Transcript
Will TIIP Happen?
Jeffries Briginshaw
Managing Director, British American Business
Shawn Donnan
World Trade Editor, Financial Times
Chair: Jean-Pierre Lehmann
Professor Emeritus of International Political Economy, IMD
9 June 2014
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2 Will TTIP happen?
Jean-Pierre Lehmann
So good evening, I am Jean-Pierre Lehmann, Emeritus Professor from IMD in Lausanne
in Switzerland. I founded something called The Evian Group, take it, well again, I’ll have
to go a little bit more, which was focusing on trade and society, trade and development,
inclusivity and these kinds of things. So I’ll be chairing this session tonight which is on
TTIP and the question we’ve had of the day, as some of you know, today, of discussions
entrée’d and it’s been a lot of discussions on the pros and cons of TTIP and the question
here is, will it happen? I mean does it matter whether it’s great or not if it’s not going to
happen? So that’s going to be the subject for discussion and I’ve told my great panellists
that they can’t just answer ‘yes’ or ‘no’, they have to say when.
It’s very easy to say, ‘yeah, it will happen’, and I’m wishing my grandchildren that they’ll
enjoy it when it comes in about 2032. So the format we’ll use is that we’ll take a few
provocative statements and then we’ll open up for furious discussion and obviously we
want to get into the pros and cons as we go along. It will happen because or it won’t
happen because or, or, but it is a very important issue to get a sense of what the trade,
future trade agenda will look like.
So we have Jeffries Briginshaw and I’m told you have the biographies, right? Yes, so he’s
Managing Director of British American Business and he’s going to be taking the floor first
and then we have Shawn Donnan who is the World Trade Editor of the Financial Times.
You may have seen he has an analysis article today called ‘Hard Sell’. So you can decide
when he’s talking if you want to listen or just read but I’m told he disagrees now with
what he wrote yesterday. Anyway, Jeffries, please.
Jeffries Briginshaw
Thank you very much and good evening to everybody and thanks very much for the
opportunity, Chatham House. I know that at various points today TTIP’s come up and so
if I at various points just sort of provide a little bit of the background detail, then excuse
me and accept my apologies if it’s repetitive. It probably fits into the argument that I’m
going to make and it won’t be for very long when I do do that.
My answer is ‘yes’, a deal will be done and some time in late 2017 or early 2018 but now
coming to the breakdown, as you say, to kind of break that down into a conversation and
sort of four or five points that I think when we put them back together might lead to that
conclusion. I want to take you through, if you want, something of an unofficial stock take
of where we are a year almost into formal negotiations. Look at the case for TTIP, we visit
that a little bit. Look importantly I think at what’s missing and why we risk losing TTIP
and what we can do about that and why we won’t, in fact, lose it.
Talk a little bit about what in my organization we’re trying to do to build the case for
TTIP. We’re strong supporters of an ambitious and comprehensive agreement. Not
particularly to advertise what we’re doing but because it’s relevant, I think, to the analysis
that I hope to bring you. Then, in particular, to talk about a national road show campaign
or set of meetings, short of a campaign that we have and what we’ve really learnt from
those as the prelude to a couple of conclusions.
3 Will TTIP happen?
So on the unofficial stock take, well we know the negotiations are nearly a year in, 5 th
round just a couple of weeks ago. An aim to conclude in a couple of years on a full tank of
gas etc and the full tank of gas would be 2016 and so, one tank of gas rather, before the
next presidential election. That looks pretty ambitious. The May round looks
workmanlike, has been described and I think we can believe that it was successful in a
sense of progress being made. I took away a couple of points from my reading on various
people’s write-ups and this is not sort of in any way sort of comprehensive. I just noticed
that while there was a lot of hard work on regulatory cooperation both at a horizontal and
sectoral level, that’s pretty important, that there would be progress there for the business
community, so that’s good news.
The energy potential for TTIP, obviously in the context of the Ukraine and Russia is being
talked up, so it’s not surprising that some of the descriptions of what was talked about
included that. That’s going up the TTIP agenda as it were and that you can sort of begin to
see, I think, at least, sort of sensitivities emerging and Shawn’s talked about these and will
talk about these, I’m sure. Also some symmetries, if you want, between some of the big
asks that are there and so, you know, one of the big asks from our perspective, European
Business is that there’s substantial access to government procurement markets. You can
begin to see a world where the federal government, which also has federal money
pumping through the state system could be helpful with that federal money in the state
system and so could help with that particular ask that’s so important to particularly some
parts of the European business community.
