Thank you for your invitation to join you today. I want to thank the ALDE Group for the important work it has done and is doing on TTIP. Many of you have made a contribution, but I’d like to mention Marietje Schaake and Dita Charanzova in particular. I’ve had the pleasure to meet some of you during my frequent trips to Strasbourg.
This Group played an important role in approving a good INTA resolution last week. Who would have thought even a few months ago that such a resolution would be possible? Let’s keep working together to have a rational, factual debate. We need you. I recently read that Mons has declared itself to be a “TTIP free zone” – whatever that means. I also understand that 11 of Brussels’ 19 communes have declared themselves “TTIP free.”
The opponents of TTIP have something valuable that we often lack: they have passion. Facts and statistics are important, but passion will win this debate. And geopolitics can incite passion. That’s why the topic of this panel is so important. Trade is geopolitics. The EU-Ukraine DCFTA made that very clear.
It is likely that Congress will support TTIP. The idea of doing a free trade deal with a region that shares our values and the high standards of health, safety and environmental protections is not particularly controversial. Although the debate about TTIP is yet to start in earnest, we are very unlikely to see US cities declare themselves “TTIP-free zones”.
As I said, I think the focus of this discussion on geopolitics is absolutely right. It is an important component of the trade deal, and furthermore is the few aspects of the deal that appears to attract understanding and support across all Member States and across all political parties. We need to talk about it more. Dan Hamilton has done an excellent job of analyzing the issues in his recent book, The Geopolitics of TTIP.
I’d like to make three points about setting the rules of global trade; energy security; and the multilateral trading system.
TTIP would set a standard for future regional and global deals that reflect the value we place on rules-based trade, high standards, and regulatory transparency and accountability. As the joint statement made by the United States and certain EU Member States at the G-20 Summit in Brisbane states: T-TIP is an “opportunity for us to promote the principles and values that we, as citizens of open economies and societies, share and cherish.”
Much of the opposition to TTIP is borne out of fear of globalization. But globalisation is a fact of life; it cannot be escaped. As Ambassador Froman recently wrote in Foreign Policy, “Globalization would happen with or without trade agreements…There is a real competition over what rules of the road will shape the global trading system…Trade agreements are tools to shape globalization.”
In the Asia-Pacific region, for example, over 200 trade deals have been struck in recent years and more are currently under negotiation. Unlike T-TIP, the vast majority of these agreements make no commitment to protecting labor rights and environmental standards, creating disciplines on state-owned enterprises, and promoting the digital economy.
This is a fundamental message in Europe: either we try to shape the inevitable process of globalization or we will be shaped by it. If we fail, other countries who do not share our values and whose weight in the international trading system is growing fast will set the agenda themselves. As President Obama stated during his State of the Union address this year: “…China wants to write the rules for the world’s fastest-growing region. That would put our workers and our businesses at a disadvantage. Why would we let that happen? We should write those rules.”
There is no doubt that it is in the interests of American and European workers, farmers, manufacturers, service providers, entrepreneurs and inventors for the United States and Europe to work together through T-TIP to actively shape the global trading system and promote a race to the top, rather than engage in a race to the bottom that we cannot win and that we should not run. TTIP would allow us to deepen our economic relationship without compromising health, safety, environmental, or consumer protections on either side of the Atlantic If the United States and Europe want to strengthen their respective economic power and extend their strategic influence during uncertain times, we must make a decision together: either lead on global trade or be left on the sidelines. There really is no choice.
Strengthening our economies through increased trade and investment will actually underscore our shared commitment of our societies to democracy, freedom, and the rule of law. It will make our overall relationship stronger and deeper, and show the world how we can work together for a common goal. Economically and strategically, this shared leadership is now more important than ever.
And that is what the Kremlin hates about this deal. Dan Hamilton has put it so well: “TTIP presents a huge challenge to the Kremlin’s efforts to divide European from Americans. It offers something that the Kremlin cannot match: a transparent, mutually benefical agreement that creates a rules-based framework for international cooperation. A reinvigorated transatlantic marketplace among highly-connected, highly-competitive democracies, whose people enjoy greater economic growth and rising standards of licing, would challenge the Kremlin’s version of “managed democracy;” render Russia’s own one-dimensional natural-resource-based economic model increasingly unattractive; and consign its rival economic project, the Eurasian Economic Union, to irrelevance.”
We know what the Kremlin thinks about TTIP. We know the Kremlin wants to use energy as a political weapon and to keep Europe vulnerable.
Energy is an issue of fundamental importance to the security of Europe. The US is now poised to become a net exporter of natural gas; that shift is having a significant impact on global markets.
Essentially there are two types of export applications – one for Free Trade Agreement (or FTA) countries and one for non-FTA countries. Exports to FTA countries are deemed to be consistent with the public interest, and authorization must be granted without modification or delay. With regard to non-FTA countries, authorization must be granted – with or without terms and conditions – unless the proposed export is found to be inconsistent with the public interest.
The Department of Energy has already granted 7 long-term authorization to export roughly 90 billion bcm of gas per year to countries with which the US does not have FTA agreements; this is an enormous volume, roughly equivalent to Europe’s imports of Russian gas through Ukraine.
T-TIP can support efforts to reform European energy policies and create greater energy security. Under our National Gas Act, if the United States enters into new free trade agreements (FTAs) that require national treatment for trade in natural gas, exports to such new FTA countries would be deemed to be in the public interest. So if the EU grants us national treatment in the energy sector in TTIP, exports of LNG would be facilitated. Natural gas prices in Asia have long been considerably higher than in Europe; in those circumstances, exporters would naturally have sold the gas from US approved facilities to Asia. Now that prices in Asia and Europe are more aligned, some analysts project that at least one third of US natural gas exports will go to Europe.
My final point is that T-TIP is also important because it would enhance the U.S.-EU global partnership in the realm of trade negotiations, and make progress in stalled WTO talks.
Regional trade agreements like T-TIP (and TPP) are catalysts of, not substitutes for, multilateral trade agreements. As emerging economies have assumed greater importance in the global trading system and as non-tariff barriers have become more important than tariff barriers as obstacles to trade liberalization, it has been difficult to get consensus within the WTO. Significant external pressure is needed to invigorate the multilateral process. We believe that a successful effort to resolve disagreements across the Atlantic could become a template for the stalled global trade talks in several difficult areas, from agriculture to cross-border rules on services, investment and regulations.
T-TIP can create positive pressures on key countries to liberalize their own trade policies and shift their positions in multilateral trade talks for fear of being left behind. Early indications are that T-TIP and TPP are serving as a magnet for other countries. We hope that these agreements will encourage other countries to embrace the same high standards and principles. If other countries do eventually join, plurilateral or perhaps even multilateral trade liberalization would have been achieved indirectly.
History supports the proposition that regional trade agreements have pushed countries to liberalize trade on a multilateral basis. Examples include the completion of Europe’s common market stimulating the Kennedy Round and the completion of NAFTA resuscitating the Uruguay Round and stimulating the conclusion of the Information Technology Agreement two years later.