This week’s successful conclusion of the Trans-Pacific Partnership (TPP) negotiations is a major historical milestone. It is the first part – along with the Transatlantic Trade and Investment Partnership (TTIP) – of the U.S. Administration’s strategy to create updated rules for the global economy that take account of important new phenomena like global value chains, the Internet economy, and the competition between state-owned and private companies. While not aimed against China or any other economy, TPP does help the U.S. and a number of like-minded partners to assert values like openness, fair competition, and the rule of law that will create a more level playing field in Asia and more widely in the Pacific Rim.
There are three lessons from TPP’s success for Germany and U.S.-German relations as the transatlantic partners consider the next steps for their own mega-regional trade negotiations in TTIP.
First, everyone will have to slay a few domestic political dragons to get to yes. The United States compromised on the length of patent protection for biologics – medicines derived from living cells that are at the frontier for treating cancer and other serious illnesses. Japan and Canada agreed to more access to their agricultural markets. And Australia has agreed to a form of Investor-State Dispute Settlement that it had refused to sign up to in the bilateral free-trade agreement it inked with the U.S. in 2005. So in order to avoid frictions later on, the earlier Germany, its EU partners, and the U.S. reconcile themselves to the fact that presenting faits accomplis to the other in TTIP is a no-go area, the better it will be for both sides. TTIP is a negotiation, after all.
Second, big economies count. The TPP negotiations, which began 10 years ago, really took off once Japan joined them in 2013. Japan’s Prime Minister Shinzo Abe became a leading proponent of TPP despite opposition from within his own party for the kinds of reforms the deal would require. With Japan in TPP, the talks moved from an important exercise in trade and investment liberalization to a dynamic assertion of forward-looking global economic rules. The message is clear: in Europe, a strong German voice on behalf of TTIP will continue to be necessary if it is to be seen not only as a market opening effort, but also as a long-term project to project transatlantic strategic interests.
Third, many of the governments taking part in TPP have to get to yes in the face of considerable opposition to further trade liberalization from NGOs, labor unions, and parliamentarians. Trade is not as popular as it should be, and a range of ills are being attributed to it from voices on both the left and right of the political spectrum, leaving centrist, pro-trade forces squeezed between vocal, if not always well-informed, opponents. While TTIP is not likely to be as unpopular in the U.S. as TPP, it is and could continue to be contentious in Germany, where there is a fear of the country’s high standards being overturned by supposedly careless American practices. The fact that it was the U.S. Environmental Protection Agency that recently uncovered VW’s unscrupulous approach to emissions controls may have the silver lining of making U.S. regulatory culture more respected in Germany and Europe. But it will take more than that to get TTIP over the finish line. The German government, business associations, individual companies, think tanks, and media outlets will need to step up their game on behalf of TTIP. Facts can beat out fears.