Q&A Will TIIP Happen? Jeffries Briginshaw Managing Director, British American Business World Trade Editor, Financial Times Chair: Professor Emeritus of International Political Economy, IMD 9 June 2014 The views expressed in this document are the sole responsibility of the speaker(s) and participants do not necessarily reflect the view of Chatham House, its staff, associates or Council. Chatham House is independent and owes no allegiance to any government or to any political body. It does not take institutional positions on policy issues. This document is issued on the understanding that if any extract is used, the author(s)/ speaker(s) and Chatham House should be credited, preferably with the date of the publication or details of the event. Where this document refers to or reports statements made by speakers at an event every effort has been made to provide a fair representation of their views and opinions. The published text of speeches and presentations may differ from delivery. 10 St James s Square, London SW1Y 4LE T +44 (0)20 7957 5700 F +44 (0)20 7957 5710 www.chathamhouse.org Patron: Her Majesty The Queen Chairman: Stuart Popham QC Director: Dr Robin Niblett Charity Registration Number: 208223
2 Will TTIP happen? Q&A Question 1 I m one of the campaign s group who have taken this position and my conclusion is, to get there first, that this will fail because I think it s a stage too far for people in the same way as the multilateral agreement on investment failed in 1998 when the same issues of investment were brought back to the WTO, it caused the first crash in 2004 after the Cancun Ministerial. Then when they tried it in the western hemisphere it failed in the FTAA. So I think this is actually a stage too far and despite complete belief in what Mr. Cameron says, I think he s wrong on this one. I was going to go to Jeffries because you re the first person actually today to have mentioned the macro-economic case. I think that s actually a very important point because people have drawn away from that as the macro-economic case has crumbled and you re the first person to have mentioned the fictitious 10 billion pound figure, particularly because, not just of the difficulties in the CPR study but because it was based very squarely on gains in the chemical sector. The chemical sector was the second most important in all of those projections and now we ve seen from the European Commission that they re not expecting any regulatory coherence or harmonization in chemicals. So I think as that s begun to fall the 545 per family figure has been disavowed by Carol De Hoogte who wished it had never been brought up. You will have seen the YouTube clips of him being widely embarrassed in terms of the labour costs, the labour projections and our own government when Ken Clarke, when we met with him, completely disavowing any of these statistics and saying, you d do right not to mention them. I think as all of these cases crumble, that s when people realize that actually there s nothing behind it. So that s why it will fall. Okay, thank you very much, that s great. Rod? I should have said to wait until the microphone comes before speaking, so that you can think before it comes. Question 2 Yes, it s better to think first. I have one question because we, in the last session in the conference we started to get commentary from what I would call civil society, NGOs, unions, it s obvious, if you want to have bits of particular views and so my question would be to both panellists, do you have any real evidence of the spread of civil society as it stands, other than in the UK [indiscernible] but what we don t know, at least I don t know is whether this is really replicating over the whole of the EU. Now we also of course know that there s a lot of concern on things like [indiscernible] and being told that 40 per cent of young Spaniards are out of work and no doubt the picture would be dramatically increased both in that specific area, but what I don t know and I m asking you is whether there is really a [indiscernible] real spread of civil society concern about TTIP across the [indiscernible].
