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

June 13, 2013

On June 13, 2013, the AGI Business & Economics Program and the Ecologic Institute hosted a workshop entitled “The New Transatlantic Trade and Investment Partnership (TTIP): A Focus on the Environment” in Berlin. The environment has not always been a main concern in international trade and investment agreements; this event contributed to ensuring that environmental objectives are given proper consideration in the negotiations on the planned trade and investment agreement between the European Union and the United States.

Expected Economic Benefits of TTIP

So far, impact assessments on a future TTIP anticipate major economic benefits. A significant amount of trade and investment between the U.S. and the EU already exists: 30 percent of world trade in goods, 40 percent of world trade in services, almost 50 percent of world GDP, 69 percent of all private research and development, and 75 percent 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 regulated by the World Trade Organization (WTO), as well as 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 in 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. There was a controversial discussion on the need for greater transparency as well as stronger civil society and parliamentary 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 TTIP’s Environmental Potential

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 have some environmental benefits. In particular, governments should maintain the right to regulate for environmental and health purposes, for example. One area of expected TTIP benefits is efficiency gains from harmonized standards, which could enable companies to invest more in job creation and development of new more environmentally-friendly products. Additionally, 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 that are considered as barriers to trade and questioning whether TTIP would bring any added value for the environment, given that governments could also take unilateral action if they so choose.

There was also a debate on how comprehensive TTIP should be. Some advocated for the inclusion of such topics as data privacy.  However, timeliness is essential to successfully negotiate a comprehensive approach. Allowing partners to pick and choose different parts of the agreement risks the success of the negotiations, as well as draws out the time frame for completion, which again may lead the negotiations not to be concluded successfully.  Eventual changes in the political landscape in the EU and U.S. after the next elections could affect the outcome of any TTIP negotiations.

One suggestion made was that a future partnership should be open and accessible to other trade partners, and in this way set world 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.

Harmonizing Regulation: An Issue for TTIP?

The second panel on “Comparing Risk Regulation in the United States and Europe” discussed if and how different approaches to risk regulation and risk perception in the U.S. and EU should be dealt with in a future agreement between the two regions. Business representatives suggested that harmonizing regulatory standards would bring major benefits for companies, in particular small and medium sized enterprises. 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 also be sold in Europe. A second option would be to work together to create new common standards, especially in areas where no standards currently 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, 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. Experts agreed that TTIP should not fundamentally change the regulatory systems of either of the parties involved.