Last March, the Commission requested formal authorisation from the Council to open negotiations for Transatlantic Trade and Investment Partnership with the United States (TTIP), the so called "negotiating directives", which set out the general objectives to be achieved with the agreement. According to the European Commission if the Transatlantic Trade and Investment Partnership with the United States (TTIP) goes beyond tariff barriers and harmonising standards on goods and services it could generate around €100 billion per year, however it would be worth just around €25 billion if it covers just tariffs. The Centre for Economic Policy Research (CEPR), has also estimated that a Free Trade Agreement with the US could worth up to €119 billion a year if it goes beyond tariff barriers. It has also been estimated that it could worth £10 billion just to the UK. France, from the outset, has made clear that it would veto any agreement on the EU mandate for a FTA with US unless the audiovisual sector is excluded from the scope of the negotiations.
In fact, the culture ministers from Germany, France, Austria, Belgium, Bulgaria, Cyprus, Hungary, Italy, Poland, Portugal, Romania, Slovakia, Slovenia and Spain, in a letter, called on the European Commission to exclude the audiovisual sector from the talks. David Cameron believes that all subjects and products should be up for discussion in the coming negotiations on the FTA with the US. The European Commissioner in charge of trade, Karel De Gucht, has also said the EU “should at all costs avoid taking issues off the table before negotiations even start” as, in this way, it “will never be able to also obtain concessions from the Americans.” He stressed that the EU has several red lines with respect to audiovisual services, but noted “that a full-scale exclusion of audiovisual services from EU commitments in the TTIP negotiations is neither necessary nor justified.” The Commission believes therefore that excluding the audiovisual sector would lead to the US also excluding sectors from the negotiations.
The US has made clear that it expects all sectors to be included in the negotiations for a Free Trade Agreement with the EU. According to William Kennard, the US ambassador to the EU, “If a mandate is released that constrains the negotiators – whatever you want to call it, a carve-out, a red line, an exception – if it’s not a clean mandate, it will increase the pressure on our side to do the same,”. Thus, the US is likely to retaliate.
On 14 June, the Council authorized the launching of negotiations and adopted a mandate for the Commission to negotiate a trade and investment agreement with the United States, the "transatlantic trade and investment partnership" (TTIP). The mandate covers market access, regulatory issues and non-tariff barriers. It is important to recall that the Council adopts the negotiating directives, authorizing the Commission to negotiate on behalf of the EU, by QMV but it is required to act unanimously for the negotiation and conclusion of agreements in the field of trade in cultural and audiovisual services. As above-mentioned, several member states, including Germany, initially supported France but then they dropped their opposition to launching negotiations on the FTA with the US, leaving France isolated on its demands for having the culture sector excluded from the Commission mandate. France refused to accept any compromise offered by the European Commission. In fact, France has refused to approve the Commission mandate unless the audiovisual sector was excluded. In order to avoid the French veto and the collapse of negotiations, before they have begun, the other Member States had no choice but to accept the French demands. Hence, the EU trade ministers agreed “that audiovisual services will not be covered in the mandate, but that the Commission will have the opportunity to make recommendations on additional negotiating mandates.” However, French Trade Minister Nicole Bricq has already made clear, "In that case, it would be the same procedure again — one would ask the French position and we would say 'No' again,". Consequently, it is highly unlikely that the audiovisual sector could be introduced into the negotiations at a later stage. Hence, as above-mentioned, the US might retaliate.
The Council’s approval of the Commission mandate has allowed the US President Barack Obama, President of the European Commission José Manuel Barroso, President of the European Council Herman Van Rompuy and UK Prime Minister David Cameron to officially launched negotiations for the Transatlantic Trade and Investment Partnership (TTIP) on 17 June at the G8 summit in Northern Ireland. Barack Obama has announced that the negotiations will start in July in Washington.
The European Commission, which will negotiate the agreement on behalf of all EU’s member states, is expecting to conclude talks before September 2014, as the current Commission's term of office runs until October 2014. However, this is a most unrealistic timetable.
It has already been very difficult to approve a mandate for the Commission due to France’s insistence of having the audiovisual sector excluded from the negotiations. In fact, the negotiations were on the brink of collapsing before they have started. This clearly shows how difficult it would be to negotiate the agreement.
