Can the US midterms revive the polemical TTIP?

This week’s midterm elections in the United States could be decisive for the controversial TTIP, but is Obama running out of time to complete the deal with the European Union? Elsa Buchanan discusses 

As voters in the United States flock to the polling stations to define control over the Senate in the mid-term elections, anti-Transatlantic Trade and Investment Partnership (TTIP) campaigners are holding their breath.

A Republican majority win could, counter-intuitively, be a good omen for President Barack Obama’s trade agenda, particularly with regards to the controversial TTIP deal with the European Union (EU).

The reason is simple.

If the midterm elections result in a Republican majority in the Senate, Obama could be expected to be given ‘trade promotional authority’, a provision under which the President would be able to fast-track a trade agreement through Congress, having it voted up or down without any amendments.

His current Democratic majority is not seen as a trade-friendly Congress and is reluctant to give these powers to Obama, who has been struggling to pass a regional trade deal.

“Without the authority, I don’t really see how the American campaigners can get TTIP through, because Obama would need to come back to Congress, have full debate around different aspects of the treaty, clause by clause, taking amendments from the floor and so on,” explained Nick Dearden, director of the World Development Movement, which campaigns for economic justice.

“Denying Obama the fast track authority would open TTIP to [Congressional] scrutiny, which means pro-TTIP campaigners are not going to be able to get it through. The midterms are vital.”

At the time of writing, polls show the Republicans winning control of the Senate as well as the House.

ISDS: EU’s tug-of-war

Meanwhile, for the anti-TTIP movement, a recent European squabble over a controversial clause enclosed in TTIP, the investor-to-state dispute settlement (ISDS), could be good news.

Signalling his position in July, newly appointed EU president Jean-Claude Juncker hinted the ISDS – which allows foreign investors and big businesses to sidestep national courts and sue governments via international arbitration – could be removed from TTIP.

While this judgment has been applauded by TTIP critics, fourteen EU members have fired a warning shot, sending a letter to the commission asserting that the ISDS inclusion was part of a mandate issued by national governments and should not be overruled by Juncker and his staff.

Juncker’s response to the letter involved shifting responsibility by delegating the decision to his vice-president, Dutch Foreign Minister Frans Timmerman, under whose remit the decision supposedly falls.

For Dr Gabriel Siles-Brügge, a politics lecturer at the University of Manchester and political economist researching trade crisis and the European Union, this means Juncker faces two choices.

As Juncker is opposed to the ISDS “in principle”, Siles-Brügge believes the EU President could accept a lighter version of the ISDS clause only if there was an exhaustion of local remedies.

“The idea is that you could only bring a claim to an ISDS tribunal if you’d exhausted all domestic legal avenues. That would be one way of accommodating it,” he explained.

A second option would be for Juncker to devolve the matter further onto Timmermans, who is known to hold a similarly negative view on the inclusion of the ISDS, and whose Social Democrat peers in the EU Parliament have also publicly opposed ISDS.

“The battle is not over as it were….It will be an uphill battle for ISDS’,” Siles-Brügge says. “Politically it might be an intelligent move to remove ISDS from the TTIP because that would mean removing one of the key lightening rods for opposition.’

ISDS and China: The elephant in the room

Possible future scenarios of how TTIP will infiltrate global trade include individual countries moving to adopt the pact with the US fully, or governments implementing a selection of clauses.

According to Dearden of WDM, however, the latter seems improbable.

“I would be very surprised if they go down that route, because what they are trying to do is rewrite international trade rules and they don’t want to re-visit a scenario where certain countries can take or leave certain aspects of it.”

Dearden also believes China is the elephant in the room when it comes to the ISDS and TTIP.

“A lot of this is about setting investment and trade rules for China. They don’t want China to be able to use [a possible rejection of ISDS] as a reason for them not to sign up for ISDS in the future or leave certain clauses or elements of a future treaty. That’s the real reason why I don’t think they want to drop ISDS.”

He added: “All of a sudden, the whole castle of cards starts crumbling down if you start removing things from the US-EU treaty. They will be very reluctant to have a three or four tier treaty that they sign up to.”

Dearden holds the view the most likely scenario will be a “slightly less ambitious” treaty.

Meanwhile, debate surrounding the ramification of the Canada and European Union Comprehensive Economic and Trade Agreement (CETA), which contains the ISDS provision, will be a “good indicator as to how things will fare for TTIP”, according to Siles-Brügge.

The CETA is a smaller deal than TTIP would be, and has ruffled fewer feathers than its US counterpart, but its adoption could pave the way for renewed negotiations about a deal with the US.

While he expects it will be ‘very difficult’ to remove the ISDS clause from the CETA deal, which has already been negotiated but is still to be ramified, he hinted a compromise with regards to safeguards, for example, could be reached.

Running out of time

Negotiations have stagnated over the contentious issue, with the next round of TTIP negotiations, originally planned for early December, postponed to an undefined date.

Despite the ‘fast-track’ promotion authority which could be granted by a Republican Congress, with two years to go until the end of his term, this delay means Obama is facing an increasingly tight timetable.

In Siles-Brügge’s view, the midterms “wouldn’t be vital” for the passage of TTIP as there are several other, more important factors in place mean which would block the agreement – even if the GOP wins the elections.

“The US presidential election kicks off in 2016, so there is a very tight window in terms of getting TTIP through. It would have to be probably negotiated before the presidential elections get underway because I don’t think either candidate would want to be involved in something like that which is potentially quite controversial,” he explained.

“The people negotiating TTIP very much underestimated the extent to which there would be opposition – they haven’t been very successful at cancelling that opposition out and their timetable is very tight so, at the moment, it’s not looking very good.”

1 Response

  1. For information on CETA’s ratification ahead of the next TTIP negotiation round:

    The European Commission has just informed me that the lawyers from the EU and Canada have now started the legal review of the CETA agreement.

    “Subsequently, the Commission will translate the full text into the official languages of the EU and submit it to the Council and the European Parliament for ratification.”

    At the EU-Canada Summit on 26 September, President Barroso, President Van Rompuy and Prime Minister Harper announced the end of the CETA negotiations, which were concluded in August.

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