France and Germany Call to End Trade Talks

By Antonia Colibasanu 

Aug. 31, 2016 

The politics surrounding EU-U.S. free trade negotiations emphasize the divisions in the EU. 

German Economic Affairs Minister Sigmar Gabriel said Sunday that the Transatlantic Trade and Investment Partnership (TTIP) negotiations between the EU and the U.S. “have de facto failed.” Yesterday, French Foreign Trade Minister Matthias Fekl added that France will call for negotiations to end. The TTIP as proposed would be a vast, complex economic agreement between the world’s two largest economies. The failure of these negotiations is not surprising and confirms our prediction that the EU’s power is disintegrating. Moreover, this turn of events, underscores the division between Western and Eastern Europe.

The TTIP negotiations started in 2013. The comprehensive trade agreement between the two major global partners was meant to both enhance the EU-U.S. relationship and help the EU overcome the economic problems that emerged after the European debt crisis emerged in 2009. Considering the geographical area covered and the substance of the agreement, the TTIP would take the concept of economic integration to a new level, with a potentially huge impact on the global trade. It has been considered the EU’s most ambitious international trade project. But the EU’s integration is not fully completed. The European sovereign debt crisis created socio-economic problems that put pressure on the political elite and fostered Euroskeptic sentiment throughout the Continent.

Both France and Germany will have general elections next year, and the TTIP has become a campaign topic. The German anti-TTIP camp (various non-governmental organizations, but also the nationalist party Alternative for Germany) has announced a large protest set for Sept. 17 against both the TTIP and the EU-Canada Comprehensive Economic and Trade Agreement (CETA). In France, National Front President Marine Le Pen has been the most outspoken politician against the agreement, calling it an “atomic bomb” for the French economy. In April, before the latest round of negotiations, she asked French President François Hollande to refuse to negotiate. As mainstream parties compete with growing Euroskeptic parties for political support, they must adapt and respond to the public. Brexit taught political parties throughout Europe that they need to listen more closely to public opinion and less to the elites. 

Protesters rallying against the TTIP and CETA free trade agreements march on the eve of a visit by U.S. President Barack Obama on April 23 in Hanover, Germany. Sascha Schuermann/Getty Images 

The major claims against the TTIP are the lack of transparency in the negotiation process and limited protection for national producers and consumers. The anti-TTIP camp has claimed that the U.S. would get more from the deal than the EU, and said the lack of transparency is meant to hide the fact that the agreement will force the Europeans to give in to American rules. Though they don’t have specific data to support their argument, the opponents of the TTIP are still saying that the EU Commission is not properly representing Europe’s interests. With Europe’s current socio-economic problems as the backdrop, protectionism is gaining ground.

This protectionism is further propelling European disintegration. Politicians have changed their stance toward the EU. Not only are they ignoring EU policies, they are challenging Brussels to please their electorate. In truth, since the negotiations continued over the summer, and taking into consideration the U.S. election season, they were not likely to yield any results until the end of 2016 anyway. But the campaign speeches didn’t mention that, especially since the TTIP has become unpopular for the public and therefore an easy target.

The TTIP negotiations are not the only European trade talks showing the weakening of Brussels’ power. In the immediate aftermath of Brexit, we've seen the EU Commission shifting its stance on the CETA, following calls from France and Germany. The agreement will now have to be approved by national parliaments, instead of going through the simple ratification procedure, which would have raised the EU’s credibility and avoided a long process and potential vetoes. CETA and TTIP were supported by the U.K., which already has strong commercial ties with the U.S.

While Germany’s leadership role in the EU has been growing as the economic crisis continues, it became even more apparent after the Brexit vote. Germany does not want to be seen as assertive, but it can no longer avoid it. Berlin needs to keep Europe together for the sake of the German economy, therefore it needs to lead. France is similarly interested in maintaining a functional EU, considering its own socio-economic and security dependencies on the other member states.

Therefore, Germany and France feel responsible for the evolution of the EU, while also making decisions based on their national interests. Just two days after the Brexit vote, the foreign ministers of the founding EU member states issued a statement recognizing “different levels of ambition amongst Member States when it comes to the project of European integration.” The 27 member states will discuss the EU’s post-Brexit future at a summit on Sept. 14. But Germany, France and Italy already discussed the future of the EU during a trilateral meeting on an Italian aircraft carrier on Aug. 23.

Meeting on an aircraft carrier was meant to tell the world that the EU still has defense capabilities without the U.K. But EU security is in fact militarily dependent on the U.S. through NATO. Calling for a halt on TTIP negotiations is supposed to convey to the German and French electorates that the EU doesn't bend to every American whim. On the other hand, most of the Eastern European governments in the EU – the Baltic countries, Poland, Czech Republic, Slovakia and Romania – support the TTIP. For them, the TTIP means enhancing transatlantic relations. For these countries, forging commercial relations with U.S. companies and investors is not only a boon for economic development, but also for ensuring strategic security and military relations.

The perception of security risk is increasingly different in Western and Eastern Europe. The west is concerned with internal security challenges relating to terrorism, while the east sees Russia as the main security threat. It is likely that the news on halting TTIP negotiations will be disturbing, though maybe expected, for the Eastern European EU members like Poland and Romania, which have each developed strategic partnerships with the U.S. These countries understand that the TTIP, or any other signed treaty, would not have created the economic ties needed to support strategic, long-term bilateral relations. Such treaties only facilitate the relationship. To the eastern member states, the news is not disturbing because the negotiations have “de facto failed,” but because such news relates to the de facto disintegration of the EU. The east perceives the west as no longer appreciating transatlantic ties – at least not to the same extent they do. They translate this into the potential for growing Russian influence and heightened security risk in their neighborhood.

The TTIP negotiations were expected to last for a long time. It was also expected that the ambitious agenda proposed at the beginning would not be fully realized. As with any trade agreement – especially one that aims high and covers such a large geographical area – optimism for rapid and efficient implementation is low. The EU’s problems – which the TTIP was supposed to help solve – were expected to make negotiations difficult. After Brexit, domestic concerns based on socio-economic problems have grown. Calls for protectionism have increased national governments’ power and weakened Brussels. While political calls to halt the TTIP negotiations may or may not have a real impact on the negotiation process, considering that an agreement was not expected to happen this year anyway, they mean much more as a harbinger for the future of the EU. And the way that the EU evolves will establish the relevance (or lack thereof) of the TTIP – or any other international agreement that the EU may choose to sign.