The Atlantic Council hosted European Commissioner Karel De Gucht to speak on the latest developments as the United States and European Union negotiate a landmark Transatlantic Trade and Investment Partnership (TTIP). Atlantic Council Chairman Jon M. Huntsman, Jr. provided introductory remarks.
Governor Jon Huntsman
Federal News Service
JON HUNTSMAN: Good afternoon, and welcome, everyone. I’m Jon Huntsman, the new chairman of the Atlantic Council, my maiden voyage, so cut me a little slack today. I’m delighted to have joined the Atlantic Council at such an interesting and exciting time for the trans-Atlantic relationship and the trans-Atlantic economy in particular. So as a former governor, ambassador and deputy U.S. trade representative, not to mention a career in business, I’m keenly aware of the positive impact trade and investment can have on a company, state, or relations between sovereign nations.
The Transatlantic Trade and Investment Partnership that the United States and European Union are currently negotiating has the potential to become the largest trade and investment deal ever negotiated, covering fully 47 percent of global GDP. Along with the United States’ efforts to promote trade with many countries across Asia and Latin America through the Trans-Pacific Partnership, TPP, T-TIP represents the most ambitious American trade agenda in at least a generation, if not ever. Moreover, trade liberalization represents one of the very few bipartisan goals and policy priorities that are left here in Washington, for those of you who are interested in actually getting things done.
Despite the overwhelming economic benefits on the table, here at the council, we like to think of T-TIP as far more than a traditional free trade agreement. Indeed, these negotiations mark a singular strategic opportunity to revitalize the trans-Atlantic relationship broadly, providing a powerful economic counterpart to the greatest military and security alliance the world has ever known. By revitalizing the world’s two largest economies, the EU and the United States, we can powerfully demonstrate to the world that a system based on strong protections of intellectual property, labor and environmental rights and the rule of law can still succeed and serve as a model for others to aspire to.
T-TIP will go well beyond the classic approach of removing tariffs and opening markets on investment services and public procurement. Its most ambitious goal aims at making EU and U.S. regulations and technical product standards more compatible, whether through mutual recognition of each other’s rules and regulations or streamlining the regulatory policymaking process for new rules in the future.
An ambitious T-TIP agreement could create over 740,000 jobs in the United States alone. This is only taking into account increased trade between the U.S. and the EU. With anticipated increases in European foreign direct investment, those numbers will only grow.
Moreover, a series of sector-based reports we’re releasing in the coming days that analyze the specific impacts of T-TIP on key sectors that drive the U.S. economy, from communications to motor vehicles to manufacturing, show that T-TIP has the potential to dramatically boost American exports across all sectors. This is vitally important, as jobs tied to exports tend to pay more, are highly skilled and sought after and drive international competitiveness.
Clearly, an ambitious T-TIP is a project well worth fighting for, even though many traditional trans-Atlantic disagreements, like genetically modified foods or differences in data protection policy, are both well-known and well-entrenched. It is my sincere hope that we will see more advocacy efforts from the Obama administration, leaders on Capitol Hill and influential voices from Brussels, Berlin, Paris, London and the rest of Europe coming out strongly in favor of this agreement. Both the United States and Europe have a lot to gain here.
On that note, I’m delighted and honored that we are joined this afternoon by the leading player in the EU when it comes to T-TIP, European Commissioner for Trade Karel De Gucht. Commissioner De Gucht has come to the council directly following a series of meetings with U.S. Trade Representative Mike Froman, where they have discussed the current state of play in the negotiations and planned out where the two sides are headed from here.
Ambassador Bob Kimmitt, a friend of 20 years, is also here and will be moderating our conversation. Bob is a very influential member of the Atlantic Council’s board of directors who has done great work on trade and investment policy for many years. Bob, we thank you for being here and joining us today.
Let me just note that our event here is on the record and is also being live-streamed online.
Karel De Gucht was appointed as European commissioner for trade in 2010. During his political career, he has served as a member of European Parliament, the Belgian Parliament, Belgian minister for international trade and Belgian minister for foreign affairs, among many other distinguished posts. In 2009 he became the European commissioner for development and humanitarian aid.
Thanks again, one and all, for joining us here today. This will promise to be a very stimulating and important conversation.
To the commissioner, the floor is now yours. (Applause.)
KAREL DE GUCHT: Good afternoon, Governor Huntsman, Ambassador Kimmitt, ladies and gentlemen.