On the other hand the ISDS issue, the investment issue, which wouldn’t have figured
probably at the beginning is something that would have to end up as a big ask, has
certainly come to be a big issue for the US in the sense of saying, well, it’s pretty
important that we do have that. So you can see that the sensitivities are growing, the
symmetry of asks is there but workmanlike progress. I’m not going to spend much time
on the scope, the formal scope, we can come back to that if we need to.
In terms of an overall sort of take on where we are, I certainly feel that the negotiations
are moving very quickly, with priority, at a speed which is unusually speedy for such trade
negotiations, so that’s one fact, speed. High level political leadership is still evident. Has
been evident right from the beginning, it’s a feature of this particular trade negotiation
that has been strong leadership, not just from the US but also from leading European
heads of state, including our own but also Chancellor Merkel.
Another factor I’d say is that sort of scepticism in senior parts of government. Senior civil
servants who have really seen this before and seen the many attempts that many of us
have been involved with over the years to build a framework for regulatory cooperation
for meaningful transatlantic economic cooperation and I think are giving this trade
negotiation the benefits of the doubt. That’s important that the weight of civil service,
wherever that is, is behind the priority that we now see in the negotiations.
I’d say as well also that the negotiators are performing with agility and I think they’re
doing a good job. I think they’re behaving in ways that you’d expect of really well trained
trade negotiators from organizations DG Trade and USTR who know how to do this stuff.
I think they’re behaving with extraordinary transparency. I think there have been more
4 Will TTIP happen?
stakeholder meetings involved in this negotiation than I can ever remember in any other
trade negotiations, so I think they’re behaving with exemplary transparency.
I think the agility is evident in the way that they kind of, you can see in the architecture
they talked about sort of symmetry of ask but there’s a kind of also, I would say, a kind of
flexible scoping so that things are both in and out at all times. I think that’s probably not a
bad thing that data is a subject that concerns citizens, business, government, everybody.
Not formally inside the negotiations but I don’t think anybody believes that it’s not
important. So it is a subject matter but it doesn’t have to be in TTIP for it to be the subject
matter of importance between European and American governments.
So flexible scoping, financial services out but, you know, language about frameworks that
could be useful included which would not mean scoping in but would deliver benefits to
financial services coherent, you could say financial services regulatory coherence. Then,
you know, a positive step by the commission to launch a consultation around the
investment, the investor state dispute resolution mechanisms.
So flexibility and agility by negotiators and then coming back to this issue of looking at
the case for TTIP, it’s a big trade negotiation, we all know that, with people talking about
strong macro-economic credentials. We’ve seen studies over the years, OECD, Ecker is
saying one per cent, three per cent global GDP on both sides. Great, so the macro case is
there, it’s got geopolitical credentials, geo-trading architectural significance and potential.
All of those sort of big words and sort of big logic is there in abundance.
The cost of failure because of the statement of those sorts of bigger aspirations is also
equally visible in terms of lost credibility, so that’s another factor. I think, quite frankly,
most people are impressed and should be impressed by the scale of the economic benefits
available. We know that in the UK that’s been counted at about 10 billion and we get the
point also that this is a trade deal for the UK that’s open as a member of the European
Union and which is unlikely to be available and certainly isn’t on the table if Britain isn’t a
member of the EU.
All of that’s, I think, the easy bit and now we come onto really the difficult bit in the losing
TTIP part or not making the case sufficiently strongly part. I think this is sort of the
interesting thing because of course big numbers don’t always sort of translate into big
results and I’m seeing Owen Tudor there and of course he taught me that line actually and
I think mentioned it right from the beginning that we’ve talked big numbers before and
they’ve not always been delivered.
So there’s not only a credibility problem with big numbers, there’s a delivery problem and
there’s a question ultimately of attainability. Is there a package that’s doable, negotiable,
sellable, politically, is it there, can it be done? It’s not simple, it would have been done
before if it was. On the business side I think we’ve taken a relatively business as usual
approach in our advocacy. We’ve drafted our position papers, our statements and I think
we’ve explained why we think it’s a very good idea that we should do an ambitious and
comprehensive trade agreement. That’s about it.
