Interview

How Can We Judge a Document That Has Not Yet Been Negotiated?

Negotiations over the Transatlantic Trade and Investment Partnership between the EU and the US are one of the most transparent trade negotiations ever.  At the same time, there is a lot of criticism about a document which has not yet been fully negotiated and will have to be ratified by the European Parliament and the 28 national parliaments before it comes into force.

Emerging Europe spoke to Professor Danuta Hübner, a Member of the European Parliament and former European Commissioner for Regional Policy, about how Polish consumers, companies and the entire economy can benefit from TTIP and why the EU needs a trade agreement with the US.

(courtesy of danuta-huebner.pl)
(courtesy of danuta-huebner.pl)

The European Union and the United States are the world’s largest economies. Why a free trade and investment agreement is being discussed only now?

First of all, the negotiations for TTIP started 1.5 years ago. In addition, you also have to consider that the EU’s 28 Member States had to agree on a common mandate for the EU Commission to negotiate TTIP.  That process also took time.  Therefore, we did not start considering such an agreement only yesterday.

More broadly speaking, however, the bilateral and multilateral trade initiatives that are currently ongoing are part of a global trend.  After the rather unsatisfying results of the Doha round of negotiations and the ongoing hindrances to their conclusion, the EU, the US and other countries decided to move forward with international trade negotiations on a bilateral and multilateral level.

The Trans-Pacific Partnership agreement (TPP), TTIP and the numerous bilateral FTAs (e.g. EU-Philippines, EU-South Korea) that are being negotiated or have already been negotiated, are a result of this deadlock on the World Trade Organisation (WTO) level.  Therefore, an increasing drive on the global level to secure ambitious trade deals has taken place in order to promote the EU’s trade interests. TTIP, by virtue of the importance of the US to the EU and vice versa, was a logical step forward in this respect. The crisis has mobilised us on both sides of the Atlantic to seek new sources of growth more decisively, because quite simply, more trade leads to more growth and jobs.

Many opponents say it is large corporations that will benefit from TTIP, not the European economy, small and medium companies or EU consumers. Would you agree with that?

In my view, it is clearly SMEs and consumers that will benefit the most. SMEs make up over 99 per cent of companies and provide for 70 per cent of jobs in the EU.  A typical SME is not as interconnected with global trade and global supply chains as a large multinational is.

Multinational companies can already today use global production and supply chains to find the most practical and profitable way for them to operate — they have the resources to make existing rules work for them. This is not the case for SMEs. Existing restrictions on trade, so-called non-tariff barriers, are one reason for this. An example would be the following scenario: currently, an SME manufacturing a product for the EU market wants to export it to the United States, it would need to comply with standards for this product according to the EU and US markets, which in most cases are different from each other. If mutual acceptance for standards or some type of regulatory convergence were to be accepted, this would allow SMEs in the EU to export their products to the US without having to fulfil separate conditions. It will be a great benefit to SMEs as they in general do not have the capacity to ensure compliance with standards in other markets. In most cases, they do not have the resources and know-how to do so. It is important to highlight that this should not lead to lower standards for our consumers and I am confident that this will not be the case.

Further, there is no indication that US standards with regard to protection of consumers are any lower than those of the EU. They are simply different.  What TTIP seeks to achieve is to ensure that both the EU and the US can find common ground so unimpeded exports to the other party can take place. It is still up to the consumer to decide which product they wish to purchase. The result of this is that consumers have more choice for better prices and European SMEs have better and easier access to one of the world’s biggest and most lucrative markets. The net gain for the EU economy is thus also obvious.

How about Poland? Will the Polish economy, SMEs and consumers benefit from the trade and investment agreement?

All available studies show that Poland will benefit from TTIP.  As it is a novel type of agreement, its impact on intra-EU trade and production cannot be estimated exactly. However, we are cautiously optimistic about the benefits of the agreement and there are a number of forecasts for the Polish economy.  As the agreement foresees the lowering or removal of tariff barriers and other non-tariff barriers (NTBs), sectors of the Polish economy most affected by such barriers will benefit. It is also normal that benefits can differ across sectors and companies as well as over time. Companies that do not already conduct business on the US market will be able to access the market more easily, thus creating new possibilities for trade and investment and subsequently jobs in Poland. Usually, benefits related to lower tariffs can be felt immediately, whereas benefits related to non-tariff barriers take time to materialise.

The pharmaceutical, processed foods, cosmetics, furniture and automotive sectors will be the main beneficiaries of TTIP in Poland. The electrical machinery sector is expected to see the biggest gains. It is less clear with regard to the agricultural sector and energy-intensive industries, which is why I am keeping a close eye on negotiations in those sectors.

