US-EU Trade: The Next Frontier (6/99)

Those who thought the French government blocked the European Commission’s crusade for the New Transatlantic Marketplace (NTM) last spring were surprised when the results of the European Union-United States Summit were announced. At their press conference in May, US President Clinton, Commission President Santer, and UK Prime Minister Blair revealed the birth of a creature called the New Transatlantic Economic Partnership (NTEP). As Clinton put it, using this comprehensive trade initiative, the EU and US "will work to dismantle trade barriers, both bilateral and multilateral … in about a dozen areas in all."

In September, the European Commission revealed more details in its Transatlantic Economic Partnership Action Plan (the "new" had already been dropped). Although less ambitious than the NTM, the TEP poses serious threats to democracy as well as environmental, safety, and health regulations on both sides of the Atlantic.

At first, the French government blatantly resisted the NTM, proposed by EU Commissioner Sir Leon Brittan to speed up the removal of trade and investment barriers. The ultimate goal is a bi-continental marketplace by 2010. France feared, among other things, that the US would use negotiations with the European Commission to pry open the European audiovisual and agricultural sectors. The French were also angry because Sir Brittan discussed the idea with the US before consulting with them, or receiving a mandate from EU member states.

Yet, when France refused to let Brittan start negotiations at the summit of EU foreign affairs ministers in April, he didn’t seem discouraged. The reason soon became clear. Though blocking NTM negotiations, EU ministers did agree to "take forward the New Transatlantic Agenda (NTA) signed in 1995, taking full account of Member States’ sensitivities with the aim of promoting multilateral liberalization, as well as enhanced bilateral cooperation, by progressively reducing or eliminating barriers that hinder the flow of goods, services and capital."

Thus, at the US-EU summit just two weeks later, although the NTM wasn’t directly discussed, the TEP negotiations were proposed. As one EU source put it, "It is saving face for everyone. France gets to kill the NTM, but the summit will still discuss trade liberalization, so the pieces of the NTM will live on."

So, What’s New?

As part of its Transatlantic Economic Partnership, the EU and US will start negotiating the "reduction and elimination" of barriers to trade, as well as increased regulatory cooperation in a large number of areas, aiming to "achieve substantial results by the year 2000." Services, industrial tariffs, intellectual property rights, investment, government procurement, and the agricultural sector will all be fair game. Rather than the NTM’s high profile plans for trade liberalization and deregulation by 2010 – a "big bang," as Brittan calls it – the TEP is a quiet process aiming for the same results through a "framework for ongoing consultation, cooperation and negotiations." The emphasis is on "barriers that really matter," or those "that hinder market opportunities, both for goods and for services," beginning with what’s achievable within the next two years. The May document was only four pages and rather general, but the subsequent Action Plan provided more details, as well as a timetable.

The proposal doesn’t include a dispute settlement mechanism, which would have been controversial. Instead, it merely says that EU and US bureaucrats should work closely to prevent the emergence of trade conflicts. To this end, sector-specific committees to solve potential problems will be established. In contrast with the NTM, which actually calls for a transatlantic free trade zone, the TEP is far less likely to run into major public opposition. Although the aims are practically the same, the TEP removes barriers to trade and investment gradually, while moving the process from the political to the technical sphere. Controversial words like "harmonization," not to mention "common market" or "free trade area," are carefully avoided.

Undoubtedly, EU and US administrations have learned from their experience with the Multilateral Agreement on Investment (MAI), a typical "big bang" treaty committing signatories to the goal of full-scale investment liberalization. The MAI ran into unprecedented opposition from a wide-ranging global coalition of social movements. The proposed NTM was also vulnerable because of its ambitious 2010 deadline for the removal of all barriers to transatlantic trade and investment.

Procurement and Biotechnology

The Action Plan sets the stage for gradual increases in "market access opportunities for both sides with the ultimate goal of procuring national treatment for suppliers and providers of services." Within what will in effect be a US-EU single market for public procurement, national, regional, and local governments will be obliged to offer contracts to the company with the best bid, regardless of its place of origin. This granting of "national treatment" to any EU- or US-based corporation will mean the end of "buy local" and other provisions for strengthening local economies that have survived previous liberalization waves.