What we haven’t done and I think we should do is that we haven’t managed to
communicate, if you want, an overarching set of positives. We haven’t really talked in
5 Will TTIP happen?
innovative ways about evidence or how we could present evidence. So we haven’t really
captured the high ground of why this is a good idea. I mean sure, we haven’t really
campaigned broadly across, beyond our sort of traditional boundaries or tried to
significantly influence let’s say broad assuasive of public opinion. So there’s a gap, if you
want, emerging between the macro-logic, the macro-political leadership, the geo-political
credibility or potential and if you want, the sum of the parts evident which we’re
presenting.
Into that gap, I think, there’s amorphous entry of interest groups and I’m not talking
about sort of institutional interest groups, civil society or labour or consumers but
generally campaigning interest groups who, in my respectful view sometimes provide
quite flimsy logic for some of what they’re saying. They certainly have emotive ways of
doing that, are able to make those points without really being refuted.
Of course they do exactly what I think people should do which is to begin to examine the
micro-cases. It’s all very well, but it’s 10 billion and when you break it down to 500 Euros
per family, that doesn’t sound very much, well it is and it isn’t. It’s like, you can argue
about whether that’s worth having or not but certainly they’re looking at, well, what is the
case here and is it that great and that’s reasonable.
So you could be pessimistic given all of that and I think certainly when you look at views
from institutionalized civil society, not just business, but members of parliament, unions,
sort of the pragmatic centre ground from unions, I’m sure they’ll speak for themselves,
consumer groups. My sense is that they’re saying, well, you have to do more. You’re going
to have to do a lot more to convince our members in these cases that this is really worth
having. In particular I think legislature is saying, well, help me here. We get why this
might be a good idea but what can you do to really provide that kind of overarching
reason why this is different and this is good.
So that’s not something so far of business we’ve really stepped into and done but I think
we should do. So this comes onto what’s my organization doing about it and hopefully I’ll
be very quick. I’m sure I’m running out of time.
Four things. One is a kind of a traditional policy approach, submitting priorities to
government and that’s great, hopefully saying things that are sensible, reasonable and
useful. Secondly we think that the role of legislators in this country in supporting the
scrutiny of the governments work on this is really important. So we’re trying to be helpful
to a group of legislators focusing on TTIP and that’s good.
We’re hoping and trying to have a conversation through a kind of blog space, social
media, with civil society through our website www.tradeinvest.babinc .org and we have a
national road show campaign and we’ve been visiting regional cities since March 2013. I
want to very briefly just capture some of the learnings from that road show campaign
because I think they’re germane to this question of what is it that could sell TTIP and
what is it that could make a difference in terms of building that bigger case that could link
things up here in this country.
So most of the road shows in Leeds, Manchester, Glasgow, the places you’d imagine them
to be have had majority SME attendance. So it’s not multinationals, multinationals have
6 Will TTIP happen?
communicated their positions to government and will be listened to or not, as the case
may be. We’ve been meeting medium sized enterprises tending to be medium size rather
than micro-enterprises. Interestingly, the stories that they all tell and almost in every
meeting in every city they’ve said the same thing which is what you read in the impact
assessments which is that they’re ambitious to export and to do business in the US and
that they do suffer disproportionately from the regulatory barriers that the negotiators are
trying to dismantle.
So that’s quite comforting and pleasing that that’s what we’re all trying to do. It also
interests me from our point of view, throws a, shines a light on, if I’ve got one more
minute then I’ll be done.
Jean-Pierre Lehmann
55 seconds.
Jeffries Briginshaw
55 seconds, shines a light on the reality that they’re doing business today, not in five years
time when a trade deal negotiation might get done, so they’re much more interested in
obstacle removal in the short term rather than the long term of trade negotiations.
They’re interested in the benefits to them of any trade deal specific, local and tangible.
So finally, conclusion, yes, I think it will happen, at any given point the negotiators, you
can imagine, could cut and run and do a tariff only deal with some kind of process
roadmap that says, you know, we will look at this sector or that horizontal aspect of
regulatory cooperation and declare victory and then I think we’d all look at it and see
whether it’s credible. That it is a victory or not. I suspect that in that position we will be
saying that, you know, the benefits and reasons why we wanted to do a comprehensive
agreement still stand and we want that.
What do we need to do to support that comprehensive and ambitious conclusion? I think
we’ve got to look at the local picture, build from the grass roots, make the case, win the
arguments and give support to legislators and other actors in civil society who are openminded but need the centre ground to be filled more effectively.
