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Trade

Is Europe sacrificing its consumer standards?

The third round of negotiations for the transatlantic trade treaty (TTIP) is over. The American and European negotiators are happy, but critics are alarmed.

Both sides appeared pleased when the third round of negotiations for the world’s biggest free trade zone, the Transatlantic Trade and Investment Partnership (TTIP), which wrapped up in Washington D.C. last week. Delegates from the United States and Europe convened here in July this year to begin negotiations, and met again last week to resume talks.

Twenty-four working groups dealt with the complex issues of financial services, investments, labor laws, and regulations. The talks showed that both sides were particularly interested in the automobile industry, as well as chemicals, pharmaceuticals, and telecommunication technologies.

"The US and the EU agreed that they need to be able to develop regulations without compromising the level of protection," the European Union's chief negotiator Ignacio Garcia Bercero told DW. This, he said, hadn't been clear in the second round of negotiations.

Difficulties remain when it comes to regulating financial services. The German conditions are too weak for the Americans, who don't want financial services included in the negotiations at all. "We think it would be paradoxical to create a strong agreement to enhance cooperation between European and American regulators and and a sector like financial services is critical," said Bercero.

The EU negotiators are interested in reaching an agreement for the energy and commodities trade. "It is extremely important for us to get a clear guarantee that US exports of gas and oil will be guaranteed to the European Union," he said. At this stage Bercero didn't want to comment on the outcome of the negotiations.

Growth, investment and employment

Bill Frenzel

Frenzel says you have to change your strategy to get what you want in such negotiations

This is no surprise for William Frenzel, former congressman and member of the Brookings Institution think tank in Washington. "The two gladiators are feeling each other out and seeing what each one needs and how deeply they feel those needs," he said. Especially in such trade treaties nothing is really decided until the end. "If you put too many things out there as being accomplished, I think you may get some surprises in the end," said Frenzel. "Because in the end you may have to trade one of those off to get something else you want more."

Both sides expect more growth, investments, and jobs from the partnership. Already low tariffs will be removed. Standards and licensing procedures will be unified. There will be standardized plugs for electric cars, for instance. According to the Munich economic think tank IFO, the treaty will create up to 110,000 new jobs in Germany alone, and up to 400,000 jobs in Europe.

Both sides hope the partnerships will set global standards, and keep emerging economies like China, Brazil, and India at bay. In terms of the European debt crisis, there was some cause for joy in the expected 0.5 percent increase of the European GDP.

Europe and the US already generate more than half of the global economic output and they are already each other's most important trade partners.

Chlorine-washed chicken

Some non-tariff obstacles are also to be removed to further increase trade between the US and Europe, including consumer and environmental protection standards and food legislation. Critics fear that Europe will sacrifice its high standards, though as the third round of talks came to a close, negotiators claimed this wouldn't be the case.

Lori Wallach, lawyer and director of the Global Trade Watch at Public Citizen, the world's biggest consumer organization, has observed trade negotiations since the 1990s. She is not against trade treaties in principle - common standards, for instance, can mean that products don't need be checked twice. But she says the TTIP's negotiations are not based on the highest standards, but the lowest. Under the new agreement, chlorine-washed chickens and genetically-modified food could be sold in Germany without labelling.

A trolly stands next to a supermarket cashier
(Foto: Rolf Vennenbernd dpa/lnw)

Genetically manipulated food in German supermarkets?

"The agenda for this negotiation really has been set by the largest US and EU corporations. It's very clear that this is an agreement about making them more profitable, about making it easier for them to operate under one standard, the lower standard. And that is not in the national interest, that's not in the public interest. That is not a benefit for most of us," said Wallach.

Wallach also criticizes the establishment of courts of arbitration, known as the investor-state dispute settlement (ISDS), where companies can take action against countries if the companies fear for their investments. These courts are meant to provide security for companies that invest in developing countries without reliable legal systems, not in places where such systems are already in place, such as the US and Europe.

According to Wallach, another problem is that once the treaty is signed, not a single word can be changed if all partners do not agree. "So it locks into place a system of policies that may or may not suit the needs of the people living with the results," she said.

Results in 2014?

Chief EU negotiator Karel de Gucht and his American counterpart Michael Froman will draw their initial conclusions at the beginning of 2014 in Brussels and meet with different lobby groups. The next round of negotiations is planned for March.

Wallach and Frenzel think that the ambitious goal signing a deal by the end of 2014 is unrealistic. Not only do ,any issues unrelated to trade also jeopardize the treaty, but the US Congress, the EU Parliament and all 28 EU member states have to agree to it.

DW.DE