I’ve been here these last few days to talk – to take stock, with Ambassador Froman, of our negotiations for a Transatlantic Trade and Investment Partnership, or T-TIP, or T-TIP, as we call it in Europe. Either way, it is good to see we are already achieving conversions as people stumble over the acronym on both sides of the Atlantic. (Laughter.) However you want to – however you want to say it, we’ve been in formal negotiations now for about eight months, and it was time to see how far we have come.
And I’m happy to say that Mike and I agree things are on track. Our negotiating teams have taken a close look at all the issues on the table. They have identified areas of common ground, and they have marked out the areas that need more work. And there are some. Certainly the marked out areas are still larger than the common ground, but we now have a clear picture of the whole field.
The consequence is that the next phase is going to be harder. This is where real negotiations begin. If you want to finish on the now proverbial single tank of gas, our message to our negotiators is that we need to step up – (inaudible) – unless of course the price of gas is going to go even lower. I would like to use my remarks today to go through what that will mean in practice, but also to remember why that work is so necessary.
European Union and the United States have a shared goal for this (deed ?): to clear new paths for small, medium and large companies to do business in ways that create jobs and growth, fully respect people’s rights as workers and consumers and protect health and safety and the environment. To meet that goal efficiently and effectively, we have divided the negotiations into three different areas. We have work to do on all of them.
The first area is market access for goods, services and public procurements. And this, we exchanged our first tariff offers. Our average tariff levels may be low, but we need to keep our ambitions high. That means tackling the high tariffs that do remain, and it means making sure that we remove duties quickly so that our economies start feeling the benefits as soon as possible.
On services, we are still preparing our offers, but I am confident we will be able to exchange them soon. We both know the huge potential for greater services trade and the importance of high-quality services to the rest of the economy. That’s why we both have high ambitions for new markets opening and for commitments to keep services markets open, as they are today.
We also need to make steady progress on public procurements. Opening markets here offers significant economic gains and greater government efficiency. Our objective should be to remove discrimination between European and American firms in either of our markets.
And all three aspects of the market access negotiation are equally important. It is essential we move forward on all of them in parallel in order to keep a good overall balance.
The second area of the talks we need to work on in the coming months is what we in trade world call rules. I’m thinking of the vital work we are doing on trade facilitation, which will take the EU and the U.S. customs systems even beyond what they just agreed at the World Trade Organization Bali ministerial. We know that specifically smaller companies find the complex system of fees, charges and security restrictions especially difficult to navigate.
I’m also thinking of the hugely important disciplines we are establishing on state-owned enterprises. Setting a high standard is crucial for our efforts to encourage other trade partners to play by the same rules as we do in terms of government support for business.
The same goes for rules on raw materials and energy. We are best served if markets are regulated in a transparent manner and there are no restrictions on trade in raw materials and energy. Restricting exports is classic beggar-thy-neighbor politics that undermines the common good and has no place in trans-Atlantic trade.
And I’m thinking of the crucial issues of labor and the environment. We need to make absolutely sure that trans-Atlantic trade and investment supports, rather than undermines, our high standards on these substantial and sustainable development issues.
We will not sacrifice them for commercial gain. On the contrary, this agreement offers the potential to go beyond what we have been able to include in previous trade agreements on these issues.
The final area we need now to work on is certainly the most difficult but also the most important: reducing regulatory differences to facilitate trade. It’s difficult technically and difficult politically. The technical difficulties are obvious. In what we might call the good old days, trade negotiators only had to work with tariffs and quotas. Those are fairly simple tools to understand, as are the effects of changing them. However, if as trade negotiators we want to deal with regulatory issues, our discussion suddenly becomes broader and much more complex – broader because it is obvious regulators, not trade negotiators, are in charge of regulations, so we will get nowhere without their full implication in our work; more complex, because if we want to make trade easier without undermining the objectives of the regulation, then we need to come to grips with all areas – all new areas of policy.
You must understand and respect the purpose of the laws and rules we are dealing with: to protect human health, the environment or, for example, financial stability. We must come to terms with entire fields of expertise – biology, chemistry, even psychology, though negotiators already know a thing or two about that. And we must master the legal mechanisms that put regulatory goals into practice – standards, inspections, conformity assessments.
As to the politics, both the European Union and the United States strive to remove all politics from regulation, for good reason. Concepts like independence and impartiality of the regulatory process are at the core of how our systems are designed.
But despite this fact, in neither system have we been able to eliminate politics entirely. When it comes to basic regulatory choices, politics is necessarily involved. Your laws are decided by Congress, ours by our own legislative council of EU member states and the European Parliament, which acts as a bicameral system on the basis of a commission proposal.