3 Will TTIP happen? Q&A Question 3 Thank you. I just want to give you my own prognostication TPP has to happen before TTIP and TPA has to happen before TPP and it s not going to happen in this administration. In order for TTIP to come to fruition I think we need to consider an alternative infrastructure, alternative to this single undertaking. I would like to get your reactions to the idea that we have with perhaps a three tranche negotiation where instead of negotiating and reaching remedy for 24 issues all at once we do eight per year every two years, something to that effect. Secondly I m curious to know whether the British American Business Council is, have raised the issue of Jones Act reform in the US. I m interested in trade liberalization from a consumer and a tax payer perspective, not really from a business perspective, so I m aligned with European business interests as an American and I d like to know whether the Jones Act is on your radar. Okay, thank you, we ll take one last question over here. We ll take two last questions and then we ll have another round, but yes? Question 4 I don t know whether the figure of 10 billion dollars or 10 billion is right or not or the figure of 500 per family or however robust those figures are but my instinct is that you couldn t possibly have a deal of this kind being implemented without very substantial economic gains. One of my concerns, however, is with the perception, at least, that in relation to the two politically and humanly quite important areas of environmental protection and consumer protection, this looks like a one-way street. The general perception is that the European is going to have to give up quite a lot of protection, for example, in relation to the use of growth hormones in beef and pesticides in agriculture and so forth but that the United States won t under any circumstances increase their levels of environmental or consumer protection to match the current EU standards or to reach a compromise with the EU on these matters. Is that perception of a one-way street accurate or not? Okay, thank you very much, great question. So, the gentleman there, last question and then we ll get some answers and move on to the next bout. Question 5 What concerns me here is that first, TTIP won t happen, it won t happen, you can forget about it. The danger is that as you push forward for it, the tank of gas is leaking on the floor and you re stood in the tank of gas playing with fire. Forget UKIP, they re a joke, the front National, 25 per cent of the vote, Golden Dawn, 10 per cent of the vote, free Democrats in Denmark, we are going to lose all the trademark agreements that we have if you try and push, if you reach for too much, you will lose what we ve already gained. I
4 Will TTIP happen? Q&A think that is just a risk that you should not be taking with. You should put out the fire, step back and re-think it because this is not going to happen. Okay, thank you, that was succinct. So, you go first, then Jeffries, then we ll have another round. Well, look, it would be a great shame if you put an end to this tonight because I d be out of a job. Look, all joking aside, I think there s a very real question about whether this might happen. My answer is probably and that s based on kind of the body language from the leaders. The fact that somebody like Francois Hollande when he goes over to Washington now, this is a French socialist, talks effusively about TTIP and about wanting it to happen and that geo-political case that s there. I don t know what it s going to do. You can hear from my accent that I m not from around here. I don t know what s going to happen with the UK and in its relationship with the EU. I m watching with great fascination on that front. The question of, is this civil society opposition that you re seeing in the UK replicated or you should go to Germany. This is nothing. This is really, and it s having an impact on policy. The fact is, and it s not, in Germany I think it s reflected in the media coverage, the big think pieces, the TV panel shows and so on, but it s also reflecting on social media and what we have seen, the episode with ISDS, the Investor State Dispute Settlement, which is the idea that foreign investors could take a European government or a US government to an international arbitration panel if they have a problem, under TTIP, the opposition to that has been fanned by social media. It s actually flowed through to TTIP from TPP and actually activists south in Australia. Question Are you talking about social media or political parties? Social media, civil society, political parties, all three and actually civil society and political parties as reflected on social media. I don t think you can make that clear division anymore. What has happened with the EU/US negotiations is that the European Commission earlier this year was forced to put the investment negotiations on hold because, to hold a consultation, because it was getting frightened of the opposition that started growing in Germany. The German government was telling it that it was a bit concerned about the opposition, that it s growing in Germany, to ISDS. There s some very real opposition there. I didn t mean to play that down in any way but I do think, and it s clearly having an impact in how that travels over the next six months is very important. The Jones Act Dan, it isn t going to happen in this one. I mean that is
