EU-US summit: free trade talks ahead?

international | eu | opinion/analysis Friday June 11, 2004 11:35 by Olivier Hoedeman - Corporate Europe Observatory (CEO) olivier at corporateeurope dot org

The EU-US summit (June 25-26, Dromoland Castle, Ireland) may result in a de facto launch of free trade negotiations between the EU and the US. Little-known but influential bodies like the Transatlantic Policy Network and the Transatlantic Business Dialogue are campaigning behind the scenes for a “barrier-free Transatlantic marketplace”. TABD co-chairs Niall Fitzgerald (Chairman Unilever) and Douglas Daft (Chairman Coca-Cola) will attend the EU-US summit to present their demands.

EU-US free trade talks ahead?

The EU-US summit (June 25-26, Dromoland Castle, Ireland) may result in a de facto launch of free trade negotiations between the EU and the US. Despite a complete absence of public debate and support, there is significant political momentum behind moving further towards a “barrier-free Transatlantic marketplace”. Little-known but influential bodies like the Transatlantic Policy Network and the Transatlantic Business Dialogue, campaigning behind the scenes, are having an impact.

In its December 2003 report "Strategy to Strengthen Transatlantic Partnership", the Transatlantic Policy Network called governments to “deepen and broaden the transatlantic market, with a view to its completion by 2015, and an accelerated 2010 target date” for a range of sectors. The Transatlantic Policy Network (TPN) - a lobby group involving EU and US parliamentarians and major corporations from both sides - will use 2004 to gather political support for its plan “on highest political level.” The motives behind the TPN campaign are a mix of neoliberal free market dogmatism and Atlanticist desires to bridge the EU-US splits caused by the unilateralist foreign policies of the Bush Administration, not the least the war against Iraq.

The Transatlantic Business Dialogue (TABD), bringing together 35 large EU and US corporations, is mimicking the TPN free trade wish-list almost word-for-word. The TABD “sees its primary role this year and next as advising United States and EU governments on the priorities for achieving a barrier-free transatlantic market.”


Don’t mention ‘free trade’

The meeting room of the Centre for European Policy Studies (a corporate-funded think-tank with a prestigious central Brussels address) was teeming with business lobbyists, diplomats and European Commission staff, when the TPN presented its "Strategy to Strengthen Transatlantic Partnership" in February 2004. The panelists, European and US government representatives, fully embraced the proposed free trade talks and the discussion focused on how best to package and sell the proposal. Alexander Schaub, a European Commission Director General, praised the TPN for “forcefully launching the debate on the Transatlantic Market”, but recommended using neutral terms like ‘mutual recognition’ or ‘equivalence’. With a good dose of irony, Schaub stated that US officials have been “instructed to avoid” the words ‘free trade’. Erika Mann, Chairman of the TPN’s EU Steering Committee and German Social-Democrat Member of the European Parliament, agreed that controversial language would backfire, recalling the resistance that flared up when former EU Trade Commissioner Leon Brittan proposed a New Transatlantic Marketplace (NTM) back in 1998. Brittan wanted a ‘big bang’ agreement to dismantle all barriers to trade in goods and services as well as investment, and a Transatlantic dispute settlement mechanism to enforce compliance. The proposal was immediately torpedoed by the French government. Instead, the US and EU governments agreed to launch a Transatlantic Economic Partnership (TEP), a step-by-step and more low-profile process. With tariffs on trade between the EU and the US already largely dismantled, the focus is on so-called non-tariff barriers, such as divergences in standards and regulations. As part of the TEP, elaborate structures have been established in the last five years to streamline EU and US rule-making. Examples are the Early Warning System (EWN) and Guidelines for Regulatory Co-operation between government officials. But the TPN, the TABD and other corporate players want more.

In May 2004, European employers coalition UNICE, the US Business Roundtable and seven other heavyweight lobby groups from the EU and the US jointly called for “a new, more ambitious transatlantic trade and investment initiative”. Again, controversial terms were carefully avoided. “Although the statement does not spell out the need for a free trade agreement between the EU and the United States, European industry federation official said this is what both sides want,” the International Trade Reporter pointed out.


The price of “free trade”

Regardless of the vocabulary, the proposed negotiations would imply further intensified and accelerated downwards convergence between EU and US policy-making and legislation. A Transatlantic divide over environment and consumer protection already existed during the Clinton Administration, but has deepened dramatically after Bush moved into the White House. Corporate interests have been granted an almost complete grip on environment and health decision-making in Washington D.C. and this increasingly has impacts far beyond the US borders. On behalf of US corporations, the Bush government aggressively attacks EU limits on genetically modified food and proposed safety regulations for chemical products (REACH). Things will only get worse if Bush gets re-elected, while it remains to be seen how much the situation will improve if John Kerry wins.