Moreover, even when regulators have full delegated powers, we know that every day they are forced to make judgment calls based on information available, even when it is imperfect. Uncertainty is a fact of life, which is why the precautionary principle plays a role in both of our systems and is enshrined in the WTO.
And alongside all of these decision-making processes, we know that the public debate between interest groups of all stripes is every bit as political, every bit as passionate as any electoral campaign, regardless whether it refers to primary law or executive action.
That complex world is the context where T-TIP takes place. And as a result, in Europe, at least, they have already seen that people have very serious concerns about what T-TIP might mean for regulation.
What it means is that our shared objective to lower barriers to trade and investment enough to have a real economic impact while keeping the levels of regulatory protection that our citizens have chosen is going to be a challenge.
And let me be clear. It is certainly possible. Thirty years ago, the European Union went much further than we will go with T-TIP. We were able to demonstrate to people that it was possible to adapt our rules and reach common standards while still maintaining the highest levels of regulatory protection. But it will require hard work from trade negotiators and from regulatory authorities in the coming weeks and in the coming months. That means looking at both horizontal rules about how we make regulation solutions to current sector-specific problems with equal care. If we want a result that makes a difference, we need to look at the way we produce regulation. Can we make the processes more transparent so that we can give useful feedback in the early stages of the regulatory process? Can we encourage the regulators to deepen their relationships so that they brainstorm solutions to new challenges together?
At the same time, if we want to be credible, we need to find a critical mass of regulatory solutions for specific sectors. If, just to give some examples, we can make our car safety standards fit together better, if we can get rid of double inspections at our pharmaceutical or medical devices plants, if we can make sure that we implement agreed international rules on finance in a compatible way, if we can simplify the procedures for approving food products and avoid duplication of inspections in areas where our product safety rules are equivalent, then T-TIP will have a positive impact on our economies straightaway.
Buckling down to take all of these areas forward – market access, rules and regulatory barriers – will require effort. So we had better know why we are doing it.
The answer, for me, is very clear: growth and jobs, on the one hand, and strategic vision on the other.
The growth and jobs arguments are clear. Open markets boost demand because exporters gain access to new customers. That goes for smaller companies even more than for large ones, because they don’t always have the resources to find clever ways around barriers. Open markets also work on the supply side of the economy by lowering prices of final goods for consumers and of intermediate goods for companies, again, small and large. On top of this, the greater overall level of competition makes the economy more productive overall.
When you apply those effects to the largest trade and investment relationship in the world, you can expect significant results. Our own estimates expects our economies to expand by more than 200 billion or just less than $300 billion by the time the agreement is in effect.
In a time of gradual recovery, both Europe and America need to seize opportunities like this.
On top of that payoff, we also need to remember the strategic reasons for getting down to the serious work of T-TIP. And this is why both the regulatory and the rules part of this agreement are so important. At the most basic level, T-TIP provides a laboratory for future global disciplines.
Last year’s Bali agreement has brought new momentum back to the WTO. Ambassador Froman and were working with our counterparts in Geneva and Director General Azevedo to use that momentum to make progress on the rest of the Doha mandate.
But even if we manage to meet all of Doha’s goals, gaps in the multilateral rulebook will still remain. Convergence between EU and U.S. positions on how to fill those gaps is a necessary, even if not sufficient, step towards global rule-making.
The role of T-TIP is therefore to pioneer solutions that can later be applied more widely, especially as they will already be operating in 40 percent of the world’s economy. Looking further ahead, one thing about the 21st century is certain; it will be a multipolar century – neither American nor European. European Union and United States will still be important players, but we will have less weight than in the past. And by 2050, our share of world output could drop by as much as half.
That’s a natural consequence of the spread of the prosperity in other parts of the world, and as such it certainly to be welcomed. It will, however, have an impact on the rules-based international system that Europe and America have championed together over the last six years. And that system needs to adapt to accommodate the new rising players. As the WTO showed us in Bali, it is possible.
But Europe, America and the world as a whole also have a very strong interest that the system continues to be based on principles, not only of economic openness but also of high standards for health, the environment, labor and consumer protection. And on these issues, the truth is that EU and U.S. share much more than where we differ. T-TIP, by bringing us even closer, strengthens the position of our shared values on the global stage.