Jean-Pierre Lehmann
Okay, great. That’s wonderful to kick this discussion off. I’m sure there’ll be a lot of
questions and reactions and so on, so 2017/2018 it will happen and it will be substantial.
It’s not just a cosmetic thing, it’s going in the right way, the right direction, it’s going to
make a difference. Great, thank you very much. Shawn?
Shawn Donnan
So I’m in the kind of privileged position today because how many people here were here
for the day’s conference, just raise your hands quickly? Okay, good. Not so many. So you
didn’t see me up here before, and that was all under Chatham House Rules and this is all
on the record so I’m going to completely reverse my position.
7 Will TTIP happen?
No, I’m in the privileged position of, someone in the last session of the last conference
said, I’m the first speaker to speak in opposition to TTIP and this was very much in this
for or against view of TTIP. Well I’m in this wonderful position that I don’t really have to
be for or against it. I’m just this observer and I’m just kind of watching this thing unfold.
I’m the sort of the anthropologist watching the two tribes meet and what’s fascinating
about that is to watch, you can take a slightly longer term view and you can look at the
body language and how things have changed.
If we go back a year when this was launched at the G8, when David Cameron talked about
it and Barack Obama talked about it, talked about the hugely ambitious agreement, it
wasn’t just ambitious and comprehensive. This was something that was going to fire up
the transatlantic economies, it was going to turbo-charge the European economy, I think
David Cameron said at the time. It was really sold hard and it was sold also as this idea of
a 21st century agreement. I’m still, I’ve been covering trade now for nine months. I still
don’t know what a 21st century agreement is and I’m waiting to find out very hard.
What’s clear is that we are kind of entering a, what is going to be, and all of the people
who have done trade for a long time will know this, it’s taken me a while to learn it, we’re
entering these kind of long, hard negotiations. It’s going to be ugly and quite dull for quite
a long time and that’s something that we really need to keep in mind as you think about
how, whether this will happen.
Which gets us into the, will it happen and when. Probably and the reason is, you know,
the Prime Minister of the UK said it would, so perhaps it will. The President of the US
wants it, it’s clearly a pillar of trade policy there. There’s a great geo-strategic argument
for it which you hear more and more in the wake of the Ukraine crisis. Less people,
referring less to China, more to Russia and what’s happened in the Ukraine and to energy
and the need to balance the European needs for gas with gas, with Shell gas from across
the sea.
So I think there is this kind of great political will and strategic case to get this done and it
will get done at some point in the next few years. I’m hedging my bets there. No, but I
think one of the things that’s interesting is to hear a tank of gas defined differently as you
kind of go through time. It’s now, I think you’ve got a hybrid engine, at some point and
it’s going to extend for some time. I think the original description of a tank of gas was
married by in the life of this commission from Commissioner De Gucht which runs out in
November and that’s the end of this year.
It’s clearly not going to happen there. Everyone now talks about the end of 2015, Angela
Merkel, the negotiators and so on, and that’s important mainly because of the US political
calendar, if it doesn’t happen then, it probably won’t happen in 2016 which then takes you
to 2017/2018, the next presidency and we have a new commission by that time. I don’t
know.
So I think that’s the kind of, the broad thing that I’m keeping in mind. When, it was
launched with great fanfare and we’re now in this kind of, we’re in the hard yards that
we’re five rounds in. TPP which may or may not be concluded at some point, this is the
great Pacific Rim Deal, the 12 country Pacific Rim Deal that is the kind of, the pacific
strategy of the Obama Trade Policy. It went through 29 rounds I think before they
8 Will TTIP happen?
stopped counting and it became official policy to stop counting because it was becoming
kind of a burden that it was starting to pop up in the press that they’d done 29 rounds and
hadn’t gotten there yet. So we’re five rounds in, we’re a long way from that 29 and that’s
worth keeping in mind.
I’ll make a couple of points and then I’ll refer it back to you Jean-Pierre but one, the
politics over the next six months I think are really important in terms of getting this deal
done and that is two big questions. What does the European Commission look like after
these parliamentary elections? Clearly there is a huge debate about what it should look
like among the member states right now. Now the Trade Commissioner is about the third
or fourth down the line or possibly further down the line in terms of appointments but it’s
a game of 3D chess. It’s really, it’s hard to figure out what that will look like and what the
new President will look like.
