have made little progress and are currently at an impasse. The situation is different for those on a cooperation agreement on conformity assessment. To understand exactly what this is all about – and what is at stake – it is worth taking a closer look at the different ways of regulating the EU and the US.
In the context of trade talks with the US, regulatory cooperation always suggests a common right. The way in which regulations are handled in the EU and the US is fundamentally different. In the EU, regulations are generally subject to the precautionary principle. Especially in sensitive areas such as environmental protection or food safety, in case of doubt, “caution is better than forbearance”. And whether a measure is “economic” or “co-efficient” plays only a subordinate role. (Art 191 TFEU). This is not the case in the US, where a so-called “risk-based” approach is used, with industry and US trade officials often using the term “science-based.”
However, there can be no question of “knowledge”. The term goes back to a campaign by the tobacco company Philip Morris in the late 1990s. The aim was to sow doubts about the scientific basis of health policy measures. With aggressive lobbying, the tobacco industry has provided itself and other large corporations with legally legitimate influence over the work of public authorities – authorities such as the EPA – U.S. Environmental Protection Agency- which is actually tasked with protecting the general public.
In the end, this means a precise reversal of the precautionary principle: it is not the company that has a duty to ensure and prove the safety of its products. Instead, the obligation to provide proof in the US lies with the regulatory authority: if it wants to regulate more strictly, it must first show that there is a scientific consensus on the risk of the respective product or substance. And not only that: it must also prove that this risk exceeds the economic benefits. Following the tobacco industry, many of the large corporations have also embraced the rhetoric of “science” in risk assessment.
Initially, this had a primary impact on the domestic US market. In the meantime, however, these demands have also been successfully introduced around the world. This is made possible by trade agreements.
US trade agreements contain obligations for their contracting parties in the evaluation of US products and this is where regulatory cooperation comes in: with their help, the standards on which there was no agreement at the time of signing can also be dismantled.
With TTIP 2, things are different; a comprehensive mandate like TTIP is difficult to imagine under the current political conditions. For this reason, the legal framework for the new negotiations is much narrower. Nevertheless, caution was required: both the mandate and the EU’s draft for an agreement leave loopholes for a creeping expansion of cooperation with the US. If the Treaty were to come into being, it could set in motion a downward spiral which, in the worst case scenario, could be the complete abandonment of the precautionary principle.
Proof of conformity (“agreement”) of a product with the applicable requirements for safety and protection is pre-condition enabling it to be sold on a particular market, for example the EU one. Through an agreement, the EU and the US aim to “align” their different evaluation procedures and speed up product approvals.
For industry and corporations, conformity assessment procedures are an indispensable part of the overall package of regulatory cooperation. A common paper from the business association US Chamber of Commerce and EU’s “BusinessEurope” on the occasion of the TTIP negotiations considered the influence on these procedures to be as important as on the regulatory text itself. An agreement on the procedures could be the door opener for the extension of lobbying.
For example, the EU negotiating mandate had already not clearly defined the contractual scope and left room for interpretation: the agreement should cover products in sectors “where there are currently obstacles” and “where the importing party needs a third-party compliance assessment.” Without additional restrictions, this can basically include almost all products. The text proposal published by the EU in November 2019 partly confirmed this fear: the product range listed there ranges across electronics, electrical equipment and machinery, pyrotechnics and explosives, motor boats and toys.
These categories are not set in stone, but can be supplemented by others leading to unlimited expansion of the list. There is nothing in the draft about the permitted scope of these extensions, but it identifies competences: the power to extend the contract, which would lie with a “Joint Committee”, also only vaguely outlined.
A similar committee was also intended for TTIP 1 as a “Regulatory Cooperation Body”. Even there, these plans had caused protests, because if committees of this kind are anchored in trade agreements, they have a dangerously high potential to undermine democratic legislative processes. The current EU proposal, for example, does not say what the composition of the body should be. The criteria for selection and requirements for members are missing. It also remains unclear whether “stake holders”, i.e., primarily the representatives of industrial lobbies, should also have the opportunity to provide “Expertise” in the committees.
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In addition to the scope of product categories, the Committee has other comprehensive competences: to establish its own rules and procedures, to make the “appropriate technical and administrative arrangements” for the implementation of the Agreement and to ensure the monitoring and review of the contractual provisions. The Committee should also be allowed to extend the treaty itself on its own initiative.
US industry wish list for an EU-US agreement
| Name | Claims |
| US Chamber of Commerce | • “Establish dialogues on standards and conformity assessment under active stakeholder involvement” • “make existing dialogues more transparent so that industry and other stakeholders can make a robust contribution to the discussion of the relevant regulatory authorities” • “initiate new meaningful dialogues for regulatory cooperation in sectoral emitts”. |
| American Chemistry Council | • “regulatory cooperation modelled on TTIP and USMCA” with the aim of “increasing efficiency and low costs for our chemical companies” • To eliminate problems related to the EU Chemicals Regulation “RE- ACH”, which is “extremely complex and demanding” and “represents a significant barrier to trade”. |
| U.S. Grains Council | • Reducing the ‘long-running EU authorisation procedures for biotechnology’ • “Remove regulatory barriers to permissible limits for pesticide levels” |
| Groceries Manufacturers Association | • the ‘excessive, non-transparent and unscientific EU orders’ have created trade barriers that need to be removed • achieve commitments with the EU that “limit unnecessary technical barriers to trade” “put health and phytosanitary measures on a science-based basis.” |
Still, the differences in the EU-US’s pre-existing positions make a quick agreement unlikely. The US proposal is much more far-reaching than the European one and aims at the comprehensive mutual recognition of the joint conformity assessment bodies.
