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T-TIP: Once a Slam Dunk, Now in Trouble

Up until now, The Transatlantic Trade and Investment Partnership (T-TIP), a major trade agreement currently under negotiation between the U.S. and E.U., has lacked the drama of other, more contentious treaties. Most trade experts take its swift conclusion for granted. However, increasingly vocal opposition by activist groups in Europe have many worried that a swift resolution to T-TIP could be imperiled.

Alexander Stubb, Finland’s Minister for European trade, said, “We are grappling with people who are anti-European, who are anti-American, who are anti-free trade, who are anti-globalization and who are anti-multinational corporations. We have an uphill battle to make the argument that this EU-U.S. free-trade agreement is a good one.”

Karel De Gucht, E.U.’s trade chief, expressed frustration at how little these activist groups understand about the T-TIP. She said, “When we talk about T-TIP, some people think it is an extraterrestrial.”

The reasons for opposing the T-TIP are many and varied. Some object on the ground that the entire negotiating process lacks transparency, undermining what they see as mere pretensions to democratic process. Others are worried about the support the agreement would likely lend to genetically modified food that potentially harms the environment or poses safety risks.

Also, a major controversy is brewing over the insertion of an investor-state resolution clause, that permits E.U. and U.S.-based corporations to forward legal challenges directly against sovereign governments to various international tribunals. This would allow those corporations to litigate national restrictions regarding public health, environmental protection and social compliance that potentially places undue constraints on their ability to conduct business.

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Karel de Gucht said the postponement of the investor-state negotiations is intended to ensure that European corporations have adequate recourse to pursue grievances while also protecting the prerogative of governments to establish their own laws independent of external interference. “I know some people in Europe have genuine concerns about this part of the EU-US deal. Governments must always be free to regulate so they can protect people and the environment. But they must also find the right balance and treat investors fairly, so they can attract investment,” de Gucht said.

On the U.S. side of the discussions, legislators have battled over the issue of President Obama’s “fast-tracking authority,” or his executive prerogative to expedite the congressional approval of treaties he negotiates with foreign nations. A gathering number of House Republicans have expressed their intention to oppose the renewal of President Obama’s trade promotion authority, a development that could undermine his ability to conclude outstanding trade negotiations.

A substantial group of Democrats have already expressed either misgivings about fast-tracking or outright opposition, many of them emboldened by Senator Harry Reid’s (D-NV) candid criticisms of it. Only hours after President Obama encouraged Congress to renew his authority during his State of the Union address, Reid expressed his misgivings publicly. “I’m against fast track. Everyone would be well advised just to not push this right now.”

The fourth round of T-TIP negotiations will be held in Brussels, beginning March 10. In preparation for the discussions, de Gucht and U.S. Trade Representative Michael Froman met in Washington, D.C. on February 17th to clarify the upcoming agenda.

T-TIP negotiations officially began in July 2013. It has largely been negotiated quietly, avoiding the same journalistic scrutiny lavished upon the Trans-Atlantic Pacific Partnership or Pacific Alliance. Nevertheless, the T-TIP negotiations have been gaining ground and, if successfully settled, could have wide-ranging consequences, allowing the U.S. and the E.U. to set common rules between them on emerging trade issues like regulatory standards and regional cooperation.

The primary objective for the fourth round of T-TIP negotiations is to review the progress made in the first three rounds and to prepare each nation’s chief negotiators’ with revised agendas. The stakes for the negotiations are high since the E.U. and U.S. collectively comprise more than 40 percent of global economic output. According to a study issued by the Center for Economic Policy Research, the E.U. could capture an additional $161 billion a year from a fully implemented free trade agreement, mostly on the strength of an anticipated 28 percent rise in exports to the U.S. More than 80 percent of the overall gain for both sides will result from deep cost-cutting, particularly with the removal of regulatory trade barriers, and the liberalization of trade in services and public procurement.

Capturing public support for the T-TIP is essential since the U.S. can’t reach a final settlement without the approval of Congress, which is beholden to the people it represents. Also, in the past, the E.U. has demonstrated the will to reject treaties that failed to garner the imprimatur of the European public; one notable example is the Counterfeiting Trade Agreement in 2012.