EU Trade Commissioner Discusses Proposed Agreement with U.S.

“Karl Popper, the British-Austrian philosopher, once said, ‘Optimism is a duty.’ I think as politicians and academics, that’s something we need to stick to.”

So spoke Cecilia Malmström, trade commissioner for the European Union, in a recent address at SIPA on the proposed free trade agreement between the United States and the EU known as the Transatlantic Trade and Investment Partnership, or TTIP.

In her talk, entitled “TTIP and Beyond: EU Trade Policy in the 21st Century,” the commissioner followed her own advice, adopting a positive perspective in discussing controversial issues such as investment protection courts and data security.

But first she emphasized two key components of successful trade policy: effectiveness and responsibility.

Effectiveness, Malmström said, “means that trade policy needs to work.”

That means adapting to economic realities, including the way in which cross-border flows differ today from in the past. Whereas the transfer of goods used to be the most important consideration, Malmström said, it’s now important to look at the movement of services, digital data, and people across borders.

She said TTIP could play a major role in “set[ting] precedents for tackling these issues in a way that fits with today’s economic realities.”

Such precedents are important, Malmström noted, because of the failure to reach consensus in multilateral trade agreements such as the World Trade Organization’s Doha round.

“We must keep multilateralism in mind when we negotiate our bilateral and regional trade agreements,” Malmström said. “We have to show the world that we can do this. Many around the world are rooting for TTIP to fail.”

As for responsibility, which she identified as the other component of successful trade policy, Malmström said, “trade will always be fundamentally an economic policy. But it is not an island. The choices we make about trade must reflect our values.”

These values can be reflected in the what, but also the how, of trade agreements, she added.

“When trade deals cover issues like regulation on safety, health, and the environment, people need to trust that we are not lowering standards,” she said. “If we want their trust, we need to be more open,” which is why the EU makes all of its negotiating documents related to TTIP available online.

Another area in which trust is important is within the issue of investor-state dispute settlement, or ISDS.

“ISDS has become the symbol of big corporate greediness,” Malmström said, because many Europeans are suspicious of the motivations of big business.

Europeans suffered immensely from the financial crisis, she explained, and therefore worry that companies could exploit the mechanism to increase their profit margins, as Philip Morris is accused of doing in Australia.

As a result, Malmström said, she and her fellow trade negotiators are pursuing reforms to gain public trust while protecting investors at the same time.

Most people involved in the process say they appreciate the direction of the reforms, she said, but a few will find fault in virtually any outcome.

“There are people who don’t like the notion of ‘free,’ they don’t like the notion of ‘trade,’ they don’t like the notion of ‘U.S.,’” she said. “There are those you cannot make happy even if you say ‘free ice cream for everybody!’”

Another stumbling block to negotiating responsible trade agreements is the issue of data protection. The Edward Snowden debate continues to echo in Europe, Malmström said, and many Europeans also don’t trust big business with collecting and storing their personal data. Such issues demonstrate the changing role of consumers themselves in trade policy, she added.

“They want to be involved, and that’s very important,” Malmström said. “It puts pressure on us as policymakers—we have to respond.”

— Lindsay Fuller MPA ’16