Obama, TTIP, and a Tough Crowd in Hannover
WASHINGTON—When the White House announced that President Obama would head to Hannover, Germany, on April 24 to open the world’s largest industrial trade fair, the underlying reason for his visit was clear: the president would use one of his last foreign trips in office to promote what he hopes to be a key legacy of his presidency, the Transatlantic Trade and Investment Partnership (TTIP). Though the multitude of crises facing Europe has diluted the focus of the visit slightly, TTIP will still be a key part of the president’s agenda this weekend — and it will face an uphill, but not insurmountable, course.
That a trip to support the trade deal being negotiated between the European Union and the United States leads the president to Germany and not to Brussels, is both a sign of the serious trouble TTIP has run into in the EU’s largest member state, as well as a clear signal of the high level of importance the U.S. side is placing on finalizing a transatlantic deal. But while the president is hoping to assuage German worries, trade policy – to the surprise of many – has become a major topic in the American presidential election campaign, as candidates like Donald Trump and Bernie Sanders have condemned U.S. trade deals as both “bad” and “stupid.”
Under attack in the U.S. and Germany, the outlook for transatlantic trade negotiations might appear dim. But while there are similarities, on closer inspection, the trade debates on either side of the Atlantic also show striking differences, which may actually improve TTIP’s prospects. Chief among them is the level of interest for the transatlantic trade agreement. While TTIP has become a crucial topic of public debate in Germany, the trade discussion in the U.S. mostly revolves around the already concluded (but not yet ratified) Trans-Pacific Partnership (TPP), a 12-country trade agreement for the Asia-Pacific region. Interest in TTIP, on the other hand, is largely restricted to political circles in Washington and specific business sectors with interests in Europe. Even on issues that are viewed critically by some on both sides of the Atlantic, the criticism is actually directed at different agreements.
One of the most widespread and shared concerns regarding the current trade negotiations is a perceived lack of transparency. Critics have often branded TTIP and (in the U.S.) TPP as “secretive deals” that are being negotiated “behind closed doors.” Adding to the criticism is the suspicion that lobbyists and other corporate representatives receive preferential access to information about the negotiations.
In the same vein, critics on both sides of the Atlantic have homed in on specific provisions in both TTIP and TPP meant to protect investors. Such provisions, like the oft-criticized investor-state dispute settlement (ISDS) mechanism, have long been included in U.S. and European country’s trade agreements, but have come under intense scrutiny in both the TPP and TTIP debates. In the U.S., criticism regarding ISDS has come mostly from labor unions, some members of Congress, non-governmental organizations, and academics. In Europe and especially in Germany, ISDS has become one of the most contentious and widely discussed issues in the entire TTIP debate. In fact, the level of disapproval in the public debate led the European Commission to suspend negotiations on the topic for more than a year in order to conduct a public consultation and finally to propose the establishment of an Investment Court System (ICS) to replace the old mechanism in the hope of assuaging concerns.
Yet, while concerns about transparency and investor protection provisions can be found in both the U.S. and German debates, the broader direction of the anti-trade sentiment is very different. Although hundreds of thousands joined an anti-TTIP protest in Berlin in October 2015, hardly any of the demonstrators seemed worried about negative economic impacts of a transatlantic trade deal. Instead, criticism in Germany has often focused on an increase in what is perceived as undue corporate influence, a feared lack of democratic control, as well as worries about threats to existing labor, environmental, and consumer protection standards in TTIP.
American trade critics also worry about lower standards, but with a much different rationale. While Germans are worried about lower standards at home, many Americans fear that lower standards abroad give some trading partners, for example in the Trans-Pacific agreement, an unfair advantage. The current U.S. trade debate thus more closely resembles previous political battles of the 1990s, when the proposed North America Free Trade Agreement (NAFTA) led to worries about an exodus of American jobs to Mexico. Perhaps not surprisingly then, Donald Trump, along with other presidential candidates, has repeatedly expressed his criticism of current trade policy in the form of lamentations about Mexico (and others) “killing us on trade,” thereby evoking images of an unfair competition.
The focus on more “traditional” concerns about trade, like the fear of job losses and negative impacts on wages, might make TTIP a less controversial agreement in the U.S., given that the high level of European standards is not generally perceived as providing an unfair advantage to European countries. But, just as TTIP ignited and simultaneously soured an almost dormant trade debate in Germany, TPP and the presidential campaign may have done the same in the U.S. Despite this possibility, it seems more likely that trade policy as a topic will disappear from U.S. headlines again once the smoke from the presidential election campaigns clears. In Germany, however, President Obama will have to connect with a skeptical audience, and TTIP will likely remain a contentious topic in the public debate, especially given the upcoming federal elections in 2017. To alleviate German worries as negotiations continue, future presidential visits may thus become necessary – though perhaps not all candidates would be equally helpful in this endeavor.
The views expressed in GMF publications and commentary are the views of the author alone.