No matter what free trade proponents claim, convergence in EU-US rule-making would mean a further step backwards in the quality of European policies and regulation, already under immense pressure due to the EU’s obsession with international competitiveness. Beyond concerns for the diminishing space for sustainable and people-centred policies, the proposed convergence (to be exercised in un-transparent structures between government officials and business) is fundamentally at odds with genuine democratic processes.


Shadow Play in the European Parliament

A milestone in the TPN campaign was the European Parliament resolution on EU-US relations, approved on April 22nd 2004. In a plenary vote in Strasbourg, the European Parliament approved a set of recommendations for the June 25-26 EU-US summit which include the main TPN demands. Under the heading “Completing the Transatlantic Market by 2015”, the resolution proposes “the launching of a 10-year Action Plan aimed at deepening and broadening the transatlantic market, as well as the transatlantic economy and monetary cooperation, with the goal of a barrier-free transatlantic market by 2015.” The Parliament “asks the forthcoming EU-US Summit to set up a body of experts to elaborate specific proposals to this end.” The resolution also recommends “a 2010 accelerated target date for financial services and capital markets, aviation, the digital economy (privacy, security and intellectual property rights), competition policy and regulatory cooperation.”

The TPN effectively pre-cooked the Parliament's resolution, by exploiting that TPN heavyweight Elmar Brok, a German Christian-Democrat MEP, chairs the parliament's foreign affairs committee. In fact, Elmar Brok simply cut-and-pasted the main TPN demands into the draft European Parliament resolution. When the resolution was discussed in the Committee on Foreign Relations, Brok was far from the only TPN’er present. In fact, over a dozen MEPs (mainly from Christian democratic, liberal and social democratic parties) in this Committee are members of the TPN. Neither Brok nor any of the other TPN’ers ever made the origins of the resolution known. Nor did they inform other parliamentarians about their double roles. Brok is no stranger to double hats: he is also on the payroll of German communications giant Bertelsmann, where he is Vice-President for Media Development.

When the resolution was voted on in the EP’s plenary session in Strasbourg, the shadow play reached absurd levels. Only Elmar Brok and TPN vice-president Erika Mann spoke: Mann tabled a last-minute oral amendment in order to remove the term 'transatlantic single market', to avoid "complications". Mann’s intervention may have been sparked by a press release from Friends of the Earth Europe (FoEE) criticising the draft EP resolution. The press release had argued that, "negotiations on an EU-US single market would have disastrous consequences, especially considering the excessively anti-environmental and pro-business attitudes of the present Bush administration".


Friends in high places
The TPN brings together influential parliamentarians and business leaders from both sides of the Atlantic. Its European Parliamentary Committee includes over 85 MEPs. The most prominent of these MEP is probably European Parliament President Pat Cox, who for instance was part of TPN activities during a visit to Washington D.C. June 23-25 2003. In June 2004, Cox won the Transatlantic Business Award for his work on “the interconnectivity of policy making between the EU and the US”. On the US side, the TPN Congressional Group has over 45 members, mainly Republicans but also a dozen Democrats. The 35 member corporations of the TPN include giants like DaimlerChrysler, BP, Nestlé, UPS, IBM, and Boeing.
The group’s powers are boosted by the far-reaching support of the European Commission. On February 18th this year a TPN delegation including the MEPs Elmar Brok, Erika Mann and James Elles met with Commission President Prodi, who expressed his support for their action plan. The European Commission also provides generous financial support for the TPN. From November 2001 until November 2002, for instance, the EC’s Directorate-General for External Relations (DG Relex) contributed over €135,000 to TPN activities. According to European Commission documents obtained by Corporate Europe Observatory, the EC for instance transferred €53,896,65 as support for the TPN’s Autumn meeting in 2002. TPN events are far from low-budget and some of the bills submitted made the EC frown. The network holds many of its discussion forum events in the Brussels restaurant Chez Marius, famous for its “Provence atmosphere”. When the TPN asked the EC to pay bills worth over €30,000 for dinners in Chez Marius, including a single bill of €4,000, DG Relex complained. In the end, the EC agreed to reimburse €13,000 for six TPN dinners in Chez Marius.