Concerning biotechnology, the plan proposes "an early warning system to help to minimize disputes in areas such as food safety and genetically modified crops." The US says that the TEP will "facilitate exports and reduce trade friction in our $15 billion two-way agricultural trade, with soybeans, corn, consumer foods, and animal feed among the top US agricultural crops." According to the US Trade Representative, this will "improve the efficiency and effectiveness of regulatory procedures with regard to food safety and the approval of biotechnology products." It sounds benign. But a look at what biotechnology crusaders in both US industry and government hope to achieve unveils a disturbing scenario.

A US Congressional hearing in July, for instance, clarified that US industry welcomes the TEP because of the opening it provides to undermine "cumbersome" European regulations. Mary Sophos from the Grocery Manufacturers of America (GMA) made no secret of the fact that she sees it as an opportunity to reduce government intervention in the agro-food sector. On behalf of GMA – the world’s largest association of food, beverage, and consumer product companies, with annual US sales of more than $430 billion – she launched an attack on EU regulations governing market access for genetically-modified products.

David Aaron, the US Under-Secretary of Commerce for International Trade, was equally explicit. "Unfortunately," he explained, "the European Union, which is a major market for US foods, feed ingredients, and other agricultural products, has a slow and unpredictable process for approving new US agricultural products developed through advanced biotechnology." Describing the hurdles of obtaining market access for Monsanto’s Roundup Ready soybean and Novartis’ Bt maize, he concluded that "the EU approval process for the products of biotechnology is non-transparent and overly political. We need to work closely with the EU to finalize approval and develop, for future biotech crops, a workable, timely, and transparent approval process."

Aaron was optimistic, since "the European Commission appears to understand our frustration with the EU approval process." As an illustration of how such transatlantic cooperation works, he mentioned that US negotiators were meeting with the Europeans "to help clear guidelines on when products must be labeled."

Since the basic purpose of increased US-EU regulatory cooperation in the field of biotechnology and food safety is to remove barriers to the flow of food products, there is every reason for concern. The TEP aims to put an end to the conflicts which have raged over the past years on market access for products such as hormone-containing beef and genetically-manipulated foodstuffs. The agreement repeatedly states that "high standards of safety and protection for health, consumers and the environment will be maintained." But what are these promises worth? Existing EU procedures for approval of biotechnological products within the single market are heavily criticized by citizen’s groups as undemocratic and biased toward industry. Creating procedures for harmonizing regulations on the US-EU level is only likely to aggravate these problems.

US industry and government ambitions for European deregulation are by no means limited to biotechnology; environmental and consumer protection laws are also threatened. Aaron targeted EU data privacy legislation as being far more protective than parallel US laws, which favor "self-regulatory privacy efforts by the private sector," and pointed out that the TEP could also influence implementation of the EU Broadcast Directive by allowing preferences for European programming to be challenged.

The GMA’s Sophos pinpointed European eco-labeling schemes as ripe targets. Eco-labels "generally reflect local cultural values and environmental concerns and discriminate against international competition," she pointed out. She also attacked the EU Packaging Directive, and particularly the German recycling system, as constituting barriers to trade, instead advocating "shared responsibility" and "voluntary cooperative programs." Nutritional labeling systems and the "very restrictive" food additive laws in the EU were also singled out for deregulation.

Global Partners

The TEP does more than simply construct a common US-EU market. The second pillar in the agreement is an equally ambitious agenda for "multilateral action" in which the EU and the US reaffirm their "determination to maintain open markets, resist protectionism and sustain the momentum of liberalization." They "will give priority to pursuing their objectives together with other trading partners through the World Trade Organization (WTO)." Like Brittan’s NTM initiative, the TEP was also meant as signal to the May WTO Ministerial Conference that pressure for further multilateral liberalization there must also be increased.

During an US-EU summit press conference, EU Commission President Santer commented on the WTO Ministerial Conference starting that same day in Geneva: "Our agreement this morning sends a powerful message of transatlantic support to that meeting and to the further development of multilateral liberalization." The EU is pushing for the beginning of a new round of WTO negotiations, a so-called Millennium Round, to achieve further trade and investment liberalization within the WTO’s 130 member states. Many Third World countries oppose this agenda, pointing to the problems they face implementing previous commitments and the failure of previous WTO agreements to serve their interests.

