US and Italian officials are weighing a deal to lock
in elements that can be finalized before Obama leaves office.
U.S. diplomats are sketching out a last-ditch plan to
salvage core sections of the EU’s moribund trade deal with Washington.
The U.S. and EU countries supporting free trade are
increasingly worried that the landmark Transatlantic Trade and Investment
Partnership will collapse if they do not secure a preliminary accord before
U.S. President Barack Obama leaves office in January.
They now accept that a full agreement will not be
possible by the end of 2016 because of an impasse over agriculture and public
procurement, but they don’t want to surrender what they regard as concrete
progress made in other fields over the past three years of negotiations.
U.S. and Italian officials are now weighing the option
of a “Step 1” deal to lock in elements that can be finalized by December,
possibly including joint testing regimes and mutually agreed upon standards for
cars, pharmaceuticals and medical devices.
The idea has sparked immediate skepticism in the
European Commission and in some EU member countries, which argue that any form
of a downgraded deal will be very hard to sell politically, particularly after
French Trade Minister Matthias Fekl and German Economy Minister Sigmar Gabriel
turned hostile on the negotiations.
The debate over the survival of TTIP has reached fever
pitch after France said that it would propose halting the talks at a meeting of
EU trade ministers in Bratislava on Sept. 22.
In legal terms, it will prove almost impossible for
the French to kill TTIP in Bratislava because the deal still has broad support
from Italy, Poland, Britain, Nordic countries and Baltic states. Perhaps most
importantly, Germany’s Chancellor Angela Merkel also backs the accord, in
direct opposition to her economy minister.
Still, the growing political threat to TTIP has
spurred U.S. trade officials into a flurry of action. Michael Punke, deputy
U.S. trade representative, last week visited numerous trade officials in EU
countries as well Jean-Luc Demarty, the director general for trade at the
European Commission.
People briefed on the meetings said that discussions
focused on nailing down “tangible outcomes” so that “something is agreed on”
before the end of the Obama administration. Diplomats stressed that Washington
had not drawn up any formal proposal but was discussing the options for
“landing zones.”
A senior official at Italy’s trade ministry said that
Rome fully supported the idea of trying to conclude a preliminary political
agreement before the end of the year. “Italy proposed a very similar plan
during its presidency of the EU [in 2014],” the official said.
The discussions on how to save TTIP are due to
continue Thursday when U.S. Trade Representative Michael Froman is slated to
travel to Brussels with Punke to meet EU trade commissioner Cecilia Malmström.
Diplomats in Brussels and Paris noted that U.S. trade
officials were ramping up pressure on their EU counterparts by arguing that
TTIP had become considerably less attractive after Britain voted to leave the
28-member bloc. The UK accounts for about 25 percent of U.S. exports to the EU,
and is a crucial market for wine, financial services and procurement.
Supporters of the “Step 1” plan say that it must only
be an initial phase and must not represent an end of the TTIP talks.
But other EU diplomats expressed concerns that the
“Step 1” idea would kill enthusiasm for any “Step 2” which would, by
definition, include more problematic and politically toxic issues such as
agriculture, government procurement and geographical indications.
They also argued that supposedly “easier” topics such
as convergence on safety standards on car parts would still be politically
difficult. EU and U.S. trade officials argue that small companies on both sides
of the Atlantic would benefit greatly if they shared common standards and
testing rules for products such as paints and car seatbelts.
Two European diplomats noted that a “Step 1” deal in
these sectors would also trigger accusations that Europe was surrendering
“regulatory sovereignty,” even if not in sensitive areas such as healthcare and
the environment.
A Commission source agreed that a downgraded version
of TTIP would be politically unpalatable.
“We have agreed on eliminating 97 percent of tariffs,
expecting that the Americans will also move forward on issues such as public
procurement or geographical indications,” the source said. He added that
Brussels was still working on the basis of goals mapped out by Malmström in July,
when she called for a “highly ambitious” agreement.
Paris also insisted that there was no question of a
pared down deal.
“France will not accept a TTIP Lite,” said Timour
Veyri, a spokesperson for France’s Fekl. “[Such] a TTIP Lite would be
inevitably made at the expense of French interests.”
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