The EC also had its doubts about some of the bills submitted in relation to the TPN Mid-Year Meeting in Tucson, Arizona, in July 2002. The €4,181.10 bill for “entertainment (line dance instruction, cowboy hats/bandanas etc.)” caused some concern. Also bills for matters like "Golfer transfers” (€466.69) and enormous telephone bills for calls made by TPN’ers from their hotel were not reimbursed by the EC. Many other astronomic TPN bills were paid by the European commission, including one of €7,159.74 for a dinner in restaurant Chateau de Ile in Strasbourg, France.

Also on their frequent visits to Washington D.C., TPN delegations enjoy high-level access. In July 2002, for instance, TPN’ers met with Horst Köhler (then head of the International Monetary Fund). During the July 2003 trip, Erika Mann, James Elles, Hanns Glatz of DaimlerChrysler and Peter Linton met with both vice-president Dick Cheney and Trade Representative Robert Zoellick. TPN delegations visiting Washington D.C. typically meet with senators from both the Democratic and Republican parties as well as think-tanks, including hardline rightwingers like the Heritage Foundation.


Burson-Marsteller Helps Out

Peter Linton, the chairman of public affairs company BKSH, is a leading figure in the TPN. Linton played a major role in drafting the "Strategy to Strengthen Transatlantic Partnership" report. It is unclear whether Linton is volunteering for the TPN. On its website, BKSH (the government relations consultancy of PR giant Burson-Marsteller) claims it can help “clients to mount US, pan-European and transatlantic campaigns.” Indeed, the TPN’s campaign for EU-US free trade talks may very well be designed at the BKSH offices in Brussels, situated in ‘lobbying high street’ Avenue de Cortenbergh. Linton himself attracted some attention in 1997 when the lobbying and PR strategy he had designed for the biotech lobby coalition EuropaBio was leaked. The report outlined “a sustained communications strategy able to generate favourable perceptions and opinions”. Incidentally, Linton seems to also be the main resource person on biotech issues within the TPN.


TPN-TABD Synergies

The TPN campaign for EU-US free trade talks is reinforced by the Trans-Atlantic Business Dialogue (TABD), a grouping of around 35 major corporations from both sides of the Atlantic. TABD-co-chairs Douglas Daft (Coca-Cola) and Niall Fitzgerald (Unilever) will attend the EU-US summit in Ireland (June 25-26th) to present key TABD demands. The TABD was established in 1995, with sweeping political support from the European Commission and the Clinton Administration. Over the years, CEOs from EU and US corporations have assembled at TABD summits and in working groups to identify what they considered barriers to Transatlantic trade and investment, which the EC and the US government in return promised to do their best to dismantle. After a series of early successes, the TABD’s focus increasingly shifted towards identifying upcoming EU and US legislation that could cause trade conflicts or otherwise harm the corporate earnings and demanding that these policies were weakened or blocked. Some examples: the Austrian, Danish, and Swiss bans on climate-destabilising HFC gasses, EU rules for animal testing for cosmetics, and the EU’s new chemicals policy overhaul (REACH).

The TABD is currently in the process of reconstruction after it ran into a crisis a few years ago. CEOs of major corporations started to get impatient with the decreasing “implementation rate” of TABD demands, as for instance EU biotech legislation became increasingly politicized due to citizens protests. Ironically, the arrival of the Bush Administration in the White House was another blow to the TABD. Bush’s instinctive rejection of anything developed by the Clinton Administration caused a further lack of momentum. Only in the past year has the Bush Administration discovered that the TABD is entirely in line with its pro-industry leanings. After a long period without effective leadership, the CEO’s of Coca-Cola and Unilever took over in early 2004 and the TABD was relaunched during a side-meeting to the World Economic Forum in Davos. Both corporations are also active members of the TPN.

During the TABD’s difficult spell, the TPN remained a consistent supporter. The two groups share offices in the Rue Froissart in the heart of the EU quarter of Brussels. The TABD’s troubles were repeatedly discussed at TPN conferences, such as the Mid-Year Assessment event in Cadiz (Spain) in April 2003. Referring to the US and EU administrations, Hanns Glatz (from DaimlerChrysler and Chairman of the TPN’s EU Business Committee) claimed that the TABD’s main problem was that “the political leadership is not committed”. EU Ambassador in Washington D.C. Dr. Günter Burghardt spoke of a “chicken and egg situation: CEOs blame lack of Administration interest and vice versa”. Ivan Hodac of ACEA (the European automobile lobby group) suggested to “totally replace the TABD rather then restructure it”.