The TEP Action Plan establishes "a regular and structural dialogue" to achieve common goals within the WTO. The commitment is far-reaching: "If possible we will establish common positions, or we will draft proposals to be submitted during multilateral negotiations." This will formalize and accelerate a situation which has existed since the early 1990s. Joint positions on WTO issues have been negotiated for years within the so-called Quad, which includes the EU, US, Japan, and Canada, and at previous US-EU summits. When the world’s largest economies have agreed upon their common interests, in most cases it has proven impossible for Third World governments to resist. This is, in part, why WTO agreements are so biased towards the interests of Northern governments and their transnational corporations.

Seduction through "Participation"

The third pillar of the TEP is "encouraging participation among business, labor, consumers and environmental interests." At the press conference after the May US-EU summit, Clinton said that the EU and the US "will make an effort to give all the stakeholders in our economic lives, environmental stakeholders, labor stakeholders, other elements of civil society, a chance to be heard in these negotiations."

However, the motives behind the invitation are questionable. In the first place, it comes very late. The TEP has already been shaped in great detail, and the Transatlantic Business Dialogue has been underway for three years. It also comes at a time when the EU and US governments face unprecedented resistance to their agendas for trade and investment liberalization, evidenced by criticism of the MAI and the refusal of the US Congress to grant Clinton fast-track powers over US trade policy. Considered in this light, the invitation to "participate" looks like a classic cooptation strategy designed to minimize opposition.

In fact, the invitation isn’t new. A Transatlantic Dialogue for Sustainable Development began in 1997, followed by a Transatlantic Labor Dialogue. A Transatlantic Consumer Dialogue and a Transatlantic Environment Dialogue will soon follow. Although NGOs seem happy to accept the invitation, not all the "dialogues" are the same. The Transatlantic Labor Dialogue, coordinated by the AFL-CIO in US and the European Trade Union Confederation (ETUC) in Europe, met for the first time in April 1998. Its participants hope to address the US-EU summit, a right enjoyed by the Transatlantic Business Dialogue since 1995.

The Transatlantic Dialogue for Sustainable Development, which began in June 1997 with a conference in Portugal, consists of representatives of governments, NGOs, and business. European Partners for the Environment, which was set up to increase dialogue between environmental NGOs and industry, is the European coordinator. Among the active corporations – and funders – are Monsanto and Dupont. The Transatlantic Consumer Dialogue, which first met in September 1998, is coordinated by the Consumers Federation of America for the US and Consumers International for Europe. It aims to present a list of important issues to the government leaders at US-EU summits. This goal is shared by the NGOs currently involved in the Transatlantic Environmental Dialogue (TED), set up by the European Environment Bureau (EEB) and the National Wildlife Fund (NWF). Fortunately, most NGOs involved do seem aware of the risk of legitimizing an agenda that isn’t theirs, and want to use the process to attack fundamental elements of the TEP.

"Greenwashing" the TEP?

NGO participation by no means corrects imbalances in the TEP. They certainly haven’t been offered the same opportunities that business has enjoyed. Rather, they’re entering a pre-designed framework with a goal that lacks a democratic mandate – transatlantic "free" trade. Their deepening participation will lend credibility to policies which shouldn’t be legitimized.

US Trade Representative Barshefsky claims the TEP "will contribute directly to more affordable goods, services, job creation, and economic growth for both Europeans and Americans." Apart from the likely lowering of environment, safety, and health standards, the TEP will also speed up the processes of corporate concentration, merger mania, and the expansion of transnational corporate reach at the expense of local producers. An EU Commission representative explained to the European Parliament that a significant incentive for further transatlantic deregulation is that 20 to 30 percent of the trade between the EU and US takes place within transnational corporations (TNCs) which have branches in both places. The TEP will make this intra-TNC trade far smoother.

If NGOs decide to participate in the TEP in order to present their concerns to the US-EU summit, they risk contributing to the survival of a project which could be stopped. The global upsurge of grassroots campaigning against the MAI shows that social movements have far more power than they tend to think when they dare to reject and organize against the illegitimate projects of the powers that be.

Olivier Hoedeman works with Corporate Europe Observatory (CEO), a research and campaign group focus-ing on European transnationals. To learn more, visit the CEO webpage at