The brief in favor of TTIP has always been weighted toward its long-term benefits, both economic and geostrategic. As economic weakness persists on both sides of the Atlantic, the economic case for the path-breaking negotiation remains strong and is generally endorsed by opinion leaders. Nevertheless, in the last six months a number of shorter term political developments have intervened in the United States and Europe to complicate the calculus, while others could significantly reinforce the geostrategic case for the agreement, provided political leaders do a better job of linking them to the TTIP debate.
Since negotiations began last year, the hard realities of achieving a transatlantic compromise matching the ambitions set for TTIP have become apparent. Chilled by mistrust arising from the National Security Administration (NSA) global surveillance revelations, negotiators are grappling with tough decisions on what were always known to be hard questions. Agriculture, financial services, data privacy, dispute settlement, and government procurement are among the thorniest issues and will require more trust and goodwill to resolve than was apparent at the start of 2014. Achieving some regulatory convergence is politically and institutionally difficult and also calls for more flexibility, transparency, and creativity than typical tariff-oriented negotiations.
Adding to the challenge at the end of January was the announcement by Senate Majority Leader Harry Reid that the normal discretion given to the executive branch via “trade promotion authority” (TPA) was a non-starter for the senior body of the US Congress. Reid’s primary focus, increasingly shared by some in the White House, is to protect the Democratic majority in the Senate in the elections slated for the fall of this year. Free trade proposals are always a tough sell in the Congress, and Reid is not one to risk asking his members to make a hard decision in an already challenging electoral environment for his caucus. Absent a major effort by the President to push for TPA, negotiators on both sides face the prospect of Congressional micromanagement of the process which will make decisive compromise even more difficult. Congressional Republicans are marginally more supportive of TTIP and TPA, and their numbers will likely expand in the 2014 elections. As for labor leaders in the US, largely because standards, wages and benefits, and regulations in the EU are viewed as advanced, their normal opposition to trade opening agreements is muted for TTIP.
In these circumstances, the real window for TPA – and ultimately a broad Transatlantic agreement – appears to be 2015. The President will be looking for legacy-building accomplishments by that time and a strong TTIP accord could help boost his record both on the economic policy front and the foreign policy ledger. Republicans have already signaled strong support for TTIP and would have a hard time bucking a good agreement next year, especially given their efforts to shake perceptions of an uniquely obstructionist agenda.
The major new global challenge to the West in 2014 is the Ukrainian crisis. The crisis only reinforces the need for better cooperation between transatlantic partners on various fronts. That case of course was already a strong one and a driver for the TTIP effort from the outset. Traditional Bretton Woods leadership would be reinvigorated by the ambitions embodied in TTIP. In the wake of the acute crisis in Ukraine, as well as continuing serious problems across the Middle East and to some extent Central Asia, the value of transatlantic cooperation and leadership is even more evident.
The changing geopolitical landscape is also tending to strengthen the potential value of the US energy renaissance. If TTIP could free up new US supplies of natural gas, crude oil and petroleum products for export, Europe’s dependence on Russian and perhaps to some degree on Middle Eastern suppliers could be considerably lessened. There is some opposition in the United States to reversing the ban on oil exports and limits on those of natural gas, but the Ukrainian crisis has engendered clarion calls to use these resources to stabilize global markets and offset the shackles of unreliable suppliers. In early March the ambassadors of the Visegrad nations (Czech Republic, Hungary, Poland and Slovakia) wrote House Majority Leader John Boehner (already an outspoken supporter of loosening controls on gas exports) and Senator Reid requesting expedited action to get US gas into Europe, just as European Commission officials froze talks on the new South Stream pipeline from Russia. Getting US natural gas to Europe in the short term is impossible given that the massive infrastructure needed to support this action will take years to build. But the impetus for achieving this goal in the long run, at least partly through completion of a TTIP energy charter, is yet another strong wind at the back of the negotiation.
Beyond 2015, the normal hazards to trade opening agreements, heightened in the case of an ambitious, path-breaking accord, risks getting caught up again in partisan and ideological disputes surrounding the important 2016 presidential campaign.
Such a timetable argues for pragmatic hard work in 2014, taking advantage of the impetus occasioned by economic weakness and global uncertainty. From the US perspective, it is always useful to recall that the Federal structure of its political institutions and the constitutional arrangement giving disproportionate power in the Senate to small, often agricultural, states suggest certain forms of pragmatism. In particular, it will be difficult to pass a TTIP absent some compromise on the usual agriculture-related stumbling blocks, especially on genetically modified organisms, animal husbandry techniques, and phytosanitary rules. Government procurement rules and authority for many regulatory bodies are jealously guarded by the states and protected by the constitution. Major commercial interests, on the other hand, in the industrial and some services sectors have the most to gain by a strong TTIP, and governments would be well advised to seek ambitious agreements for them so that they can be enlisted to help counter some of the more negative forces. These sectors are in the recent recovery driving economic growth, at least in the United States, and are already supportive of TTIP.
One substantial unknown on the US side is how much political capital and effort the President is willing to expend to complete and pass any agreement. Perhaps the growing recognition of the need to close differences with our long-standing allies across the Atlantic to meet the merging geostrategic challenges will help make the case for anchoring the partnership in a meaningful economic alliance. Reviving the Transatlantic link and giving a boost to the transatlantic economies would be a forceful legacy for this President and the time to achieve it is before the 2016 elections begin to dominate the US political landscape.