international analysis and commentary

Understanding German skepticism towards TTIP

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Given that Germany is one of the world’s largest exporters, ranked third after China and the US, it is curious that European resistance towards the Transatlantic Trade and Investment Partnership (or TTIP, currently being negotiated) stems to a large extent from Germany. With its massive and competitive manufacturing sector, the country stands to benefit from a trade deal such as TTIP, especially since the US is among Germany’s key trading partners. The German industry association BDI, for example, strongly favors reaching an agreement. Yet the German public appears very cautious and increasingly skeptical, as support for TTIP in its current form is not only among the lowest of any European country, but also dwindling.

Public debate about the matter appears to be as fierce and contentious as the stationing of foreign nuclear-armed missiles in the country that marked the Cold War. Still, concerns about the agreement should not be mistaken as simply another form of anti-Americanism, or anti-globalization. Instead, they rather center on a fear of losing democratic control if a TTIP agreement somehow weakened democratic institutions, negatively impacting social and environmental standards. With a grand coalition currently supporting the Merkel government, the German position towards TTIP is far from straightforward and there are various factors at play that impact the ongoing negotiations.

TTIP enjoys support from the industry and Angela Merkel’s leading Christian Democrats, but the position of the Social Democrats – the other main government partner, under party leader Sigmar Gabriel – is less clear. Since the rise of Angela Merkel and the formation of the left-wing party Die Linke in Germany, the Social Democrats have struggled in national elections to be a serious contender for the chancellorship. As the junior coalition partner, the party is therefore facing a dilemma between the industry’s support for the treaty and a less-than-convinced public. This is exacerbated by that fact that Gabriel also serves as Minister for Economic Affairs and Energy, while showing opposition towards TTIP – which can gain valuable support among voters. Angela Merkel’s Christian Democrats, meanwhile, favor a comprehensive agreement, but the Chancellor has been known to change course based on opinion swings in polls.

Most assessments of the agreement confirm that Germany would be among the winners of a TTIP agreement. According to a study by the European Council on Foreign Relations, for example, Germany ranks among the top countries to potentially benefit from TTIP. Around 8% of Germany’s exports go to the US, a figure that is only topped by Ireland and the United Kingdom in the EU, and there is a high degree of trade complementarity between the two countries. German studies by the Ifo Institute and by the German Ministry of Economics have been criticized for being overly optimistic, but even the French CEPII institute or the British CEPR institute expect significant GDP gains for Germany if a comprehensive TTIP agreement were to come into force. Domestically, the automobile industry, as well as the large number of German SMEs in areas such as manufacturing, would also welcome the removal of non-tariff barriers, for instance, in terms of greater harmonization of technical regulations.

In spite of all this, public support for the agreement is not overwhelming and may be volatile. While a survey conducted by the Pew Research Center found 55% of Germans to be in favor of a TTIP agreement at the start of 2014, with only one in four Germans against it, the Eurobarometer at the start of 2015 found 41% of Germans against an agreement, a figure that was topped only by Austrians. The most recent survey on the matter, conducted by TNS on behalf of the German Spiegel magazine, only found 18% of respondents to be in favor and 33% against TTIP in its current proposed form. Quite notably, however, about half of the respondents were not sure.

Opponents of TTIP in Germany primarily worry that the agreement could be misused by corporations as a back door, circumventing and undermining worker and consumer protection rights as well as environmental standards. The German union organization DGB, for instance, demands that the US should first sign up to all of the core principles of the UN’s International Labour Organisation (despite being a full member, the US has adhered to only two out eight core principles) before it would give up its resistance. Moreover, the planned inclusion of investor-to-state dispute settlement (ISDS) provisions, which in fact both the EU and the USA want as part of the agreement, are a particular concern – somewhat ironically, since they were originally introduced by Germany. Given that EU countries and the US are established democracies, it is in fact curious that the existing, ordinary judiciary system should or could not be trusted to provide fair investor protection, and that an ad hoc private court should be seen as necessary. The Social Democrat Sigmar Gabriel has therefore made himself a leading opponent of the inclusion of private arbitration as part of TTIP.

Food and agriculture is another area that German consumers, led by the influential German consumer protection agencies, fret about. The “Chlorhühnchen” (referring to the American practice of cleaning chickens with chlorine after slaughter) has sparked a heated public debate in a country that regards chlorine with suspicion even with regards to cleaning bathrooms. Apart from such specific issues, of course, current TTIP negotiations raise wider questions related to public health. The Green party, coalition partner in the Schröder government for many years, has a strong tradition in Germany and many consumers worry that TTIP could lead to lower standards regarding the environment. That applies to animal welfare as well, if domestic farmers compete directly with their usually much larger American counterparts that often face fewer restrictions. In addition, a clear majority of Germans opposes genetically-modified farming or foods, and fear that such products could easily find their way to the market under TTIP. Similar concerns exist around other controversial practices such as “fracking” for the extraction of shale gas and oil, which is already widespread in the US, but continues to be much more regulated in Europe.

In this context, while TTIP holds clear potential for both sides of the Atlantic, negotiations are stalling partly because many of the current proposals reinforce worries whereby voters feel increasingly left out of the decision-making process. In this view, the trade agreement risks to weaken established democratic protections for common citizens, for example in areas such as arbitration, or social and environmental regulations. Politicians on both sides would therefore do well to find the right balance between supporting growth in their economies and creating a business-friendly environment, but without weakening the standards and best practices that help define contemporary Western economies. The verdict about their success still appears to be uncertain, at least in Germany.