After TPP Impasse, TTIP Failure is Close at Hand

With US ratification of the Trans-Pacific Partnership in huge trouble, we receive word that things are even worse with the proposed US-EU Transatlantic Trade and Investment Partnership (TTIP). At least an international deal was hammered out with the TPP. With the TTIP, its negotiations have already stalled, leading German Vice-Chancellor Sigmar Gabriel frankly assessing that these negotiations have failed:

The free trade negotiations between the European Union and the United States have failed, but “nobody is really admitting it”, Germany's Vice-Chancellor Sigmar Gabriel has said. Talks over the so-called Transatlantic Trade and Investment Partnership, also known as TTIP, have made little progress in recent years. The 14th round of negotiations between American and EU officials took place in Brussels in July. It was the third round in six months. 

As always, the French are wary of relenting on agricultural protectionism, all the while accusing TTIP of being too favorable to American multinationals (isn't that always the case with these American-led negotiations?) In contrast, the Europeans supposedly don't gain much access to US government procurement:

At the time, the talks were thought to be in trouble after a number of leading European politicians expressed concern about TTIP’s effects and the US’s reluctance to accept changes to the proposed deal. In May, cracks emerged when France threatened to block the deal. President Hollande said he would "never accept" the deal in its current guise because of the rules it enforces on France and the rest of Europe – particularly in relation to farming and culture – claiming they are too friendly to US businesses.

“We will never accept questioning essential principles for our agriculture, our culture and for the reciprocity of access to public [procurement] markets,” Mr Hollande is reported as saying at a meeting of left-wing politicians in Paris. “At this stage [of the talks] France says, ‘No'.” Speaking on Sunday, Mr Gabriel, who is also Germany’s Economy Minister, said: “In my opinion, the negotiations with the United States have de facto failed, even though nobody is really admitting it."

With regard to public procurement, the EU and US are each bragging that they are more open to buying foreign-made supplies. However, the EU points out the difficulties of those wishing to participate in American public contracts--especially at the sub-national level:

According to US Trade Representative Michael Froman, the Federal Government spends approximately $500 billion annually for a wide range of goods and services and the EU has guaranteed access to approximately $200 billion – or two-fifths of federal procurement. This $200 billion is not subject to restrictions like the Buy American Act, the Berry Amendment and the US SME programme.

But here is the [catch]. The EU says European firms face discrimination even on those two-fifths of accessible public procurement. A source in the European Commission’s trade directorate told EurActiv that even though some European companies have found a way to comply with the stringent domestic restrictions and win public contracts in the US, they have been obliged to change their supply chains and even establish their production in the US.

For example, the US procurement market for buses and public transportation is severely restricted for European suppliers, the EU official said. These restrictions are linked in particular to the Buy American Act, which requires that all steel and iron is produced in the US.

Things get even more complicated when going to the sub-federal procurement level, which stands at 60% of total public procurement in the US. While US officials say they provide guaranteed access to EU companies for $120 billion annually worth of contracts, the EU contends that the figure is overestimated.

American inability to ratify the TPP would further discourage its EU counterparts: Even if an international deal is struck, what are the chances of a trade-weary America signing on to TTIP after TPP has been shelved? Slim to none, and the US is becoming a less credible negotiation partner each day TPP is not ratified at home.