TTIP of the iceberg for energy: growing expectation gaps for EU-US trade deal

One goal of a more harmonious, open trade relationship between the EU and US, as proposed under the sprawling Transatlantic Trade and Investment Partnership (TTIP) negotiations, is to spur innovation in European green technologies by making it easier to sell products to the US market.

For the EU, “a rules-based, open international market would promote more cost-efficient and more widely available green goods and services (including green technologies). It would also foster innovation as well as create jobs and bring an important contribution to the achievement of environmental objectives and the fight against climate change.”

As the fourth round of negotiations focusing specifically on energy came to a close, TTIP is already claiming an early success on this issue in the electric cars sector. Authorities have agreed to set up joint testing laboratories that will work together on safety and performance requirements for electric vehicles and batteries. Common standards for plugs, sockets and other equipment needed to charge cars are expected to emerge.

Such standards are important for green technology SMEs, and SMEs more broadly, which have difficulty handling and affording two sets of technical standards.

Alongside TTIP’s agenda for unifying technical standards for products, commentators point to the potential opening of procurement as a massive opportunity for companies. “Some 85 per cent of US public procurement is currently not open to European companies while 85 per cent of EU public procurement is open to the US,” said Nick Mabey, Chief Executive of E3G.

Business associations are throwing their weight fully behind the negotiations. Speaking at a TTIP briefing hosted by the German Marshall Fund on Tuesday (19 March), Fredrik Erixon, Director of the European Centre for International Political Economy (ECIPE) remarked how they are, “uniformly and vigorously in favour of the TTIP.

A spokesman for BP, Robert Wine, said the TTIP is about, “Improving the competitiveness of both parties” through “shared standards, joint R&D programmes and most importantly, complementary climate related policies.”

Elsewhere, the mood music is more reserved. For Pieter de Pous, EU Policy Director, European Environmental Bureau, the TTIP is, “Not so much about trade, but new rules about how we write rules.”

The creation of a new council and new procedures including trade impact assessments for two continents is proposed.

“If you need to change policies and standards that apply to a given sector, you’ll need to go to the US first [for alignment],” he said. “This all sounds like a lot of delays. You will be putting a break on innovation if you increase extra barriers to policies that drive innovation.”

There will be hard choices too in resolving the growing contradictions between EU industrial and climate policies. The subject of shale gas imports sits prominently on the negotiating table.

"What little you might gain on green tech exports [under TTIP], we fear you’d lose twofold or more in climate ambitions here,” said Brook Riley, of the environmental pressure group Friends of the Earth. “We need to maintain ambitious climate and energy policies.”

Growing public interest in TTIP

Following the completion of the fourth round of negotiation last week in Brussels (10 – 14 March), the profile of TTIP is growing.

Previous rounds included around 30 negotiators on either side. This time around, over 100 US experts came to Brussels to discuss the package, as the detail gets more technical. A host of lawyers, lobbyists and other professional services firms lie in the wings too.

Public hearings and stakeholder consultations are fast becoming the norm, prompting a member of the European Parliament (MEP), Catherine Stihler, to ask for the creation of a special full time TTIP committee watchdog.

The visibility of the two leaders of the negotiating teams – Ignacio Garcia Bercero for the EU and Dan Mullaney for the US – is increasing, in an apparent effort to increase public diplomacy.

Much of the public interest stems from the closed-door nature of the negotiations and the piecemeal release of documents from both sides. But this feature is “part and parcel” of trade negotiations, says Peter van Ham, senior research fellow at the Clingendael Institute of International Relations.

“We’re talking about high-level poker games that are very familiar to these kinds of negotiations: they should not be overly dramatised,” he stressed.

The date of agreement of a final deal is unclear: it could happen as early as the end of this year, or as late as 2017, and will be influenced by the personalities elected into the Parliament and Commission and counterparts joining the US Congress in this election year.

With growing public interest, a rising resistance is also increasingly evident. There are sensitive and long-standing differences in certain sectors with skin and hair starting to fly on everything from chlorine-washed chicken to the labelling of genetically modified products.

“I would like to see the EU work on the economically strong and politically easy areas and shed the economically marginal and politically difficult areas,” said Mabey.

Energy’s tipping points

There is plenty in TTIP’s energy negotiations to debate about with the current overriding issues covering sustainability and security.

The sustainability angle is embodied in the debate surrounding shale gas. The EU and its business community would like to benefit from the recent shale gas boom in the States. Arnaldo Abruzzini, Secretary General of Eurochambres, told Science|Business that TTIP is seen, “As an important vehicle to strengthen energy supply chains to Europe.”

The US currently has restrictions on energy exports and, for politicians, there is reason to keep a hold on the reins. Exporting natural gas would push up prices at home, meaning US votes and the competitiveness of industry are at stake.

According to an energy association official, given how low gas prices are in the States, a marginal increase would not rock the boat too much for anyone.

An eventual agreement under TTIP would be seen as a significant boon for the EU, with the bloc particularly interested in acquiring crude oil and liquefied natural gas (LNG).

Such commentary risks the ire of Europe’s environmentalists though. Shale gas should not crowd out renewable targets, says Riley.

“From a research perspective, look at the boom over the last few years in helping wind turbines evolve from 2MW in 2000 to 10MW today,” he said. Europe must ensure it keeps challenging itself to develop innovation in these fields, he added.

Another difficult circle to square is the subject of Europe’s long-term energy security. “It obviously has great political pertinence right now, when we see Russia, the sole energy supplier of some countries in Europe, asserting itself on Europe’s borders,” observed van Ham. Central and Eastern European buyers of US energy stand to enhance their negotiating power, the argument goes.

Here again, staying the course with renewables remains Europe’s best option, reiterates Riley. “By the time we’ve built our shale terminals in Europe, to facilitate shale imports, we’ll have moved on to the next energy crisis.”

Elsewhere, negotiators are continuing to debate whether TTIP should include energy as a dedicated chapter or deal with the sector through horizontal provisions. This was the subject of two days’ debate last week, with no breakthrough.

Opening up US procurement markets to Europe is expected to prove very difficult too. Procurement is a state competence in the US and there’s precedent in an existing trade agreement with Canada where states enjoy exemptions.