5 Will TTIP happen? Q&A more toxic politically in the US than ISDS as in Europe, I would have thought. The three tranche negotiations, I think that s a really interesting idea. That s certainly the way the WTO is, you hear a lot of people talking about breaking up the single undertaking. That seems to make sense in terms of the living agreement but it s out of my hands. Jeffries Briginshaw So let me take the macro-case, the investment issue first and then come back to some of the other points. I ve got to tell you, I believe in the macro-case. I think business believes in the macro-case, I think business believes that it will make some of the macro-case. I think that when you look at the studies and I have, they talk about attainability in the studies. So Ecker s talk about maybe one per cent chemical sector this, that and the other. Certain kind of presumptions and assumptions are made just like in any study but they re after 5,500 interviews. Ecker has said maybe there s 1 per cent there, in OECD 2006, different bases, but statistically credible, methodologically reasonable. Then politicians and governments can do what they want. They can disavow, they can step back, they can step in and I understand really why they re stepping back because in a way, is that the issue? Is it 10 billion, is it 10.1, is it 9.4, is it a gain? I believe so. I think that our reading of the evidence is that there is but the question is attainability and that s what I said right throughout the remarks that I made. It s about attainability. Can you get the deal? Can you get the package? Can you convince people who may lose something that it s worth having? So I think yes, the case is there, but that s not the only thing and then politicians can do what they want with that basic evidence but we certainly believe in it. Investment, you know, again, you weren t surprised to hear that certainly our organization believes in investment content, believes in dispute resolution mechanisms, investor state dispute resolution mechanism. I think that s entirely normal that you d expect in an investment agreement where investment is so important in a transatlantic economic relationship where you know there s a trillion dollars just between this country and the US on both sides that people would be interested in investor protection from a kind of conceptual point of view. The facts on ISDS, there are very, very few cases, governments would actually win most of them, sort of on the NHS, there s no suggestion that any policy change or policy likelihood would implicate an investor state dispute itself. So we re in favour and people will make what they want of it. Companies want ISDS because they don t want to have to argue with governments, you know, across a public domain where they might be sensitive to that. So they prefer some kind of predictable mechanism where they can bring a dispute in some kind of predictable way. So people will make what they want of it but certainly it seems normal that you would include protection in an agreement that is so much, where investment is so important. Quickly just on two or three of the other points. Single undertaking, I ve got to say that a single undertaking route is a kind of prelude, sometimes, to that cut and run for benefits and say, well, okay, we ve got some tariffs here, or the use of the single undertaking mechanism avoids this. I think it should be retained because, you know, the risk is that the negotiators could say, well, let s just take the tariff part here and that s worth X and so
6 Will TTIP happen? Q&A let s do that. I think the sort of structure of the agreement is comprehensive ambitious through the single undertaking, is worth keeping. Jones Act, I agree, we re not going to get any, we re not going to make any progress on that, but there are a whole series of areas where business, British business, for example, is interested in doing more business in the United States where they currently can t. Whether that s aviation, telecom s, you know, there are lots of sectors where there is not complete and free access to the marketplace. So there are plenty of areas where I think we can make progress short of trying to unwind something that has such historical pedigree and political sensitivity. Scepticism, yeah, you could be right. Now all I can say is that when we ve been out there talking to small businesses and small businesses are interesting because they are the same people. They vote and they sometimes share some of the same scepticisms about bureaucracy, about markets, wherever they are. Having been saying that, they ve been ambitious to trade and do business. Now this is not the kind of grand scale vision of society that we see in elections but certainly they haven t been saying that. I just wanted to come back in, if that s okay, just very quickly, just a couple of things. In terms of your point about the consumer standards and so on, which also links up a little bit with the discussion on ISDS and investors. I think one of the really interesting things about the debate over TTIP is how black and white it is sometimes and actually the reality is it s like a big, muddy, grey screen there. It s all, it s shades of grey on everything. ISDS is really interesting. There was a case earlier this year that we wrote about where Al Jazeera is lodging an ISDS case against Egypt over the fact that it has jailed its journalists in Egypt and it s looking at this as its last recourse. They say, hey, we ve lost several hundred million dollars of our investment into Egypt because of this crack down on the press there. So it s a freedom of press issue there. These things aren t all kind of multinational corporations chasing, governments own shaking its hand then but the other thing is - Speaker [Indiscernible] Well, Qatari government s record, Al Jazeera has actually been bloody good on the Arab spring and they ve got some incredibly courageous journalists who are banged up in Cairo right now, so I wouldn t be throwing mud at them. The consumer, the consumer case, the consumer standards case, I think, again, it s in this black and white motion, this idea that US standards are somehow always weaker than European standards. Now I have an American accent, I m actually Australian and I don t have a dog in this fight but, you know what? My wife is American and thinks you Europeans make lousy washing machines and thinks that the washing machines that are made in the US are that much better. People who have lived in the US will say to you, I would love to have access to
