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The New Transatlantic Trade and Investment Partnership (TTIP): A Focus on the Environment

The New Transatlantic Trade and Investment Partnership (TTIP): A Focus on the Environment

Environmental benefits of TTIP are controversial; TTIP should not fundamentally change regulatory sytems of parties involved

On 13 June 2013, the AICGS Business & Economics Program and the Ecologic Institute hosted a workshop entitled "The New Transatlantic Trade and Investment Partnership (TTIP): A Focus on the Environment" at the Ecologic Institute Berlin office. Environmental aspects have not always been a primary consideration in international trade and investment agreements. The event was thus aimed at ensuring environmental objectives are given proper consideration in the negotiations regarding the planned trade and investment agreement between the EU and the US.

On the occasion of the 30 year anniversary of AICGS and 5 year anniversary of the Ecologic Institute’s Washington DC branch, both organizations sought to connect the dots between transatlantic trade and environmental issues. Ambassador Klaus Scharioth of the Mercator Foundation gave the keynote speech; panelists and moderators included Jack Janes, President of AICGS, R. Andreas Kraemer, Director of the Ecologic Institute, Marla Luther of Joschka Fischer and Company, Juergen Maier of Forum Environment and Development, Alexander Privitera of AICGS, Stephen Eule of the U.S. Chamber of Commerce Institute for 21st Century Energy, and Christiane Gerstetter of the Ecologic Institute.

Expected economic benefits of TTIP

Impact assessments on a future TTIP conducted so far expect major economic benefits from TTIP. Currently there is a significant amount of trade and investment between the U.S. and the EU. 30% of world trade in goods is conducted between the EU and the U.S. 40% of world trade in service, almost 50% of world GDP, 69% of all private research and development, and 75% of all the world financial markets are concentrated between these two regions. While tariffs are already low for many goods, observers expect benefits from rules on investment protection and market access that go beyond the standards currently contained in the law of the World Trade Organization (WTO), and the harmonization of technical regulations and norms.

Worries over lack of transparency

In the first panel, "Potential Implications of TTIP for the Environment, Energy, and Climate," one major issue raised was the perceived lack of transparency of the negotiation process. Civil society representatives and parliamentarians feel that they have inadequate access to negotiation documents – for example, the draft negotiation mandate of the EU Commission was unofficially leaked, but never officially shared with stakeholders and the wider public by negotiators. There was a controversial discussion on the need for greater transparency as well as stronger civil society and parliaments’ involvement in the TTIP negotiations. While some considered such involvement an essential part of democratic decision-making, others pointed to the fact that a draft TTIP would eventually have to be approved by parliaments on both side of the Atlantic and considered this sufficient in terms of the requirements of democracy.

Diverging expectations of environmental potential of TTIP

Disagreement also persisted on the environmental potential of TTIP. Some expected that if environmental concerns are given proper consideration in a comprehensive agreement, TTIP could bring some environmental benefits. In particular, it was pointed out that governments should maintain the right to regulate e.g. for environmental and health purposes. One area where benefits were expected from TTIP were efficiency gains from harmonized standards which could enable companies to invest more in job creation and development of new more environmentally friendly products. Also, harmonizing standards e.g. in the area of e-mobility or lowering tariffs specifically on environmentally friendly goods could lead to a wider use of such technologies. Others were more skeptical, pointing to a potential dismantling of environmental standards which were considered as barriers to trade in a trade agreement and questioned whether TTIP would bring any added value for the environment, given that governments could also take unilateral action if they wanted to.

There was also a debate on how comprehensive TTIP should be. Some advocated for the inclusion of such topics as data privacy.  However, the potential cost of a comprehensive approach is with regard to timeliness. If partners pick and choose different parts of the agreement, the entire negotiations may fail, or at least will take a lot longer to be completed which again may lead the negotiations not to be concluded successfully, with a view to eventual changes in the political landscape in the EU and US after the next elections.

One suggestion made was that a future partnership should be open and be accessible to other trade partners, and in this way set global standards in trade. A past example is the EU-U.S. Telecommunications Agreement which was first concluded by the two parties, but open to other countries, many of which joined.

Harmonising regulation – an issue for TTIP?

The second panel was on "Comparing Risk Regulation in the United States and Europe" and discussed if and how different approaches to risk regulation and risk perception in the US and EU should be dealt with in a future agreement between the US and the EU. Business representatives suggested that harmonizing regulatory standards would bring major benefits for companies, in particular small and medium sized ones. Norms, standards, and regulations between the two regions are already similar in many respects, but a TTIP could support regulatory convergence on issues such as investment protection, intellectual property and technical standards. It could allow for mutual recognition in certain pre-negotiated areas by recognizing substantial equivalents. In this sense, if a product is tested as safe in certain areas of the U.S., it could be sold in Europe. A second option would be to work together to create new common standards – especially in areas where no standards previously exist like nano-technology. However, it was also questioned whether a TTIP was really needed for these purposes given existing WTO rules on transparency and on mutual involvement of parties in standard-setting as well as the existence of international standard setting fora such as the Codex Alimentarius Commission or mechanisms such as the Trade Policy Review of the WTO, allowing countries to raise concerns over the trade impacts of each other’s regulations. There was agreement that TTIP should not fundamentally change the regulatory systems of either of the parties involved.