Governor, Ambassador, ladies and gentlemen, these negotiations will be a challenge. But as you see, there are strong reasons for us making the effort to surmount it. Doing do will require a serious commitment. I know that despite our heavy political calendar this year, Europe is ready to make that commitment. And I have every confidence that the U.S. will join us.
On President’s Day, there are many great leaders that Americans can look back to for inspiration in these efforts, but perhaps Kennedy is the most relevant one. In 1962, he needed to rally support for the first round of multilateral trade talks involving the embryonic European Union – the round that would ultimately be named for his memory. It is time we recognized, he said, that trade is no longer a matter of local economic interest but of high national policy. Striking a bargain with the common market may strike a blow for freedom.
That is the possibility we again have before us and I’m looking forward to see us working together to achieve that. Thank you very much for your attention. (Applause.)
MR. KIMMITT: Commissioner, thank you very much for those comprehensive remarks, great readout of two arduous days of negotiations for you and a longer period for your team. What you were describing were your official responsibilities. I know that you also keep a close eye though on politics, on both sides of the Atlantic. A lot of talk recently about politics in the U.S. with statements over the past several weeks by President Obama, Senate Majority Leader Harry Reid, Vice President Biden and, of course, our midterm elections coming up in November.
But six months before that, you’ll have important elections in Europe for the European Parliament, an institution you know well. General belief, at least we look at it from the U.S., that there’ll be a very strong element of that new parliament that is skeptical about the European Union, perhaps has some skepticism about trade. Could we get your views on how politics are going to play out in the near term in Europe?
MR. DE GUCHT: Well, maybe first on trade – can you stop the wind here? We are in a wind tunnel, you know? (Laughter.) So first on trade, at present European Parliament is not skeptical on trade. You have a lot of questions on sustainable development, on environmental issues, on health and safety, on fundamental rights, but generally speaking they are not against trade because without major problems we managed to get the trade deal with Korea adopted, the one with Colombia, Peru, with Central America. We can’t yet vote upon the agreement with Ukraine for obvious reasons, but it could very easily pass the test of parliamentary scrutiny.
So the idea that there would be skepticism on trade as such, in Europe that’s, I think, no true. And I’m pretty sure that if you were to reach a deal, of course it would be very widely debated because it would be a big deal, you know? And there’s more interest on this deal than on any other because it’s broad and the idea is to a certain extent, I mean, merge our two markets, so that’s a broad – a broad experience. But I’m pretty sure that it would make no major problems in European Parliament to get it adopted, provided that you have one.
Now, the developments in Europe – first of all, one of the lessons I have learned after 35 years of politics is that whenever you try to have a clear judgment on the outcome of elections, you are mistaken. It’s always a little bit different than you had expected, and sometimes very different. So that’s difficult to predict. But it could very well be that, yes, you have more Euro-skeptic members of the European Parliament. You already have some now, for example – (inaudible) – from Great Britain, by – but on trade, for example, they are very positive. That is about the only they are positive about, with respect to Europe. (Laughter.)
But you could expect to have more Euro-skeptics. And if that were to be the case, it could, I think, change the nature of relationship between the institutions. Now the European Parliament works more or less like the American Congress. I mean, when you have a legislative proposal the majority for that proposal can be very much across the board and to have all kind of specific coalitions on topics and so on, which is a little bit different than, let’s say, the classical democratic system we have in European Union – not only on the continent, by the way, but also in Great Britain and Ireland.
That could change because imagine you have 25 to 30 percent of Euro-skeptic members, then you nevertheless will have to manage that you get 50 percent out of the 75 remaining. And the – what I expect to happen is that you will have a closer relationship, a more political relationship between the European Commission and the European Parliament whereby you – I’m not saying that you would copy, but you would move in the direction of having a majority-based commission in Parliament, which is presently not really the case. That, I think, would change.
But whether that would make life more difficult, I’m not sure. What it would do is – you would move more in the direction of a real kind of a, quote, unquote, “governmental program,” that you then execute over the years and maybe from time to time also have to adapt it, huh? So that could be, but it would not – it would have no effect, I believe, on the operability of the relationship between the institutions.
MR. KIMMITT: So whether T-TIP or T-TIP, one thing that is different about this agreement is the explicit reference to the word “investment” in the agreement. That’s not really surprising on the U.S. side because while there continues to be a political debate around trade, we seem to have coalesced about the benefits of foreign direct investment in the U.S. We have 5 ½ million Americans who work for companies headquartered overseas.
