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Interview IW News 22. June 2016

Setting a new benchmark: or just waiting to be abandoned?

Even business representatives are divided over TTIP, the planned transatlantic free trade agreement. Angela Mans, Head of Foreign Trade for the German Association of the Automotive Industry (VDA), and Martina Römmelt-Fella, Managing Director of Fella Maschinenbau GmbH and co-founder of the "KMU gegen TTIP" (SMEs against TTIP) campaign, discuss the pros and cons of TTIP in an interview.

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There is strong opposition against TTIP. Can you relate to this massive disapproval?

Römmelt-Fella: Yes. TTIP has dangerous construction flaws, and it challenges basic democratic principles and European values. An increasing number of businesses are rejecting TTIP and CETA. This is partly because of the empty promises being made to small- and medium-sized enterprises; after all, the US government is not in a position to promise the alignment of technical standards, since it doesn’t have access to privately organised certification schemes.

Mans: It’s understandable that businesses have concerns about individual points of the agreement, but I cannot fully comprehend the extent of the current opposition. As an export nation, Germany benefits in particular from trade agreements. In today’s and tomorrow’s world, globalisation simply isn’t an option. A nation that doesn’t recognise its opportunities at the right time – or that deliberately ignores them – is obstructing its own path to more growth, employment and prosperity.

Who stands to benefit most from TTIP: major corporations or small- and medium-sized enterprises?

Mans: Both do. After all, TTIP eliminates customs duties, bureaucracy and duplication of work. And that saves costs. For many SMEs, TTIP will finally allow them access to the US market – especially for those that cannot afford to manufacture two different versions of a product, as was often the case previously. Thus, TTIP opens up additional revenue possibilities for small- and medium-sized businesses.

Römmelt-Fella: Many of the TTIP instruments are designed for international companies and major corporations. Costs related to such things as investment protection are simply unaffordable for us SMEs; procedural costs amount to 8 million euros, on average. Large companies will also benefit from the planned opening of government procurement – while we SMEs don’t have the resources to bid on contracts across the Atlantic.

The TTIP documents leaked by Greenpeace revealed that the US is trying to create a connection between the facilitation of access for European automotive companies and EU concessions related to the agricultural trade. Could you live with this?

Römmelt-Fella: Not at all. With such an extensive, cross-industry agreement like TTIP, weaker lobbies are at risk of falling victim to the incumbent lobbies. This simply isn’t acceptable.

Mans: It’s in the nature of free trade agreement negotiations to pursue a comprehensive package for all branches of the economy. That’s why previous negotiations also had to find a balance of interests. The crucial point is that the EU has promised that TTIP will not lower European standards and that the precautionary principle will remain unaffected.

Where do you stand on the issue of investor protection?

Römmelt-Fella: I oppose both the original ISDS and the EC’s proposed Investment Court System (ICS). We SMEs are convinced that the existing courts of the EU member states already offer effective legal protection to foreign investors. We don’t want any special courts for individual groups.

Mans: The reason for establishing courts of arbitration is not to prevent high standards but to protect investments worth billions. Comprehensive improvements to arbitration are currently being negotiated. This would especially benefit the many small- and medium-sized enterprises in Germany that cannot afford large legal departments. TTIP can become a global standard for fair and secure investment protection.

Another core issue is that of regulatory cooperation. According to this point, no further regulation could be enacted without the trade partner first taking a look at it. Is that realistic?

Mans: Purely national regulations don’t really make sense any more in the automotive industry. Our goal is – to the extent possible – to adopt regulations on the international level. The UN has been the recognised platform for this for several decades already. Additionally, there should be bilateral recognition in areas where the standards of protection are comparable. So, we expressly want our partners to participate in new regulations.

Römmelt-Fella: I consider the plans for regulatory cooperation to be extremely dangerous. The US already has a Regulatory Council, and we know that the majority of ambitious proposals for environmental legislation cannot withstand this process, or at least only in an extremely weakened form. Corporate interests come first. In my view, such an instrument undermines basic democratic principles and overrides parliamentary procedures.

Assume you were sitting at the TTIP negotiating table. What stipulation would you absolutely want to see included in the text of the agreement?

Mans: TTIP should be a “living” agreement. That is, partners should be able to continue working on joint projects, even after the agreement enters into force. To this end, an institutional framework needs to be created – one that ensures the involvement of both the civil society and the economy. The implementation of TTIP will, of course, continue to be subject to democratic control.

Römmelt-Fella: I'm in support of abandoning the ongoing TTIP negotiations. As an agreement that is so binding under international law, TTIP is not the right instrument for the existing challenges. It would be best for standards and technical specifications to be defined at the global level – in relevant institutions, such as the ISO. Consumer and environmental standards should be defined by the individual countries themselves. Mutual recognition of guidelines is also possible without TTIP, if it makes sense in a particular case. This is evident in examples such as the Organic Equivalency Arrangement between the US and Europe.

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