The Government has been saying that negotiating a free-trade agreement with the US is “much better on a EU-US level than on a bilateral UK-US basis.” In fact, according to the Government it is better to trade through the EU than bilaterally. David Cameron has recently said, “If Britain weren’t in the EU you would not directly benefit from an EU/US trade deal because we would not be in the EU.” However, it seems the Government has failed to acknowledge that it will face serious difficulties by having the Commission negotiating on behalf of all 27 EU Member States. Having the EU negotiating free trade agreements does not mean that such agreements are negotiated according to the UK interests. The Union consists of 27 member states all with different interests. Whereas the UK, the Netherlands, Denmark, Finland, tend to adopt liberal positions, Italy, Spain, and Portugal are more protectionist, whilst Germany is generally liberal on trade in goods, but less so on the liberalization of agriculture or services. It is impossible to accommodate the interests of all member states, and the Commission will negotiate the deal taking into account the interests of the EU as a whole, which might not coincide with British commercial interests. The UK has limited influence in the shape of this agreement due to QMV.
It is important to note that QMV is the general rule in Council for all aspects of trade policy. Consequentely, the UK does not have such a leading role and influence as the government is claiming. In fact, the Government’s power to influence EU legislation is very limited due to QMV. Presently, the UK only enjoys 8% of the votes. From November 2014, QM will be calculated according to double majority: 55% of EU Member States (15 Member States) and 65% of the EU’s population, and the UK will enjoy 12% of the votes. However, this can hardly be seen as an increase in the UK's voting power as it will be harder for the UK to block proposals.
Following a proposal of the Commission, the Council decides on the signature and conclusion of the agreement. Once the negotiations are completed, the Commission presents the deal to the Council and the European Parliament. The Council adopts a decision authorising the signing of a trade agreement and a decision concluding the agreement by QMV. Although the MEPs have recently voted on a non-binding resolution endorsing the launch of negotiations, they also voted for cultural and audiovisual services to be excluded from the negotiating mandate. The European Parliament supports, therefore, the French demands to exclude the cultural sector from the FTA. Although the European Parliament report is not legally binding and MEPs are not involved in the negotiations, they stressed that the European Parliament’s position should be taken into account at all stages of the negotiations, as the "Parliament has teeth and can bite". In fact, the European Parliament has to give its consent to all trade agreements (assent procedure). The Council must obtain the consent of the European Parliament before adopting a decision concluding EU trade agreements. The European Parliament present position on the FTA with the US confirms the European Parliament tendency to have a more protectionist outlook than the European Commission.
The UK is not able to trade with third countries on its own terms due to EU exclusive competence. The EU is negotiating FTAs with third countries which does not necessarily entail better opportunities for the UK, as they are negotiated on EU terms and decided by QMV. It is vital for the UK to be able to negotiate its own bilateral trading agreements with countries such as China and India. Britain has more successful trading relationships outside the EU. There has been a continuous trade deficit between the UK and the other EU member states. In almost every year since Britain joined the Common Market it has incurred a balance of payments deficit. The UK’s trade surplus with the rest of the world is now £13bn. It is important to note that the UK imports from outside the EU are increasing significantly faster, particularly from the new emerging economies. The UK must, therefore, refocus its trade away from the EU to the rest of the world.
As Bill Cash MP and Bernard Jenkin MP said in their paper “The EU single market – a positive way forward”, “The UK would continue to trade with the EU even if we ceased to be a member: under the EU treaties, the EU is exhorted to pursue “free and fair trade” with non-EU countries." They noted, "It is often argued that the EU can obtain better outcomes at WTO negotiations for Europe as a whole because we are part of a large bloc, but there is no reason why we should not continue to combine UK-EU negotiating efforts when it is in our joint interests. This would not be at the expense of our own seat at WTO negotiations, so we could have more influence." Then, they stressed "We would also have the ability to negotiate our own bilateral trading agreements with major economies like the US, China and India. The UK would be free to pursue agreements throughout the Commonwealth and elsewhere, to enhance UK influence and goodwill, exploiting the “network” world which the present government has been promoting."
