In December 2013, the EU and US negotiators concluded a third round of talks on a Transatlantic Trade and Investment Partnership (TTIP) agreement. Progress was reportedly made on market access issues, regulatory aspects and rules. In terms of regulations, it is estimated that “up to 80% of the gains from any future EU-US trade deal would come from improvements in this area”.
EU negotiators expressed the desire to “slash customs tariffs on imported goods”, open up public procurement and services markets, and make it easier to invest.
However, negotiations around the investment component of the negotiations have been temporarily suspended, pending further consultations and discussions.
The next meeting is scheduled for March 2014, when work will begin on the wording of regulatory provisions, including the establishment of a framework “to enable regulators to work together more closely in future when drafting new rules” on “food safety and animal and plant health (sanitary and phyosanitary issues)” as well as “technical regulations and product standards, and testing and certification procedures – so-called technical barriers to trade”. A key focus of negotiations is thus on “creating similar regulations from the outset, rather than having to try to adapt them later”.
The Commonwealth Secretariat has published a paper in its Trade Hot Topics series on the implications for LDCs and small states of the TTIP. The analysis concludes that, in general, the direct effects on the exports of the Commonwealth countries reviewed (all but two of which are ACP countries) “are expected to be minimal”. However, “countries struggling to comply with EU/US SPS requirements might well find it difficult to face any additional obstacles which result from the TTIP.”
Nevertheless, the analysis does make a number of general points. It notes that:
- “if mutual recognition is agreed with no recognition for third country bodies, it would create a significant competitive advantage for EU and US exporters”;
- there are some products in some countries that run the risk of loss of market share, but these effects are likely to be small overall;
- while there is “potential for regulatory requirements to get tougher under Mutual Recognition Agreements (MRAs) or harmonisation, there are also potential economies in compliance cost from harmonisation across two very large markets”.
The paper makes a number of lobbying recommendations with regard to:
- the exclusion of products where high MFN tariffs are in place and where LDCs and small states have an export interest (although success in this area is seen as unlikely);
- compensation for any preference erosion that might occur;
- extending mutual recognition to third countries approved to export to either the EU or US;
- providing assistance with adaptation to any regulatory changes brought about through the TTIP.
The alternative of focusing on enhancing domestic competitiveness is highlighted, as is the policy choice of simply doing nothing.
The Commonwealth Secretariat-financed analysis highlights a number of areas where the ACP collectively could take up issues potentially of concern to individual ACP members.
In terms of opening a dialogue on compensatory arrangements where specific cases of preference erosion occur under the TTIP, there is a precedent in the EU’s Caribbean rum programme. This was explicitly established in response to the EU’s unilateral liberalisation of US access to the EU rum market. The experience under this programme highlights both the need for and the relevance of such targeted compensatory arrangements.
Extending mutual recognition to third-country products approved for import by one of the parties is potentially of particular importance in the Caribbean, where it would not only reduce the costs of securing approvals for export to two major markets, but would also provide more commercial flexibility in exploiting market opportunities in an era of currency volatility.
In terms of assistance in adjusting to regulatory changes, in January 2013 the US announced further modifications to its food safety rules under the Food Safety Modernisation Act. This announcement came less than 18 months after the implementation of new food safety rules. Any regulatory changes arising from the TTIP agreement would then require still further adjustments.
The US has recognised the burden these changes impose on Caribbean exporters and has set in place programmes to assist with the necessary adjustments. There would appear to be a need to extend this approach to the TTIP negotiations, on a case-by-case basis; the framework for such assistance would need to be set in place well in advance of the required changes.
This constitutes a clear agenda for ACP dialogue with the EU and US authorities in areas which may be significant for individual ACP countries, depending on the outcome of the ongoing negotiations. This is despite the fact that initial assessments suggest that the overall level of impact of the TTIP on ACP exporters is likely to be small (see Agritrade article ‘ Initial review of impact of EU–US trade partnership on selected developi...’, 20 January 2014).