That’s roughly 5 percent of our private workforce, but they account for 20 percent of our exports. Those jobs pay, on average, 25 percent higher. Forty percent of those jobs are in manufacturing versus 15 percent of the overall economy. And 12 ½ percent are unionized, versus 8 ½ percent of the overall economy. So the investment side of this is something that I think is very much animating the U.S. political debate.
In Europe, I saw over the weekend President Hollande hosted 35 top business people, encouraging more direct investment in France. That looked good. I also, though, have seen some hesitation on the investor state dispute settlement mechanism and wondered if that is a concern about that mechanism in particular, or is there some divergence between how Europeans and Americans see the benefits of foreign direct investment?
MR. DE GUCHT: Well, I don’t think so. I mean, I would even say that we have recognized earlier than you have done in the United States that trade and investment are two of alike, you know? That they – you have to combine them if you want to take profit a globalization for your own economy. So there I don’t see a difference of opinion.
It doesn’t exclude, of course, that you would have some political parties rather to the left that put this into doubt; that’s something else. But I mean, generally speaking, there’s an understanding that, OK, you cannot have an autonomous development of trade without a development in parallel of investment. And that’s also because you have so many investments of European companies in the United States and vice versa that trade between the EU and the U.S. It’s the highway of trade worldwide. So – but that’s a – and that’s proven by whole studies that have been done about it.
ISDS, it’s different. It’s not new, ISDS. But the political environment has changed for the simple reason that recently you have had two cases, the cases by Philip Morris against Australia on plain packaging of cigarettes, and the one of – by Vattenfall against Germany on the nuclear sector. And what is at stake is, what is the effect of ISDS on the policy space? In the past it was not so clear, but that’s the real question. To what extent does ISDS mean that it limits policy space?
Now, we have been negotiating an ISDS provision recently with Canada. And the purpose of that negotiation was precisely to make sure that the ISDS does not limit policy space, which is less clear in the existing agreements because there you speak about fair and equitable treatment. But there’s no clear definition of that. And as now we have seen that this is put into question, it’s very important to be much more precise on that. If we don’t do that, for example, in T-TIP, the existing investor protection agreements of which ISDS is part will remain in force.
Now, our member states of the European Union in the past have been concluding about 1,400 investment protection agreements with everybody around the world. And in quite a lot of them you have that, let’s say, old style ISDS provision. So in fact we tried to remedy that, no? And I think we are on the same page with respect to that in the U.S. and in the EU. Now, all of a sudden there has been a lot of discussion about it and that’s why I have decided to relaunch a consultation hoping that this will shed more light on what the real goal of all this is.
Now, there’s a supplementary element. A number of European member states do not have ISDS agreements with OECD members. And of course United States is an OECD member.
But a lot of EU member states have that kind of provisions with the United States. And how do you bring all that together? So that’s the real challenge. And then it’s about preserving the policy space; it’s about more transparency; it’s about the possibility that you do not agree with an arbitrator and that as a result has that he or she has to leave.
I mean, so that – to modernize the whole process, and I hope that we can do that because what we need to know is that in all ISDS cases let’s say, in 52 percent of them it’s the European company that has launched the procedure. So the idea that it’s something that would be directed by the United States against us, I mean, if you look at the figures it’s completely wrong, you know? 52 percent of the cases are launched by European companies. (Inaudible) – against your country, but that’s something else. But by European companies, which means that they are convinced that they need it, you know?
MR. KIMMIT: Thank you. Last question from me then we’ll open to the floor.
In your third basket of issues that are being addressed on regulatory convergence, you mentioned briefly financial services. The Atlantic Council has done a lot of work in the area of trying to encourage convergence on financial services, regulatory standards, an effort also underway in the G-20, the financial stability board and elsewhere. Finance ministries, including the U.S. Treasury and central banks are somewhat restrained in their enthusiasm about putting their regulatory issues into trade negotiations, bilateral, but especially multilateral. Could you give us a sense of where financial services stands today in the negotiating process?
MR. DE GUCHT: There aren’t – there remain differences of opinion, very clearly so, but the European side is adamant that it would be part of the negotiations whether it was within T-TIP itself or in parallel and that the result is then merged into T-TIP, that’s a – I don’t mind about it. I’m interested in the result. But I think we need the result. Why? Let me give you two examples. There’s a lot of financial regulations have been changed and influenced by recent decisions by the G-8, the G-20, the Basel committee. But we have to make sure that when these decisions of principle have – are translated into actual legislation or regulation on both sides of the Atlantic that this is compatible. And this is not going to happen automatically, certainly not. And that’s what they demonstrated now.
