The 13th round of negotiations on the Transatlantic Trade and Investment Partnership (TTIP) agreement between the United States and European Union concluded in April 2016. However, French politicians have been extremely critical of the process, and President Francois Hollande has even threatened to stop it. Is France bluffing?
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The idea behind TTIP is to create a large European-American market. Even though tariffs across the Atlantic have decreased substantially with the introduction of international trade agreements over recent decades, they still average 3 percent ad valorem. Some tariffs remain extremely high, such as the 42 percent duty on textile imports to the U.S.
The central issue, however, is not tariffs, but regulatory barriers. Currently, companies operating within the two blocs have to comply with two different sets of rules that aim to do the same things. This can significantly increase costs. Harmonization or mutual recognition of standards (where they are equally effective, such as for safety belts) seems a rational path.
Access to public procurement should be open on both sides. The Buy American Act, which requires the U.S. government to favor products made in the country for all of its purchases, obviously presents a problem and should be reined in. But the whole point of a negotiation is to identify these hurdles and find ways of overcoming them.
Lowering barriers to trade would increase the size of the market and help business on both sides take advantages of growth opportunities and economies of scale. While the new, increased competition would require adjustments that some fear, the overall outcome would clearly be positive, as the single European market has been.
However, during the most recent round of negotiations, French Prime Minister Manuel Valls announced that “the treaty cannot come to a successful conclusion if it does not guarantee that the standards we have in France for our citizens’ health and environment will be maintained. ... And today we're far from it.” In early May, French President Francois Hollande warned that “at this stage, France says no” to the treaty.
Matthias Fekl, France’s secretary of state for foreign trade, threatened that the halt of negotiations was the “most probable option.” Many French MPs – on the right and left – criticize the talks for their “lack of transparency,” saying they do not have access to the negotiation documents and want the process to stop.
When an EC trade official came to discuss TTIP at the French National Assembly, only three MPs attended
This is a curious attitude. A number of sticking points have been dealt with already: chlorine-washed chicken and hormone-boosted beef will not end up on European plates. And while there is plenty of protectionism on the U.S. side, France was able to remove the audiovisual sector from the agreement to protect its “cultural exception.”
French politicians should know better. France alone cannot stop the negotiations, because EU trade policy is the responsibility of the European Commission. Moreover, since January, the Commission has allowed national MPs to access its documents. Curiously, the French government announced only in May that the documents were “now available for consultation.” French MPs have not demonstrated a particularly deep interest in the topic anyway: when EC Director-General for Trade Jean-Luc Demarty came for a hearing on TTIP at the French National Assembly in April, only three MPs and two assistants attended.
Both the government and the opposition are using the agreement to scare their constituents and increase their own popularity. Free trade is not exactly a favorite cause of the French right or left. The country’s ongoing economic crisis has raised fears about more openness and competition. Opposition to the new Labor Act, although a minimalist reform, has not waned. With presidential elections in a year, the politicians in power do not want to lose more voters to the far left and the right-wing National Front.
President Hollande, posing as a bulwark against the alleged “Trojan Horse treaty,” probably intends to improve his image as a traditional protector and win back some voters with his opposition to the agreement. It helps that the deal is with “imperialist America”: riding the wave of good old French anti-Americanism always pays off.
There is no doubt the presidential campaign has started in France. Such shortsighted political postures will continue to pile up.