TTIP to go faster in Congress than TPP, says US trade expert

As Congress leaders and the White House work around the clock to get TPP-related legislation passed, Brussels observers fear that TTIP will have to ride on the same risky rollercoaster, which could jeopardize its success.

I heard a much more reassuring point of view this Tuesday (June 16) at a Commonwealth Club event in San Francisco. Demetrios Marantis, Head of International Policy and Regulatory Affairs at Square and former trade expert in the Obama Administration*, thinks that TTIP will be processed much faster by Congress.

But before jumping into Mr. Marantis’ reasons, let’s quickly recap what “TPP” and “TTIP” stand for:

  • TPP (Trans-Pacific Partnership) is a trade agreement between twelve countries located around the Pacific Rim, including leading economic players like China and Japan and developing countries like Vietnam. Its proponents in the US expect the TPP to provide opportunities for US exports by decreasing quotas, tariffs and trade restrictions. It will also put the US on a level playing field with other world players, like the EU, that already benefits from bilateral agreements with those countries. Its opponents, especially trade unions, fear it will destroy US jobs.
  • TTIP (Transatlantic Trade and Investment Partnership – you may also have come across its aliases “EU-US FTA” or “TAFTA”, for Transatlantic Free Trade Agreement) is a trade agreement between the US and the European Union, i.e. 28 countries. Since tariffs between the two economic regions are already low, TTIP focuses on bringing standards closer together in order to make the transfer of goods and services easier.

Why should US tech companies care? Both texts will decrease the cost of doing business in the other signatory countries, e.g. by preventing them from requiring to locate data centers in their territory and making it easier to transfer their nationals’ personal data to the US.

So, what’s going on in DC? And why would TTIP’s destiny be any easier than TPP’s? Mr. Marantis’ answer: the TTIP will benefit from the procedural progress already achieved on the TPP.

A foggy roller coaster (photo: P1090394 by Matthew Stinson, Some Rights Reserved: CC BY-NC 2.0)

TPP in Congress: a foggy roller coaster (photo: P1090394 by Matthew Stinson, CC BY-NC 2.0)

In a nutshell, a few months ago, President Obama asked Congress to vote in favor of a Trade Promotion Authority, or TPA. This is also known as “fast-track”, and it is customary in international trade negotiations. This piece of legislation allows Congress and the White House to work hand in hand during the negotiations. This helps avoid Congress tearing down the deal with amendments afterwards. It also provides the US Trade Representative with better leverage, as it shows the commitment of Congress to the agreement. Both the House and the Senate voted in favor of the TPA.

Very often, the TPA is voted jointly with a Trade Adjustment Assistance program, or TAA, which provides support to workers affected by trade agreements. As Mr. Marantis underlined, this type of program has been adopted since the 50s and President Kennedy, and is usually not controversial.

Except that this time, a large group of Senate Democrats opposed to TPP (the Pacific deal) are preventing the adoption of a TAA, in the hope that it will block its joint adoption with the TPA and influence the TPP negotiations. Although it obviously creates problems for the future of the TPP-related process, Mr. Marantis explained that TTIP (the European deal) does not need a TAA, only a TPA (presumably because TTIP will have less of a negative impact on US jobs). And the TPA already approved for TPP is also valid for TTIP.

Beyond piggybacking on the TPP procedural progress, TTIP benefits from a much more relaxed political atmosphere. Relations with Europe are much older and stronger. There is less of a gap between US and EU standards on labor, environment or food safety. TTIP represents, therefore, less of a threat to US jobs and less of a concern to US politicians.

a by-product of MEPs having too much time on their hands”

So we’re all good? Well, not really…

Expect difficulties to appear on the EU side. For one, public opinion in several European countries is not enthusiastic about TTIP, to say the least. This is true particularly in Germany – as highlighted in my previous post on the topic.

On top of that, European Socialists are hesitant about TTIP, in a similar way that the US Democrats are divided on TPP. This became evident on June 9, when European Parliament leaders (Parliament President Martin Schulz and Chair of the International Trade Committee Bernd Lange, both German Socialists), decided to postpone a decisive vote on TTIP.

Without a firm majority in favor of the agreement, Schulz and Lange preferred not to present the text at this stage rather than risk a rejection in Plenary, which would make it harder to get final approval once the deal is finalized.

Rumors have started attributing this delay to another, as of yet unseen phenomenon: a gridlock in the European Parliament. Ryan Heath of Politico EU calls it “a by-product of MEPs having too much time on their hands.” With a dryer legislative pipeline coming from the European Commission, “the Parliament faces no external threat. Now we just sit back on our ideological lines and get gridlocked. Everyone can afford to stick to ideological lines.”

Can the US help? Mr. Marantis cautioned against the US advocating in favor of TTIP in Europe. This would be counterproductive. It is the job of European countries to go out and do their own promotion. The European Commission has been calling on European Member States to do exactly that.

Whether it is due to US Congress politics or divisions among Europeans, commentators agree that TTIP won’t see a happy end before 2016 at the earliest. So buckle up and get ready for a bumpy ride.

PS – if, like me, you are confused by the process and politics in DC and by the various acronyms (TPP, TTIP, TPA, TAA), Phil Mattingly wrote an excellent piece in Bloomberg explaining it all.

*Mr. Marantis only spoke in his capacity as a US trade expert and Former Acting US Trade Representative and Deputy US Trade Representative, not as a representative of Square.