Secondly, recently, there has been made an agreement between the EU and the U.S. on derivatives. And what we see now is that when you try to put this into practice, again, you see discrepancies, you know. So I could give you more examples, but it means that you really have to go – that you have to do this work of making it compatible and not letting surfacing differences that have no special political goals, you know, that that’s what we should try to avoid.
So yes, it should be part of the regulatory package. Whether we do it in parallel or not, I don’t mind, but the results should be that also in financial services we have much more regulatory convergence. And the answer is not market access, you know. There’s no real problem in market access for financial services. And the problems arise once you put into practice a market access and you are hindered by regulatory values. So it’s about the regulatory values. So you do not resolve it by saying, look – they give you even more market – there are no problems with respect to market access. There are problems with respect to regulations.
MR. KIMMIT: Thank you, Commissioner. We have about 20 minutes before the commissioner has to leave for the airport. I would ask that your questions be crisp, your comments crisper. We will have a microphone brought to you. And if you’d please identify yourself and your affiliation, that would be a big help.
Yes, sir, right here.
Q: Microphone? It doesn’t matter.
I’m Bernard Gordon. University of –
MR. KIMMIT: No, it matters for the people in the back. Thank you.
Q: Thank you.
Bernard Gordon, University of New Hampshire. Normally, Mr. Commissioner, I work on TPP issues. So in sense I’m here under a false flag. But the issue I want to raise with you, and many of us know that just yesterday Senator Durbin came out against the Trade Promotion Authority. My basic question is this: The TPP has raised enormous public debate on every kind of issue, on pharmaceutical issues, on Internet issues, on every kind of issue. So far the T-TIP has not generated that kind of opposition. Is there a reason why it seems so much smoother for T-TIP than the TTP has so far experienced?
MR. DE GUCHT: Let’s try to keep it like that, no? (Laughter.)
It’s a different kind of negotiation, I believe, because you have 11 or 12 partners?
MR. DE GUCHT: Twelve partners, and they are very different in terms of economic development. And we also have experience in the past that this kind of regional approach is not easy. We have tried to do it – Ambassador Vale de Almeida will remember – with respect to ASEAN. Now we have tried to do so, and my predecessor Lord Mandelson tried to do, and it didn’t work out because there again you have these very huge differences in the economic development and also cultural diversity, which is – which has – (inaudible).
So to catch all this in one agreement, it’s more difficult, probably has also an impact on the level of a mission. But let me be very clear: I hope that you can conclude as soon as possible a good agreement with TPP, with the TPP partners. I’m very much in favor of that. Because it would be part of the puzzle we also tried to make with T-TIP. And of course we’re also discussing our – (inaudible) – with Japan, for example. So I’m very much in favor of that. And I really wish that you can do it as soon as possible, because the sooner you can do it, I think the sooner we can get to the end game of T-TIP also.
MR. KIMMITT: Yes, ma’am?
Q: Yeah, thank you.
MR. DE GUCHT: Thank you.
Q: Mr. Commissioner, Irina Gelevska, Macedonian TV. Very shortly, do you think that –
MR. KIMMITT: Could you – excuse me. Could you please identify yourself and your affiliation?
Q: Gelevska, Macedonian TV.
MR. KIMMITT: Thank you.
Q: Mr. Commissioner, do you think that the candidate countries to some level should be included in the negotiations for T-TIP?
MR. DE GUCHT: Which countries?
Q: Candidate countries for membership to European Union.
MR. KIMMITT: Candidate countries.
MR. DE GUCHT: Oh, the candidate countries. We have a – we have a policy on that, no? We keep them informed but they are not a party to the negotiation, for the simple reason that also the member states, by the way, are not a direct party to the negotiation. It is the European Union that is negotiating and the executive branch of the European Union, the European Commission, is doing this – is performing these negotiations on the basis of a mandate that we get from the Council of Ministers.
So we could not invite candidate countries to the negotiating table. We couldn’t do that. But there is a possible impact of course if those countries afterwards become members of the European Union. And there is also a possible impact of countries with whom we have, for example, a customs union. Like, for example, we have at least a partial customs union with Turkey. It can impact them. So, yes, we keep them informed, and as soon as the end of next week I am going to Istanbul to, for example, discuss it with the Turkish government.
MR. KIMMITT: Yes, right here please.
Q: Thanks very much. Marjorie Chorlins with the U.S. Chamber of Commerce.
Mr. Commissioner, thank you for being here. A very simple question: How do you perceive the engagement of the European business community in the course of the negotiations currently?
