EUROPEAN FOREIGN POLICY SCORECARD 2016

Trade liberalisation and overall relationship

54 - Relations with the US on trade and investment

Grade: B
Unity 3/5
Resources 4/5
Strategy 4/5
Impact 2/5
Total 13/20
Scorecard 2015: B+ (14/20)
Scorecard 2014: A (18/20)
Scorecard 2013: B+ (15/20)
Scorecard 2012: B- (11/20)
Scorecard 2010/11: B- (12/20)

Faster progress is needed in the TTIP trade talks if a deal is to be reached under the Obama administration

The negotiations on TTIP continued throughout 2015, though obstacles emerged. Based on the current rate of progress, it looks unlikely that an agreement will be reached by the end of 2016 despite both sides’ stated intent to achieve this.

Regulatory standards and Investor-State Dispute Settlement (ISDS), a system to allow investors to seek compensation for decisions by foreign governments that violate their rights under a trade deal, remain key sticking points between US and European negotiators. In July, the European Parliament issued a resolution supporting TTIP but rejecting the inclusion of ISDS in the deal. In September, the Commission proposed a new “Investment Court System”to replace ISDS.

The view in the US is that the Volkswagen emissions scandal may make an agreement more likely by vindicating the US position that its regulations are superior to Europe’s. However, many in Europe believe that the scandal further undermines trust in the ability of governments to regulate industry, and could increase opposition to TTIP.

However, there have been positive developments. The Trade Promotion Authority (TPA) legislation,which was widely considered a necessary precondition for TTIP, was approved by Congress in June. The debate on TPA largely centred on the Trans-Pacific Partnership (TPP), but also applies to all trade agreements submitted to Congress over the next seven years, including TTIP. TPP negotiations were successfully concluded in autumn 2015. The reception was muted, with Democratic and Republican front runners criticising the agreement. Nonetheless, hopes are high that it will be ratified.

If an agreement is not reached by the time the next US administration takes office, the incoming president is likely to take a fresh look and make further demands, some of which may diverge from the Obama administration’s position. A Republican administration would take a tougher line on regulation, while a Clinton administration may seek to enlarge the scope of the agreement. US Trade Representative Michael Froman acknowledged in December that a window of opportunity would close when Obama leaves office.