7 Will TTIP happen? Q&A American washing machines here, you know. There s also the reductionist nature of it, also ignores the fact that you have states doing very wildly different things in America. California has been setting the omission standards for the US for many years now and it has, they re not European but they re higher, they re certainly higher omission standards than they are in Michigan, home to Detroit and you ve got Vermont recently who passed a bill whereby they re banning trade in GM beef, in GM foods, in Vermont. Now Vermont s a tiny state but it s got a different, they, by the way, don t like the geographic indicators because they re a big cheese producing state and they d like to make some cheddar. This side and then the gentleman, then you pass it right behind you, we ll go over here. Question 6 I just want to pick up further on Shawn s last point about regulatory standards. Oh, sorry, in answer to the question, yes, that was going to be the first part. In terms of regulation, I do just want to go into that further. There are a lot of areas, we re not hearing about it in this country. You re hearing about it in the US, there s an awful lot of areas where they re saying, yeah, we don t want the EU standards here, we d like our own standards. Now that s a challenge but it s also the opportunity and why I give a yes answer is that there are so many of these examples where we re hearing from companies. So for example their product has to be tested twice, once in the EU, once in the US. Why is that? Now surely we should be able, you know, you can do something about that and even in discussions I ve had with civil society, people on the issues, they kind of can come round to that issue and say, okay, I can see it for that but actually you re going to do X, Y and Z, which is probably not going to happen. So I think that the whole, there is a bit of a myth out there that EU standards are always higher. It s just not true. Question 7 These issues all the speakers have skirted around, you all mentioned it but you ve skirted around it is of course regulatory affairs and particularly the issues in agriculture and food. These are crucial, you re going to have TTIP, you re going to have to sort them, but you re going to have to do it in public, not behind closed doors. If you do it behind closed doors civil society will continue to believe that you re up to no good and the difficulties of getting it through the European Parliament will only grow. So if you look at some of the stuff that is printed in America, you ve got the American power lobbies putting pressure on the President to say that unless you get us better access to Europe, GMOs, hormone beef, you name it, and the new one that s coming up the block, antibiotics in animal feed, which is leading to super resistant bacteria. These issues cannot just be shovelled under the carpet. It will be interesting, how do you propose to sort them to get TTIP -
8 Will TTIP happen? Q&A Question 8 So my question is from a perspective of global trade liberalization and I d like to know what you would call a successful outcome from TTIP. So if TTIP is concluded, what needs to be in there in order for it to be called a successful agreement and that from a perspective of third countries? A lot of talk about knock-on effects of TTIP for other countries and there was talk about the WGO process, negotiation process being stalled and TTIP acting as a catalyst basically for that process. So what would the agreement have to look like in order to be that catalyst for other countries? My particular interest, of course, would be regulatory coherence, so regulatory convergence and that goes back to the previous speakers point about finding solutions to clear differences and views on certain food safety standards and hormone treated beef that was mentioned also by the member of the House of Lords. If you cannot solve and this morning there was a lot of talk about not being able to solve these issues and maybe finding a living agreement, a process based outcome that would just talk about regulatory cooperation and no substance basically. So a difference between a substance outcome of this agreement and a process outcome. If it s a process outcome, could that be called a successful agreement in terms of WGO and other third country perspective? Question 9 I ll try to be brief but now I have suddenly two points. First of all, my name is Steven Cooney and I m a member of Chatham House but I retired a year after, thirty years Washington as a lobbyist and congressional researcher. Well, the company that I, in the 1990 s I lobbied for Siemens and I will just say to Mr. Donnan that, some of my former colleagues at Siemens would take grave exception to your comments about the European washing machine - I should have said except for Siemens - Question 9 Yeah well, well now it s Bosch Siemens, they re a joint venture in home appliances, Bosch, Siemens, [indiscernible]. More seriously, the other comment is that unfortunately I worked long enough ago that I remember the TAFTA. So the question I have to you, I raised this question once to John Jackson who used to be the leading American expert on the GAP and under GAP rules no regional trade agreement is legal if it does not include all or substantially all trade. Basically one of the issues in the 1990 s was that you could not get a US/EU agreement that included agriculture and that killed the idea of the TAFTA. I mean there s just no way to get an agreement, so I would ask the question, following on from the gentleman s question about regulatory affairs and going beyond just regulatory, what about the whole issue of trade, subsidized exports in agriculture, which is legal
9 Will TTIP happen? Q&A under the GAP, but that would have to be changed and how would you handle that and can that be included in this. Thank you very much. Question 10 This is specifically to Shawn and you mentioned the spaghetti bowl and one of the ways to solve that or try to solve that is through the convergence of agreement. For Chile, our participation in the TPP process, one of the objectives is that, you know, try to harmonize, try to converge all the [indiscernible] in terms of basically the rules for [indiscernible]. My question is, you mentioned TPP, like part of the Obama strategy for the Asia Pacific, as in opposition that the Obama strategy to the North Atlantic. My question is are those two agreements going to be completely different, are they going to be completely different [indiscernible] or are they going to be some sort of convergence between those two agreements. Thank you very much. Okay, thank you very much. We ll get the responses from the panellists. If I may, I want to ask a quick question to the panellists also because it interested me that all day today talking about TTIP and again this evening, we re not talking, we re talking about the relations between the EU and