The second thing is the mid-term elections in the US. There’s a very real possibility that
the Democrats will lose control of the senate in November. That will change the dynamic
in Washington and on Capitol Hill for what is called ‘trade promotion authority’ or ‘fast
track authority’ which the President has now struggled to get from its Democratic led
senate. Harry Reid really put the kibosh on that back in January. Harry Reid being the
majority leader in the senate, the Democrat, the top Democrat in the senate.
So I think the next six months will really determine and are very important and we need
to watch those carefully and we are at the FT. The other issue is one that was brought up a
couple of times today and is one of the things that is really hard to figure out and that is
the kind of public mood and this issue of trust after the financial crisis. Does anyone trust
governments or regulators anymore? We know they don’t trust bankers but they still put
their money in the bank. It’s something that we really need to figure out and that gets
into, people often talk about, some of my colleagues in the press talk about ‘rising
opposition to TTIP in Europe’.
I don’t know that it’s rising opposition. The polls that I’ve seen don’t show me rising
opposition. What they do show me is an increasingly vocal opposition which may lead to a
rising opposition and I think that’s something to watch as we go there, as we go along. In
the US the US is occupied with other things now in terms of the Trade Agenda but at
some point, you know, watch for the day that the Tea Party congressman of Tennessee
stands up on the house floor and says, ‘President Obama is trying to make us all turn into
Europeans’. That is a moment when you’ll see a different dynamic, possibly in the politics
there.
What is it all about? I think that’s the other thing to keep in mind. There is a real tendency
and that’s what I write a little bit in the piece today, to get sort of down into the weeds and
into these 19th century issues. I start with the great story of parmesan cheese. Apparently
there are 245,170 cows around Parma that produce the world’s parmesan. Every year they
produce 3.2 million wheels of parmesan and I think that’s wonderful but the fact that
we’re thinking about that and that we’re talking about that gets us away from the bigger
issue of the trade deal which is that this is about tying two enormous economies together
and building a stronger alliance across the Atlantic.
9 Will TTIP happen?
That’s how the deal was sold initially. There is this strategic case for it as a response to
China, as a response to Russia and what is happening there, but there is also this logic
that makes a lot of sense. There is a narrative that says President Obama really pushed
hard on his trade policy after he got into office but behind closed doors, when he got in
and he turned to Mike Froman who was then a bigwig in the White House in terms of
international economic policy and said, hey, you know, what’s this trade policy all about.
What’s going on in Geneva at the WTO, what’s that all about? Is it working?
They came up and he sent Mike Froman and a few others away and they went and they
came up with this idea that actually the multilateral negotiations in Doha, they’re not
going to go anywhere for the foreseeable future, this is after the collapse of 2008 of the
talks there. Therefore we need to inject some kind of new impetus into the global Trade
Legalization Agenda and hey, there’s this thing that New Zealand and a few other people
are doing out in the Pacific called the Trans-Pacific Partnership. We should get involved
with that and the Europeans keep asking if we might be interested in doing something.
So he started pulling this together and I started, I think in lots of vivid images and so
when I, Jagdish Bhagwati, the great trade economist used to talk about the noodle bowl
or the spaghetti bowl of bilateral trade agreements that were going to ruin the world and
take us away from the great multilateral agreement, all these bilateral things. I think we
sort of, we’ve given up for the time being or the WTO is trying, but sort of half trying to
get the big multilateral deal but actually there’s a push on now to come up with, and I’m
sorry, it’s a kind of cheap analogy but the ravioli plate rather than the spaghetti bowl or
the noodle bowl.
In other words, have a couple of overlapping, big, regional, mega-regional things on your
plate with some red sauce on top and that is going to be advancing the cause somehow in
terms of setting the rules. It would probably be an advance on where we are in terms of
global trade liberalization. I’m going to stop there but I think there’s also just one thing to
keep in mind as you talk about TTIP or as you think about TTIP and that’s this idea of a
living agreement that somehow this deal will be cut but when it is cut that will begin a
process which is when we talk about regulations across the Atlantic. They will be more in
line from here on out. It’s about the future. It’s about liberalizing the future as much as
dealing with these things now and in the past.
Jean-Pierre Lehmann
Okay, wonderful, thank you very much. Well I’m going to open up to the floor. I would
ask you please to introduce yourselves and to be succinct because we want to try and get
as much discussion/interaction going as possible. If you can ask a question or make a
statement, if you are making a statement start with your conclusion and if you’re making
a question start with the question rather than the rationale before it can follow. I’ll take
three or four questions and we’ll do various routes, so John?