Brexit & UK trade, United States & TTIP

TTIP Round 14 held under the shadow of Brexit, leaving out services

TTIP Bercero Mullaney

The EU and the US are holding a fourteenth round of TTIP negotiations. Few expect significant breakthroughs in the now three-year-old talks. Negotiations are deadlocked over bread-and-butter market access issues in agriculture, services, and procurement. Fundamental disagreements persist on rules on investment or on intellectual property rights (geographical indications). The UK’s planned departure from the EU is also casting a shadow over the talks.

 

The foremost aim of this round in Brussels is to come to a common text. Negotiators in Brussels are expected to discuss an energy and raw materials chapter tabled by the EU, and to discuss the institutional framework that will underpin the regulatory cooperation activities that TTIP aims to foster.

 

It is not yet clear whether the US will come up with a second offer on public procurement this month. The EU requested a new offer after it deemed the US’ first offer tabled in February not satisfactory. The EU is seeking waivers on Buy American provisions of railway and highway projects funded by the federal government. Few experts believe the US will offer any concession on this matter this year – a general election year.

 

 

Services in TTIP tied de facto to TiSA & TPP

 

 

But if negotiators manage to come up with a common text this does not mean outstanding disagreements will be overcome. One of these disagreements is services.  Quite symbolically, TTIP’s services market negotiations will be held after the next round, starting on 18 July, sources close to the talks told Borderlex. The date coincides with the end of negotiations being held in Geneva on the Trade in Services Agreement (TiSA) in parallel to the TTIP round. The EU and US are involved in TiSA alongside 21 other countries.

 

Commissioner Malmström said the EU and the US want to achieve “TiSA Plus” in TTIP, in other words to go further than what they achieve in TiSA. In practice both in TiSA and in TTIP the EU and US are sparring over similar issues and it is hard to see at this stage what extra added value TTIP will bring.

 

The EU wants the US to open up its maritime services and to end its equity cap in the telecommunications sector. According to sources close to the talks, TiSA members disagree with the US over the very definition of “telecommunications”, with the US trying to stick to the WTO notion of “basic telecommunications”.

 

The US for its part is not happy with the EU’s second services offer in TiSA. In both TiSA and TTIP it appears the US is trying to reduce the number of individual member state “reservations” in the services schedule of the EU.

 

In TTIP the EU is expected to consider tabling market access commitments in financial services if sufficient progress is achieved in parallel talks held to beef up an existing EU US Financial Markets Regulatory Dialogue to turn it into a regulatory cooperation forum that can actually deliver on dialogue and avoiding new market access barriers.

 

A final fundamental issue in TTIP is whether and how the EU and US will tackle the issue of free data flows. The approval of the freshly renegotiated Privacy Shield by the member states last Friday will now bring the EU to the discussion table on e-commerce in TiSA, of which it was largely absent so far. In TTIP, informal discussions have reportedly already started, on the basis of the text of the Transpacific Partnership that is still awaiting ratification in the US Congress. The TPP’s ground-breaking text on e-commerce – which covers data flows – enshrines the principle of free movement of data, with due respect to national consumer protection and privacy laws. It also carves out financial services. The US is reportedly seeking to avoid carving out financial services in TTIP.

 

 

Brexit shadow

 

 

More broadly this round of negotiations will be overshadowed by a toxic political climate over trade policy – on both sides of the Atlantic. The prospect of the United Kingdom leaving the EU is raising questions as to whether TTIP can be concluded at all, as Britain is one of TTIP’s top champions in the EU. Now entering delicate election periods, Germany and France are currently reluctant to rush into a deal that might not be well received in their respective electorates.

 

Despite Brexit, the Obama administration is keen on moving forward with TTIP. Washington is cautious about stating what kind of relationship it would seek with a UK outside the EU. “We are trying to work towards reaching a [TTIP] agreement by the end of the year”, USTR Michael Froman told Bloomberg on Wednesday. “Right now the focus is really on the UK and the EU, between them, what process is going forward”.

 

Before the US gets into discussing what kind of possible arrangement it would have with a UK outside the EU, Froman said “first we need to know whether they will have sovereignty over regulations, over tariffs. It all depends on what model they pursue. We certainly will do whatever we can to deepen our relationship with the UK, as well as the EU. Hopefully that can mean the UK joining TTIP once it is completed”.

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