A free trade agreement between the European Union and the United States is closer to being negotiated than I have ever known. As a bystander to previous attempts to get a deal, I was delighted when the Prime Minister asked me to include the Transatlantic Trade and Investment Partnership (TTIP) in my portfolio of responsibilities, answering to the House of Commons alongside my colleague in the upper house, trade minister Lord Livingston.
At the G8 conference in Ireland, summer 2013, David Cameron and Barack Obama heralded a potential trade and investment agreement between the world’s two largest free trade areas as a once-in-a-generation prize. It would bring the 800 million people of Europe and the U.S. economically closer together than ever before, boosting our collective GDP by as much as $300 billion every year and bringing considerable benefits to consumers and companies alike.
Skeptics will say that efforts to achieve such a deal in the past have always failed, but I am convinced that the political omens on this occasion are better than ever before. The negotiations will be difficult, of course, but the clear advantages of a successful deal are a prize made all the more worthwhile by the rapid rise of developing economies and by economic turmoil in the West. According to the best independent estimates, the long-term value to the British economy alone would be around $16 billion annually, delivering a welcome boost to investment and job creation. Crudely put, we can no longer afford not to have a trade agreement.
The negotiations are focusing on removing the few remaining tariffs in certain sectors, costing British firms exporting to the U.S. around $1.6 billion every year. This challenge to the vestiges of protectionism is long overdue. But the main aim of the deal is to get rid of unnecessary regulatory and standard setting barriers to trade, reducing the costs and delays faced by businesses – and small businesses in particular – as they move to transatlantic markets.
Contrary to the assertions of a number of well-meaning but misguided lobby groups, there is nothing in this proposed deal that would lower standards of environmental protection, consumer protection, health and safety regulations or labor rights on either side of the Atlantic. The right of individual jurisdictions to legislate on regulatory standards will be protected.
The aim will be to get rid of duplicate regulatory processes where standards are satisfactorily achieved in either jurisdiction. So, where a product meets regulatory requirements in either the EU or the U.S., it will be possible to sell it in the other market without it first being reassessed against a different set of regulations which achieves the same outcome.
American cars are no less safe than their European counterparts. In spite of this, costly regulatory differences create an unnecessary barrier to trade. The mutual recognition of regulatory compliance in the car industry and across many other sectors would make a huge contribution to boosting trade and would be welcomed by businesses on both sides of the Atlantic.
The European Commission is handling the negotiation. But Britain is recognized as the most open trading nation involved and this is a policy where the British Government is playing a leading role on both sides of the Atlantic. By helping to achieve an agreement, we can make sure that it reflects our values, protecting British interests in the process.
I do not underestimate the protectionist instincts in all of the countries affected. But on this occasion, the traditional opposition of trade unionists and non-competitive state industries is all but invisible. Instead, the main issues of contention are likely to be data protection and investment dispute resolution mechanisms, which certain NGOs and lobbyists fear will undermine regulatory standards and the ability of Member States to legislate in the public interest.
Objections on both grounds can be overcome in a sensible and reassuring way. I am holding regular meetings with representatives of industry groups, consumer groups, NGOs and other organizations with an interest in the deal, working with officials to take account of and respond to their concerns, and representing them to the Commission. Reflecting the extent of some groups’ concerns over investment dispute resolution, the Commission has just begun a public consultation on its approach to this in the negotiations.
The timing for these negotiations is ideal, since it demonstrates the value to the United Kingdom of being a member of the European Union. The EU is an equal partner with the United States and can bargain with equal weight. If the United Kingdom tried to negotiate a trade and investment agreement with the United States on its own, we would no doubt be treated kindly. But hard-nosed U.S. negotiators would not make the same scale of concessions to 60 million UK consumers as they would make to the 500 million in the European single market.
There are also diplomatic advantages of collective bargaining. If we can develop a proper single market in energy within the EU, the closer economic union brought about by a successful EU/U.S. deal might accelerate U.S. natural gas exports to Europe. This would take the first steps towards freeing Europe from its over-dependence on Russian natural gas, tipping the diplomatic balance significantly in our favor while at once protecting the interests of our industry and consumers.
With the right leadership, the potential of this deal shows what the EU’s collective clout can deliver for businesses in Britain and across the single market. In a world that seems increasingly politically fragile as well as less economically stable than during the boom years, the UK’s seat at Europe’s negotiating table has never been more vital to our ability to defend our interests in the modern world.
The Rt. Hon. Kenneth Clarke is Minister without Portfolio and has been Member of Parliament for Rushcliffe, Nottinghamshire since 1970.