It is necessary to note that as the TTIP agreement will relate to all sectors of the economy, it is difficult to predict the exact impact in every sector. In general, TTIP will have mostly positive consequences for the Polish economy. In light of the development of other economic powerhouses such as China and India, Poland and the EU need TTIP now in order to remain competitive. Let me underline that businesses have to prepare themselves so they can fully benefit from a future agreement.

You believe that TTIP will help the poorest and less competitive regions in the EU to develop. How is that? Will Poland benefit from TTIP in that sense too? 

I have spoken to many different Polish stakeholders to hear their views and concerns about TTIP. There is overall agreement that TTIP will be beneficial to Poland and the Polish economy. Have you heard any company or industry say that they oppose TTIP? I haven’t — and there are good reasons for that.  I have already mentioned some aspects in my previous answer about which sectors can gain and which sectors may need to innovate to remain competitive. I am nevertheless pleased to see that companies in the chemical sector take their responsibilities and opportunities seriously and make the necessary preparations in order to be able to benefit and reduce the risks.

As for the individual regions:  We know which areas will be faced with challenges but this is independent of whether there will be a TTIP agreement or not. Uncompetitive industries cannot survive for ever and this is especially the case in a globalised world. What we need to do is to create opportunities for them to innovate, to become more competitive and to open international markets for them so they can achieve these aims. This is why we are for example pushing for an energy chapter in TTIP so that energy-intensive industries will be able to compete not just with US products but also on a global scale in many years to come. Remember, this is not an agreement for tomorrow. It is an agreement for the next 30+ years. Therefore, if we do our job properly and if our industries and companies are willing to embrace the opportunities that TTIP will provide for them, any region can grow and prosper with TTIP.

Similar agreements and negotiations always have a number of advocates and opponents, those who will gain and those who will lose. Who is most afraid in this case?

Those who are most afraid in my view are consumer NGOs and other members of civil society. I am certain that their fears are largely unfounded. I am certain because most of the fears are based on rumours and scenarios that are not real. For example, one of the main concerns is that in the future, large multinational companies will determine our future laws by directly determining legislation. This is not true. First of all, this assumption is based on a proposal by the EU to create a so-called Regulatory Cooperation Body between the EU and US. This type of system will be in place for the TPP agreement and there is nothing to indicate that this will destroy democratic legislative processes or interfere with a government’s ability to make legislation in the best interest of its citizens.

The EU Commission has been very adamant that EU governments will still be able to pass legislation as they see fit. The idea of such a body is to have closer cooperation between EU and US regulators on future legislation and to review current legislation. The body is not intended to comprise industry stakeholders who can unduly influence regulators. It is necessary to highlight, that as with all democracies, anyone can make their views known to this committee, as can civil society organisations. Regarding other issues in the agreement: How can we judge a text that has not yet been negotiated? Remember, the European Parliament still has the opportunity to vote against TTIP if it is not satisfied with its contents.

Economically speaking, I have already mentioned some of the affected industries in Poland. Let me repeat that the agreement is not yet set in stone and we will fight to ensure a good agreement for our country until the negotiations have ended.

It seems that these negotiations are very transparent and people can easily find out about that agreements have been reached. At the same time, there are many fallacies and misconceptions about TTIP. Which ones would you like to address?

As you mention the question of transparency, I would like to address exactly that issue. It has been one of the key concerns expressed by the detractors of the TTIP agreement. Let me start by saying that by definition of what they are, negotiations on trade deals are confidential for strategic and tactical reasons. Publicly disclosing your negotiating position does not bolster your position at the negotiating table. Negotiating in a confidential environment is thus not-antidemocratic but it is a strategic choice to get the best out of the negotiations for EU citizens. Let us not forget that it is the governments of the EU Member States, which have been democratically elected, that gave the EU Commission the mandate to negotiate this agreement. This is also the case with any other trade deal. This mandate was adopted according to democratic procedures and endorsed by the European Parliament.

It is important to note that all Members of the European Parliament have access to the negotiating documents of the EU for TTIP, as do lawmakers from national parliaments. We have very regular discussions in the European Parliament, both within our political group and with the other political groups, as well as with the negotiating team of the EU Commission about the ongoing negotiations. Further, an advisory group to the EU Commission, which contains all relevant stakeholders, can state its views on particular issues being negotiated. Everybody, including consumer groups and civil society advocates, have the opportunity to bring their views into the discussion. In addition, the EU Commission publishes all its position papers and negotiating positions on its website. This is an unprecedented degree of transparency.

There is, of course, room for improvement when it comes to democratic oversight of trade negotiations, but we are making significant progress on this issue. The best example of this is the enhanced role the European Parliament has been given as part of the reforms of the Treaty of Lisbon. The European Parliament must now approve any trade deal the EU Commission negotiates. How can the negotiations thus be deemed non-transparent when the European Parliament can view the final text before voting on it?