EU-US free trade deal dead before arrival

Paris (AFP) - Free trade negotiations between the European Union and the United States were supposed to be heading for the home stretch, but now the chances of a deal appear remote.

Last weekend Germany's vice chancellor and economy minister Sigmar Gabriel said the negotiations on the so-called TTIP agreement were effectively dead, with French junior trade minister Matthias Fekl calling Tuesday for a halt to the talks.

"While one minister openly denouncing TTIP casts severe doubts on the future of TTIP, the second one to do so may have given TTIP the final blow, especially since the ministers represent Germany and France, the two largest economies in Europe," said Daniel Bosgraaf, an economist at ING Bank.

The EU's executive Commission and US negotiators began work on the Transatlantic Trade and Investment Partnership (TTIP) in 2013, aiming to create the world's biggest free trade market of 850 million consumers stretching from Hawaii to Lithuania.

A deal was supposed to be concluded before US President Barack Obama leaves office in January, but the talks have become bogged down amid widespread suspicion in the 28-nation EU that a deal would undercut the bloc's standards in key areas such as health and welfare.

Sylvie Matelly, deputy director at the French Institute for International and Strategic Affairs (IRIS), said it will be difficult to successfully conclude what she sees as a flawed negotiating process.

Controversial from the start, she said "the negotiations have repeatedly broken down over their different viewpoints, and a lack of public preparation, and transparency over what will be negotiated."

Negotiated in extreme secrecy, the agreement in fact aims to go much further than previous trade deals which have focused on lowering tariffs on goods.

The TTIP targets setting out common rules and regulations that affect commerce, such as oversight of product and food safety.

The aim, said Matelly, was "to make European and American products more competitive and capable of competing" with those from China.

Common rules, for example on car safety, would reduce costs for US and European manufacturers, and could result in the TTIP area in fact setting global standards in many areas.

But leaks about the planned text have sparked serious concerns among many Europeans that they will be giving up control over sensitive issues such as the use of pesticides and hormones in food production.

Another issue that has raised hackles is plans for a special court to speed up cases by companies against governments over breaches on regulatory issues, which opponents see as giving firms a veto over public policy, particularly in social and environmental areas.

- Elections risk -

The negotiating timetable is now bumping up against the electoral calendar.

The TTIP treaty has become a "hot potato" as key elections approach in the United States, France and Germany, said Sebastien Jean, director of the French international economics think tank CEPII.

"In France there is a feeling that no one can win an election defending the TTIP, but rather that one could lose," he said.

While the European Commission wants to continue the talks, "it is hard to see negotiations continuing without the support of Germany or France," said ING economist Bosgraaf.

"Both countries hold elections in 2017, and TTIP is not popular with the public."

He said that even if EU foreign ministers decide at their meeting on September 22 and 23 to continue the negotiations, chances of a deal are now slim.

"After all, neither Trump nor Clinton support the trade deal. For now, TTIP remains barely afloat."

Donald Trump swept away his Republican rivals to secure the party's presidential nomination by attacking trade deals as being disadvantageous to Americans.

Hillary Clinton secured the Democratic nomination, but only after shifting to a more sceptical position on trade agreements following an unexpectedly strong primary challenge .

IRIS's Matelly said that those who launched the negotiations "failed to anticipate that in the post 2008 crisis period the idea of liberalising and deregulating even more would fare poorly with public opinion."

Moreover, the June decision by Britons to leave the EU heralds a possible shift to "a new view on what Europe should be, which is unlikely to include more economic liberalism", she said.