Evaluating the Costs Imposed by Open Negotiations
While the transparency in the TTIP negotiations is discussed from a democratic perspective, bargaining problems are neglected for the most part. From a bargaining perspective, open-door negotiations can increase costs for negotiators from backing down and reduce the latitude to negotiate. However, closed-door negotiations run the risk of failed ratification which is why there should be consultations with the legislative branches and stake holders over the results obtained.
Since the beginning of the negotiations over the Transatlantic Trade and Investment Partnership (TTIP), beside genetically modified food and the investor state dispute settlement, the lack of transparency is a main point of criticism by opponents of the TTIP, especially in the European Union. The critique is not only problematic from a democratic perspective, but it also contradicts the self-image of the EU. In regard to trade agreements, the EU Commission actually pursues an approach which aims to strengthen the participation of civil society in partner countries. In this context, the EU Commission refers to its own standards as good example. Thus, lacking transparency damages the EU's argumentative power. However, it is neglected in the public debates that, from a bargaining perspective, open-door negotiations can cause problems which make it difficult for negotiators to find an agreement.
In bargaining theories, public demands or threats can impose costs which negotiators suffer ex post when they back down from their own demands or threats. Thus, public demands and threats tie the hands of negotiators and reduce the latitude to negotiate. There are two arguments which are famous for this kind of costs: audience costs and reputation losses. Audience costs mean that the constituency will punish a political leadership for inconsistency between its words and deeds. According to the reputation argument, backing down from threats or demands causes a loss of reputation and decreases the credibility of negotiators for future demands or threats. Thus, negotiators refuse to back down in order to prevent such losses even when backing down would be the better option in the current bargaining situation. For example, after the EU Commission had put the negotiations over the investor state dispute settlement on hold, the US chief negotiator Dan Mullaney declared that the United States insists on the inclusion of such provisions because otherwise countries such as China would also demand the exclusion of these provisions in future trade negotiations.
These arguments, however, should not be considered to excuse for the lack of transparency or participation, rather they refer to the problems of open-door negotiations. In addition, it seems that the EU Commission is concerned that opening the negotiation process at an international level could increase the complexity of the TTIP negotiations and could make it impossible to find an agreement. Yet, this strategy can also backfire. For example, the negotiations over the Anti-Counterfeiting Trade Agreement show that neglecting pluralistic interests can cause massive public protests which finally lead to a breakdown of negotiations. Furthermore, it is no rarity that international agreements become renegotiated after their signing because of critiques by the legislative branches, changes of government, or public protests. For example, in case of the Terrorist Finance Tracking Program, the European Parliament rejected an interim EU-US agreement because it did not give sufficient consideration to the concerns of the European Parliament regarding the privacy protection of EU citizens. Thus, aside from democratic concerns, secret negotiations behind closed doors can cause problems for the ratification process and increase the risk of a negotiation breakdown.
For these reasons, the EU Commission should improve its efforts to strengthen the transparency in the TTIP negotiations and participation of the European and national parliaments, as well as its stake holders during the international negotiations. However, because of the above-mentioned bargaining problems, this does not mean that the negotiations between the EU Commission and US administration should be completely transparent, but that there should be consultations of the executive branches with the legislatures and stake holders before, during and after every negotiation round over the results obtained. It is especially important that the TTIP negotiations lose their pro-business bias in order to increase the legitimacy of a possible agreement. Otherwise, the EU Commission risks a breakdown of negotiations during the ratification process. The transparency and participation in the TTIP negotiations is not only important because of democratic principles and the probability of a later ratification but also for the self-image of the EU and its argumentative power in foreign relations with other countries.
Dr. Holger Janusch worked as a researcher for political science at the University of Wuppertal where he wrote his doctoral thesis over US trade negotiations. Now he works at the Centre for Transformation Research and Sustainability (TransZent).
This article was published in the first of three theme weeks for our project "TTIP: Myths vs Reality". An introduction of the articles for the week can be found here, and introductions of the other two weeks can be found at the top of the TTIP Forum.
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