MR. DE GUCHT: I would like to see them more engaged, you know? When I hear voices about T-TIP in Europe, they tend to be the negative and the critical ones, you know. I think business – but it’s not only business. This agreement is not only in the interest of business. It’s in the interest of the economy; it’s in the interest of growth and jobs, you know? And those who are in favor of T-TIP should come out much more loudly and clearly if they want us to succeed. And I accept that criticism for Europe. I hope you also accept it for the United States.
MR. KIMMITT: Yes, sir.
Q: Hi. Thanks. My name is Ben Beachy – Ben Beachy, Public Citizen. You mentioned the pause that you had called for over the negotiations over investor state provisions, given the rising concerns about the threats that could be posed by empowering foreign corporations to directly challenge health and environmental laws. Many of the civil society groups and even some EU governments have expressed concerns and called for a similar pause over regulatory convergence negotiations, given a perceived similar threat to health and environmental laws.
Most of those came out of the EU proposal on regulatory coherence, which included a mention of the need for like governance and called for equivalence with U.S. standards, you know, causing much of the same concern. Just to name one sectoral example, I’m sure you’re familiar with a concern about EU approval of chicken that’s treated with chlorine from the United States, or ractopamine-treated pork, or hormone-fed beef. Given this widespread controversy over the regulatory convergence proposals, do you see cause for calling for a parallel pause in the regulatory convergence area?
MR. DE GUCHT: This is not the first time I get this question – (laughter) – and I’m always answering the same. And probably you are already aware what I’m going to answer.
We are not going to change our legislation, and I expect the same to happen in the U.S. because of this negotiation. To be very clear, for example we are not going to import hormone beef because it would mean that we have to change our basic legislation – because it would mean that we have to change our basic legislation and we are not going to do it. We are not even going to make a legislative proposal for that because it has no support in the Parliament; it has no support in the commission.
So we will keep and stick to our regulations. And it’s within the framework of the regulations that, for example, we will expand trade, because if you speak on hormone beef – on beef, yes, if we come to an agreement, most probably the United States will be able to export more beef to the European Union, no? Well, that will have to be hormone-free beef. And what will happen is what is happening, for example, now in Canada as a result of our agreement with Canada, that they put into place a hormone-free beef production line. It’s as simple as that.
It is strange that I get this question all the time, you know? (Laughter.)
MR. KIMMITT: Yes, please, right here.
MR. DE GUCHT: Am I – am I so unclear about this? (Laughter.)
Q: Thank you, Commissioner. Doug Nelson for the CropLife America. Quick question: You spelled out very clearly the three general categories of things that need to be negotiated in this free trade agreement. Does your mandate permit you to just focus on perhaps one or two of those and leave, in particular, the most difficult one, regulatory coherence or convergence, for another day?
MR. DE GUCHT: As I just explained, we negotiate on the basis of a mandate we get from the Council of Ministers, no? And that’s a very broad mandate. Theoretically we could do that, yes? I mean, but we are not going to do it because, I mean, that’s not on our mind. What we want to do is – it’s a broad agreement on all aspects and certainly on the regulatory one, which I personally consider, forward-looking, the most important one.
So it’s a no-starter. I mean, that’s what – either we make a broad agreement or we don’t make one. For example, the idea that we would get an agreement on tariffs only? No, because it wouldn’t make sense. It would never pass the European Parliament. So that’s out of the question, but theoretically you could, but politics is not about theory, you know? It’s about practice.
MR. KIMMITT: Yes, right here. Also in the center aisle, please? Thank you. And I’m coming to the back of the room next. I’ve seen your hand. Thank you.
Q: Kris Bledowski, Manufacturer’s Alliance for Productivity and Innovation.
The EU has enshrined in its laws and regulations precautionary principle that manages risk. On the U.S. side we don’t have the risk assessment, which is the rough counterpart, enshrined in law, but it’s part of our business culture. If the precautionary principle and the risk assessment were somehow managed or included in the negotiations, along which ways do you see a compromise and how can these two differing philosophies be reconciled over the agreement?
MR. DE GUCHT: As you’ll likely say, you also have something that hints in the direction, but it’s much more clear in European legislation. And the importance of the precautionary principle is higher in European legislation and regulations than it is in American regulations. Also – (inaudible) – culture. You are less risk averse; we are more risk averse. And it is cultural; we probably are not going to change that overnight.
