5 May 2016

Obama’s TTIP deal with the EU appears to be toast


During President Obama’s recent farewell trip to the UK, much was made of his comment that Britain would find itself in “the back of the queue” for a free trade deal with the US if it dares to leave the EU. The arrogance of that statement caused even moderate Brexit-leaning commentators (okay, me) to abandon calls for a calm response to the President’s involvement in the EU referendum. As the Wall Street Journal put it: having been talked down to by Obama, now the British know how many Americans feel after eight years of it.

There was a seemingly serious point being made by Obama though. It has taken many years to get this far on the Transatlantic Trade and Investment Partnership (TTIP) and sealing that deal is the priority for the US. Leave and Britain will be shut out of a bright, shining future, according to Obama and the Remain campaign.

While the EU supposedly enjoys the wonders of transatlantic free trade a few years down the line, poor old post-Brexit Britons will only be able to read about the wonders of trading with America, weeping over our Apple iPhones, unable to order anything from Amazon. Actually, hold on. We already buy lots of American things or purchase through American sites with operations here? And that’s even without the existence of a free trade deal between the EU and the US? This is a massive problem that requires a Remain vote why exactly?

Now, it looks as though TTIP is toast anyway. It seems Britain will be in the back of the queue for something that is extremely unlikely to happen. Again, I struggle to see how this is much of a problem.

For some time it has been clear there are obstacles to TTIP ever being agreed. In the current populist, protectionist atmosphere in the United States, it will struggle to get Congressional approval. TTIP also looks like a difficult proposition to sell to voters in Europe, where there are deep concerns about it weakening environmental and consumer protections.

But the leak to Greenpeace and others earlier this week of details on the secretive talks showed how far apart the two sides are. “Free trade” talks are really at root about regulation and how the parties trade regulatory standards. While it has long been the American fashion to say that the UK should stay in the EU, the experience of the TTIP talks has exposed the American negotiators to how pervasive EU regulation is. This is not a rant against the EU regulation; it is simply the case that the EU operates to a large extent on the basis of presumption of potential harm (the precautionary principle) and the US approach is generally based on a less stringent risk-based model.

This makes a deal between the US and the 28 member EU tricky to complete. It may even be that it is easier for a single state – let’s, for the sake of argument, call it the UK – to craft a scaled-down deal direct with the US than it is for the European Union in its entirety to agree to US demands. That British option is what David Campbell Bannerman described earlier this week on CapX as a WTO Plus deal.

As Ambrose Evans-Pritchard noted in his latest piece for the Telegraph:

“Weighty principles are at stake. The (Greenpeace) documents show that the EU’s ‘precautionary principle’ is omitted from the texts, while the rival “risk based” doctrine of the US earns a frequent mention. Clearly, the two approaches are fundamentally incompatible.”

As Ambrose says, TTIP being in serious trouble is probably a positive development. In the rush to globalisation, there has been far too much power passed up the line to supra-national bodies. National parliaments have had their powers eroded and to counter populist resentment it makes sense to restore the balance.

Iain Martin is Editor of CapX.