A Modest TTIP Deal Not an Option for the US
A modest TTIP deal does not seem to be a plausible option for the US. Firstly, it will provide limited value added for the US, while the prospects of upgrading it to a more ambitious agreement once it has been passed look infeasible. Furthermore, a modest deal will set a wrong precedent and will signal potential US RTA partners that it will compromise on issues it has been pushing for ever since the NAFTA negotiations. This would contradict the trade policy the US has been pursuing for the last quarter century.
The Transatlantic Trade and Investment Partnership (TTIP), under negotiation between the US and EU since June 2013, has stirred a lot of debate and opposition from different groups for its clandestine nature and alleged allegiance to transnational big business at the expense of sovereignty, democracy, public health, and the environment. Given the strong opposition to TTIP, some have argued that, in order to save the deal, agreeing on a limited version of the agreement may be a way forward to secure a formal deal and leave the contentious issues to further negotiations, as the currently negotiated ambitious agreement may never come to a conclusion. A modest TTIP deal, however, is not an option for the US for two reasons.
Firstly, a modest deal with the EU will provide limited value added for the US. As the US approach to regional trade agreements (RTAs) has shown, it is interested in agreements that go beyond tariff reduction and incorporate beyond-the-border liberalization, including strong measures on investment protection, intellectual property rights, and services. Moreover, the prospects of upgrading a modest deal to a more ambitious agreement during further negotiations seem unrealistic. Like it was the case with the Uruguay Round, once a deal was agreed upon, building upon it has proved quite difficult, as the now moribund Doha Round has revealed. Once a new status quo is established (e.g. the Uruguay Round or a modest TTIP deal), moving beyond it becomes difficult as sticking to the new status quo becomes easy, while the option of using the "no deal" outcome as a bargaining chip for an ambitious deal exhausts itself.
As it was argued by Richard Steinberg of the UCLA School of Law, one of the explanations why the Uruguay Round of negotiations was successful and the Doha Round was not, is that against the backdrop of the North-South divide, Northern countries played the "no deal" bargaining chip during the Uruguay Round of negotiations very well. By withdrawing from the GATT 1947, they left Southern countries with the option to either ratify the WTO with its different agreements as a "single undertaking" or be left with the old GATT 1947 that had no meaningful economic significance if Northern countries had withdrawn from it. During the Doha negotiations, however, Southern countries have been able to stick to the current status quo, i.e. the Uruguay Round provisions, and successfully resist the WTO-plus provisions proposed by Northern countries. The stalemate in the Doha Round has, in fact, been one of the reasons why the US started to pursue its WTO-plus interests in RTAs.
Secondly, a modest deal will set an unwanted precedent, prompting potential US RTA partners that it is ready to compromise on important measures, such as strong investment protection, it has been pushing for during the last quarter century. This will constitute a U-turn in US trade policy, which starting from the 1990s, has been promoting "competitive liberalization" among its trading partners. The vast majority of the recently concluded US RTAs go much beyond the WTO and create incentives for others to liberalize if they want preferential access to the US market.
Hence, a modest TTIP deal does not seem to be an option for the US, as it will exhaust an important bargaining chip for an ambitious agreement in the future and will contradict its current trade policy by setting a wrong precedent for its future RTAs.
Davit Sahakyan is a PhD candidate at the School of International Studies, University of Trento (Italy). He has been a researcher at Columbia University (New York) and has an MSc degree in Development Management from the London School of Economics and Political Science.
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