the United States as being sort of constant. You mentioned the fact that Laurent was saying that TTIP is a great thing but Laurent Fabius, as Foreign Minister is saying that, you know, that we have this BNP Paribas affair, I don t know whether that s just all spoke. I suspect that if the German s are less keen on TTIP than they were a few months ago according to Bruce [indiscernible]. It may have something to do with the timing of hacking into Angelo s telephone and so on. I think somebody has written about this that there is as much tension between the two as there is harmony and whether it s going to be a sort of a pop door thing to be able to push this. So let s do a reverse order. So you go first and then Jeffries. I ll start with your question because you re sitting next to me. The - It s a Chairman s question. It s a Chairman s question, you should always address the Chairman first. I think you re absolutely right. I think that there is a tendency to view Transatlantic relations as a kind of constant and it s a comfortable relationship. It s got its tensions but it s, either talking about old Europe or new Europe, as the previous President did, but I think there are inevitably going to be other things that are going to spring up along the way that are going to threaten these talks. I think the BNP Paribas example is fascinating. For those of you
10 Will TTIP happen? Q&A who don t know, this is the US Department of Justice is about to reach a settlement with BNP Paribas for its behaviour, historical behaviour whereby it was helping businesses get around financial sanctions in regard to Sudan, Iran - Speaker Cuba. Cuba as well and a few others and they ve come up with this, the leaks out of that are that we could get a fine of 10 billion dollars, whoever gets BNP and BNP has gotten the whole French government involved. The French Central Bank President has been over to lobby US authorities. Hollande brought it up in his meeting last week with Obama on the sidelines of the G7 and [indiscernible] just brought it up as well. Now there s a very real difference of systems thing here which is that the US President is not allowed under the separation of powers to intervene in the judicial proceeding. There s nothing Obama can do and I think the French have a hard time understanding that. What s interesting here is the by-line. [Indiscernible] earlier this year as part of a cabinet reshuffle that was viewed as a great move for TTIP, was given responsibility for TTIP. It was taken away from [indiscernible] and his moves that changed the Trade Minister to a more trade friendly personality. This was after the trip to Washington, it was a great view that the French government was therefore going to be much more on board the TTIP and now all of a sudden you have this. That s also against the context of what is happening in European elections with Marine Le Pen who before Fabius had tied the BNP Paribas saga to TTIP and warned that there should be consequences. So I think that that absolutely is something that we need to keep in mind. TPP and TTIP are they completely different fields? I think you may have better insights and see more documents on the TPP side, being in the Chilean Embassy but I think the view in Washington and the view of some others engaged in these big projects there is that some day we might be able to stitch these together. So what s interesting with the Canada EU deal that s being negotiated now, it s very specifically being negotiated in a way that it could fit together with an EU/US deal and that s important. Then if you think about Canada and their role in the negotiations, they re also involved in the TPP negotiations, one of the NAFTA countries and you can see a stitching together that that would happen on that. So it s not going to be easy but I think the view is that if we can stitch together these ravioli, we can get something that gets us close to a multilateral agreement at some point. Lasagne someday, maybe, yes. I m getting signals there.
11 Will TTIP happen? Q&A Okay. Yes? That s fine, I m happy. Jeffries Briginshaw So just to close really quickly. Regulation, effective regulation, not harmonization, sometimes that will be to the higher level. Business doesn t really care as long as it s going to comply to one standard, that s going to be a saving. So effective, some higher standards, that s fine. Agriculture, food and transparency, absolutely in favour of maximum public transparency in the negotiations. I think we re seeing good efforts at that. What that doesn t mean is sort of real time exchanges of negotiating positions, that doesn t seem reasonable. In essence, what we re looking for, I think, what we d like to see is kind of a mixture of progress on meth0dology, how regulatory authorities work together, progressive at sector level and then some political deals on extra access. So that s what would work for us. Global trade, growth is good if TTIP delivers growth, then that s good for global trade. Open source add on, so people can join TTIP if they want and really, finally, on TAFTA and the failure to do TAFTA. That s certainly the kind of, there was a technical interpretation but there was also political interpretation and I kind of, I certainly believe in where there s a will there s a way and if the politics is right then you can get the technical sort of part working and that s even true of France. Okay, thank you very much. I think one thought maybe is our friend from the University of York was raising the question about, you know, what if, if it fails and I m not going, I m just going to leave this as a question to think about while you re having a drink, or two or three. You know, we ve seen virtually every initiative in the Trade Agenda fail so far, and my concern, in a way, is both, if they succeed and if they fail. If it fails, where are we? What will that do in terms of confidence in the system. So there are, we ve had some very good answers. There are still a number of questions out there and of course we live in extremely uncertain times and other [indiscernible] and other whatever and other whatever, the Black Swans. I mean the Black Swans are absolutely all over the place, whole flocks of them. So please join me to thank the panellists for this very, very, thank you very much.