So I’m not very much interested in having a very long – (inaudible) – on the exact meaning of the precautionary principle in our trans-Atlantic relations, because that would lead us nowhere. So of course, it will be on the back of our minds when we discuss about the regulatory approaches, you know, and it will be difficult to go at this moment in time into the technicalities of that, also because it would take an enormous amount of time.
But I think what we have to do is make a combination of mutual recognition, more compatibility, common approaches with respect, for example, to risk assessment – forward-looking cooperation on regulations so that you try to avoid differences of opinion and practice from the start. It’s always more difficulty to remedy them than to avoid them. But it is a complicated thing, you know?
I have to tell you – I mean, I’ve been reading about this recently – quite a lot of pages, and sometimes it gives me headaches. But on the other hand, I believe this is the most important part of the agreement. And I’m also confident that we will be able to make very important progress with respect to this. Maybe not on all sectors – that’s possible – maybe not on all sectors in the first instance, but we are so much concentrated on the regulatory that I think both Mike Froman and myself are conscious that we have to do this. You know, we have to – we have to meet that challenge, and we will – we will find our way out without having a very theoretical approach on the precautionary principle, you know? But we will do it.
MR. KIMMITT: Yes, please.
Q: Thank you. Ben Hancock from Inside U.S. Trade. You emphasized in your speech the importance of balance in these negotiations across all tracks. You indicated in some earlier comments that you were under the impression that the ambition of the U.S. market access offer did not match the level of ambition of the EU offer. Can you offer some details about where the U.S. is falling short in this regard and how important is it to be – or to see reciprocity in the market access element in order to advance parallel negotiations in the regulatory aspect of the talks. Thank you.
MR. DE GUCHT: The answer could be very short. I am not going to give any details on that. If I have to go a somewhat longer answer, we will make sure that we arrive together in the end station with the same level of ambition, and that’s, I think, what should be the goal.
MR. KIMMITT: One last question. Paula Stern.
Q: Back onto the question of regulatory harmonization or however you want to describe it – clearly, there are certain sectors – certain industries which are further advanced, if you will, in terms of convergence because of cross-investment in trade over many, many years. Is it conceivable that within that arena, that we will see more disparity in terms of convergence, sector by sector, that some, like in autos, might be more advanced than in other areas? This is my experience when I worked on the trans-Atlantic business dialogue on the regulatory standards by sector, and clearly, we could harvest on some much quicker than on others. Could you give us your views on that?
MR. DE GUCHT: Yes, thank you. There are a number of sectors that have agreed to – across the Atlantic on what they think is needed in their specific sector. For example, in chemicals – for example, in automotive. And that’s, of course, giving you a comfortable starting point. The risk of disparity – I think, by addressing the horizontal aspects and the vertical aspects, you will have to develop disciplines, you know, that become the backbone, let’s say, even of sector approach. You cannot have a completely different approach from one sector to another.
So I believe that’s – in a pragmatic way, we will be able to develop, let’s say, the backbone of that kind of regulatory convergence for already existing measures, for measures we have to take for the future, and that – it should develop in an organic and in a pragmatic way. And it could be, yes, that in the beginning there is some disparity, but if you want to keep this manageable for the future, it’s very important that they also converge, you know, the way – depending, of course, on the specificities of the sector that they have to converge – that’s making work easier for the future, and once there is an accepted discipline, it also means that people are inspired by those disciplines when they already try to put into place new regulations. So I think this is a very organic process.
But of course, for a number of sectors, we – at this moment in time, we will start for what they are asking for, not automatically putting this into practice. I mean, you need to make a political choice, yeah? That’s also very clear. It – the decisions will be taken in the negotiations, but the fact that you have an agreement between companies on each side of the Atlantic is a very, very important given.
MR. KIMMITT: On behalf of the board of the Atlantic Council, and our new chairman, Jon Huntsman, I’d like to offer three quick words of thanks. Number one to Fred Kempe, Damon Wilson, Garrett Workman and other members of the staff for putting this wonderful program together. Second to all attendees; it’s a mark of respect both for the council and especially for our speaker to have you turn out on the first day after a three-day holiday with a little bit of snow on the ground.
But mostly, thanks to you, Commissioner, for joining us. Not all visitors to Washington take time to go public soon after a set of negotiations like this; again, we take that as a real mark of respect for the council and your commitment to an open dialogue in this important area. We wish you and your team – Mike Froman and his team the best of luck in the difficult months ahead. We all have a stake in your success. Thank you.
MR. DE GUCHT: Thank you. (Applause.)