16 May 2013

MEPs present expectations for EU-US FTA

The H+K Strategies Trade practice considers the significance of a preliminary resolution on future EU-US free trade relations, as was adopted by the European Parliament’s Committee for International Trade.
MEPs present expectations for EU-US FTA
Brussels. On 25 April the European Parliament’s Committee for International Trade (INTA) adopted a resolution outlining its exact expectations for a future EU-US Free Trade Agreement; a timely reminder to the European Executive that the European Parliament’s wishes cannot be ignored when common commercial policies towards third-countries are forged. Given its potential to impact trade globally, it is no surprise that third-countries are too are increasingly looking at this potential trans-Atlantic deal with interest and anxiety in equal measure.

Red line issues in the European Parliament

The political effort being invested by both sides was warmly welcomed in the resolution as was the stated intention to conclude an ambitious and comprehensive final transatlantic agreement.  However INTA Members observed that not all aspects of the European economy will be open to negotiation.
Cultural and audiovisual exemptions, for example, must be preserved demanded the Committee – a sentiment echoed by the French Trade Minister in March 2013.  We may also expect to see difficult discussions on agriculture and health issues. In its resolution the committee unequivocally noted that US-EU differences over GMOs, cloning and consumer health must not undermine the EU "precautionary principle".
Interestingly the Committee chose not to voice its opinion on whether or not a future EU-US FTA should contain provisions on the enforcement of intellectual property. In the run-up to the vote an influential group of non-government organisations called on INTA members to support an amendment seeking to omit references to IP provisions from future discussions. The proposed amendment was ultimately defeated when put to a committee vote.   

Having the final word

The adopted resolution can now be shared with the full Parliament for a final vote in plenary. A provisional date in May 2013 has already been set.
It is important to note that even if it were to receive the Parliament’s full support the resolution possess no legally binding authority. That is to say, the European Commission – i.e. the European institution entrusted to lead negotiation discussions with US counterparts – is thus not obliged to take the view expressed in the resolution into account.
That said the Commission is well aware of the political price to pay for ignoring the will of the Parliament having recently gotten its finger burned.
Recent changes to EU law provide that whilst the European Parliament has no mandate to intervene in EU-third party agreement discussions (i.e. it has no role in deciding individual chapters of a trade agreement), it is entitled to reject a proposal by a majority vote.

Lessons learnt from ACTA?

Most people will be familiar with the recent ACTA debacle which now serves as a neat example for illustrating the Parliament’s pivotal role in deciding European trade agreements.
Less than 12 months ago the Parliament outright rejected a Commission proposal to join the international agreement aiming to combat trade in counterfeit goods on the grounds that the civil liberties of EU citizens could not be protected by being party to this agreement.
This very public dispute left the Commission red faced; officials will thus be keen to avoid a similar result this time around.
As a response to criticism that EU stakeholders were not properly consulted when defining the ACTA Agreement, expect numerous FTA focused consultations and feedback sessions to be organised by the Commission in the coming months and years. A closer informal cooperation between the European Parliament and the Commission on FTA issues should also not be ruled out. Having adopted their initial resolution MEPs will be keen to ensure that the Commission incorporate it in negotiations.
Staying with ACTA, it is worth mentioning that concerns that ACTA-like provisions will be stealthily integrated in a future EU-US FTA remain widespread. A quick scan of digital media conversations related to the FTA reveal that privacy advocates are already preparing themselves for a future lobbying campaign on this issue.
Whilst this group may not have the financial muscle to compete with the advocacy resources of multinational corporations, their ability to mobilise grassroots support on sensitive issues – particular via new communication technologies – should not be underestimated.

Impact of potential EU-US FTA on third countries

Other major trading partners of the EU and US will closely follow the negotiations on a free trade pact between the two largest economies in the world. They worry that an EU-US FTA would effectively insulate the transatlantic economy from the rest of the world and, therefore they have been voicing their concerns and undertaking new trade initiatives in recent months. China has recently signed an FTA with Iceland and has been raising the possibility of launching its own FTA negotiations with EU. India has recently become more serious about pushing forward the ongoing FTA negotiations with the EU – as has the Canadian government -, while Japan appears eager to join the Washington-led Trans-Pacific Partnership (TPP). In the meanwhile, EU and US officials have tried to appease concerns arguing that other countries would also profit from this free trade agreement.
These developments also make clear that - despite the Doha round’s stalemate - the world largest economies are still interested in furthering trade ties, but that global trade is getting a make-over.

What’s next?

The Commission will now see how the preliminary demands set out in the INTA Committee resolution can be best integrated in a future agreement. Prior to engaging in official discussions with their US counterparts, the Commission will need to receive the so-called ‘negotiation mandate’ from EU Member State governments.
With the notable exception of France, this ought to be a relatively straight forward process. Large Member States including Germany and the United Kingdom are said to be particularly keen to ensure a speedy conclusion.
EU Member States are expected to present the Commission with its mandate in June 2013.

Related contacts :

Joost Koomen
Director Public Affairs

email: joost.koomen@hkstrategies.com