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Sectoral cooperation or how to get back on track after TTIP

First seen as a walk through, then seen as complicated and difficult, and finally viewed as a disaster, the trauma of the Transatlantic Trade and Investment Partnership (TTIP)  negotiations still influence the dynamics of EU-US trade relations, or rather their future.

A less than perfect management of the post-2016 European public debate on TTIP, coupled with vocal anti-TTIP voices and the rhetoric of United States President Trump have all created a situation where very few people are considering the possibility of a Free trade Area between the two transatlantic partners.

There is concern that the disruption of EU-US dialogue is creating a backlog of commerce and trade related issues and that there is a negative spill over from politics to commerce. 

Apart of the bilateral trade dialogue, the EU and US administration view the future of the World trade organisation (WTO) and global trade framework differently. However, though a comprehensive EU-US Trade Agreement is not realistic at present, the EU and US must develop their trade relations in any way they can.

There is concern that the disruption of EU-US dialogue is creating a backlog of commerce and trade related issues and that there is a negative spill over from politics to commerce, which could ultimately adversely affect EU-US trade relations.

Meanwhile, President Juncker and his Commission are unwavering in their support of free trade and the EU is now negotiating new trade deals with other parts of the world: the Commission is submitting the Japan trade agreement for the approval of the European Parliament and EU Member States, aiming for it to be introduced before the end of its current mandate in 2019. The EU is also negotiating a trade deal with Argentina, Brazil, Paraguay, and Uruguay, as part of a broader Association Agreement between the two regions.

Nonetheless, EU-US trade relations should not be forgotten. Together, the EU and US are still the largest economic entity on the planet and cross-continental investments are increasing. Even seemingly small improvements in that flow will create added economic value, and as pointed out several times by Commission Vice President for Jobs, Growth, Investment and Competitiveness, Jyrki Katainen, it is not normal that we negotiate with the whole world on promoting trade whilst not seeking to improve on the current trade relationship with the US.

In addition, on both sides there are strong pro-trade actors. The majority of the European population remains positive about trade and in the US Congress there are strong forces that wish to relaunch the free trade agenda whenever the opportunity arises.

Luckily, the EU and US are still negotiating on sectoral obstacles of trade. The Commission DGs for Internal Market, Industry, Entrepreneurship and SMEs, Health and Food Safety and Agriculture and Rural Development are currently in talks with their US counterparts with the view to future cooperation on cars, pharmaceuticals, medical equipment and tests amongst others. The legal framework for EU and US sectoral cooperation could focus on mutual recognition agreements: focusing on active and regular dialogue in order to adopt common standards.

The majority of the European population remains positive about trade and in the US Congress there are strong forces that wish to relaunch the free trade agenda whenever the opportunity arises.

This has already yielded some positive results. For example, the EU and US have achieved a mutual recognition of test results for pharmaceuticals, which can increase efficiency by reducing paperwork and the duplication of tests. Furthermore, EU and US dialogue being conducted on space-related issues is also showing early signs of success.

Sectoral cooperation is an EU proposal to which the US has previously agreed. Unfortunately, there has been very limited follow-up. The two sides have yet to accumulate enough political capital to advance sectoral cooperation further.

Sectoral cooperation is less controversial than a comprehensive trade agreement and there is the possibility to extend it so long as there is common interest. Even though sectoral cooperation does not sound very ambitious, it gives real economic benefits and keeps the channels of communication open on issues of trade.

However, sectoral cooperation still requires political support and industry pressure. And, of course, commitment from the European political leadership. The steps towards sectoral cooperation may seem small, but they will maintain the badly needed positive momentum and pave the way towards more comprehensive future trade negotiations between the EU and the US.