The US administration and US industry have been conveying the same crystal-clear demand for decades: the EU precautionary principle should fall and with it the import and restrictions on US products. This was already one of the central demands of TTIP, especially with regard to food and agricultural products.
After all, the US negotiating objectives for TTIP1 also highlighted the “extraordinarily close strategic partnership” with the EU and the opportunity to jointly develop rules and principles for a strong “rules-based trading system that benefits all economies”. This spirit is no longer felt in the new negotiating objectives, hard-hitting interests are taking over in a Trump – driven environment. U.S. exporters have suffered “for decades from the many tariff and non-tariff barriers” that are to blame for the “chronic trade deficit with the EU.” Accordingly, an agreement would have to eliminate “unfair practices that unfairly restrict US market access.”
The US Secretary for Agriculture, Sonny Perdue, recently made it even clearer: it is up to the Commission to allay the concerns of EU populations and to counteract voices of NGOs, to proceed “who are out here spreading fear regarding hazard-based rather than risk-based approach. We have to make policy decisions based on sound science when it comes to food. […] I think they [EU policymakers] are willing to do that.” The negotiating objectives are almost identical to the inputs of the US industry.
Here’s a little aside on the role of innovation in sustainable farming as viewed from the US and which should ensure continued Green Party opposition to TTIP.
But it would be a mistake to believe that EU lobbies and the Commission do not also have a keen interest in comprehensive regulatory cooperation with the US. On the contrary, EU corporations have often been fighting for deregulation and the reduction of standards with their US counterparts. As far as the Commission is concerned, in its appeal to ‘stakeholders’, it did not limit itself to the agreed area (conformity assessment), but explicitly asked for “strategic proposals for concrete initiatives for regulatory cooperation in sectors with the potential to achieve bilateral trade.”
It would appear that the lobbyists are getting closer and closer to their desired goal. Between 2018 and 2019, the EU made a number of significant concessions to its trading partners, particularly in the agricultural sector. These include, for example, higher imports of beef and soya from the USA, the targeted authorisation of genetically modified or pesticide-treated plants from US-American production. Although the Commission has always assured farmers that agriculture is not covered by the negotiations, it seems to intend to include it.
At the beginning of 2020, there were more reports of such statements. In January, Trade Commissioner Phil Hogan said: “I did suggest that regulatory cooperation might be a mechanism where we might get in the door to discuss non-tariff barriers on agriculture. We have a long list of non-tariff barriers and so has the US. So let‘s pick a few of those maybe in the agricultural area in order to help, to maybe unlock some of the concerns”
It is alarming that the Commission wants to use regulatory cooperation without anchoring it in a treaty. Under EU law, the Commission can enforce far-reaching changes to certain rules on its own. This is made possible by the design of so-called “implementing acts“. These are acts that organise the concrete implementation of EU legal acts or revise or extend an existing regime. These acts do not necessarily require the consent of Parliament, but merely require that the relevant committees are informed (‘comitology’).
In the past, the Commission has used these and other backdoors to make controversial concessions for which a majority in the EU Parliament would never have been achieved. In 2013, for example, the Commission approved the use of lactic acid in beef production to prepare the ground for successful negotiations with the US on TTIP.
In January 2019, too, a sweetener was given to the US to guarantee a positive outcome to the new negotiations: the Commission classified soya-based fuels as “sustainable” – contrary to the stated objectives of the “Green Deal”. All this raises the question of whether other measures taken by the Commission in the context of the ongoing EU-US talks will lead to lowering of standards. Mr. Trump’s threats to impose import levies on products such as cars have made a big impression on some Member States. In order to ward off punitive tariffs, the EU could agree to make further concessions – without democratic legitimacy and without looking at the needs of consumers.
Then there’s the developing trade war with the US. EU products exported to the U.S. are already facing duties worth up to $7.5 billion as a result of a 15 percent retaliatory tariff on aircraft and a 25 percent one on other goods, including some wines and cheeses.
But a long-term solution is nowhere in sight: While European aircraft giant Airbus hoped its move to halt subsidies from Spain and France earlier this summer would be a decisive step to end the transatlantic dispute, the fight is far from over. And while the European Commission has repeatedly tried to woo Donald Trump into a truce in the trade war, it has ultimately failed to do so, partly because of the pandemic. So for now, Brussels is playing wait-and-see until after the November U.S. election, perhaps hoping that Biden, a strong advocate of trade deals, emerges as President
So, though there has been a slowdown partly due to the pandemic and also to the pending election in the US, like the Lisbon Treaty, TTIP seems destined to return – and in a worse form than on the last occasion.
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