The TPN’s Leadership Summit in Washington D.C. (December 5 2003), attended by US Deputy Secretary of State Richard Armitage and Trade Representative Zoellick, was used to build new momentum for the TABD. Niall Fitzgerald (Chairman Unilever) and Douglas Daft (Chairman Coca-Cola) explained their plans for a leaner, more focused TABD. According to Niall Fitzgerald, the TABD will be less high-profile than in the past and it is “going to limit its agenda to a few areas”, such as pushing governments to “seek convergence before regulations were put in place.” At the same meeting, Erika Mann presented the TPN report calling for a Transatlantic Market by 2015/2010.


EC Saves Ailing TABD

The main reason that the TABD seems to have survived its long crisis and several failed re-launch attempts is the extensive and continuous support from the European Commission and particular Trade Commissioner Pascal Lamy and Enterprise Commissioner Liikanen. European Commission documents obtained by CEO reveal that the EC has taken a very active role also in the most recent relaunch, to the extent that new co-chairs were in fact handpicked by the EC. It was the EC that sent out the invitations to “a geographically balanced list of US and EU CEOs” for the June 24th 2003 business-government meeting in Washington D.C. The EC and the EU business side of the TABD work in close tandem, sharing a dissatisfaction with the lack of commitment from both the US Administration and US corporations in recent years. A striking example: at a meeting between EU TABD representatives and EC officials in February 2002, business leaders suggested “that Commissioner Lamy calls US Secretary Evans with the view of encouraging the US TABD to appoint a new Co-Chair as soon as possible”.

In defence of its sweeping support for the TABD, the Commission cites parallel consumer, environment, and labour dialogues, conveniently neglecting to mention that these never had any powers comparable to the TABD’s. The Commission also fails to mention that the environment and labour dialogues ceased to exist years ago. The Transatlantic Consumer Dialogue, meanwhile, is still going strong, trying to defend progressive biotech and chemicals regulations from being undermined by EU-US convergence efforts.

The Dutch government, which takes over the EU Presidency from July 1st 2004, is a firm supporter of the TABD. The Ministry of Economic Affairs has assisted the re-launch and works closely with the leadership of Unilever. A TABD conference is planned to take place in The Netherlands during Dutch EU presidency in the second half of 2004.


Will Free Trade Talks Be Launched?

The TPN itself is “extremely optimistic” about the chances for getting EU-US free trade talks off the ground. Hanns Glantz, TPN’er and Brussels-based lobbyist for Daimler-Chrysler, for instance, sees more commitment now than in the previous attempts to get such negotiations launched, in both the US administration and Congress as well as the European Commission and Parliament. “By banging on the door for the fourth time it will work,” Glantz said, referring to the NTM and other previous failed attempts.

U.S. Commerce Secretary Donald L. Evans has in the past clearly voiced the interest of the US Administration in free trade negotiations with the EU. Trade Representative Zoellick is known to be particularly eager to start talks on a EU-US services agreement. On the EU side, UK Chancellor Gordon Brown has repeatedly called for free trade initiatives of this kind. Jose Maria Aznar, then Prime Minister of Spain, in February this year proposed to create a “high-level bilateral economic committee” that would design a plan for EU-US free trade by 2015. The European Commission’s response was surprisingly lukewarm, which may have to do with tactics rather than content. The European Commission knows that several EU governments are likely to resist full-blown free trade talks. France, for instance, would object to negotiations involving agriculture as well as audiovisual and other services. Other EU governments, as well as the European Commission, fear that launching extensive negotiations may upset developing countries and thus harm the WTO’s Doha Round. Karl-Friedrich Falkenberg of DG Trade says that the EU would agree to talks “not on a comprehensive FTA but dealing with ‘everything but tariffs’." The focus, Falkenberg argues, should be on removing regulatory and standards-related barriers to trans-Atlantic trade, which, he said, the WTO "so far has not been able to deal with." The Dutch and UK governments favour a pragmatic approach focusing on preventing new trade conflicts and removing technical barriers to trade and investments through mutual recognition agreements.


Beyond Dromoland Castle

The EU-US summit on June 25-26th will be the moment of truth for the alliance of parliamentarians, government officials and business leaders promoting EU-US free trade talks. But apart from what happens when Bush meets with Commission President Prodi and Irish prime Minister Bertie Ahern at Dromoland Castle, the campaign by groups like the TPN and the TABD raises serious questions about democracy in the European Union.

The TPN - involving parliamentarians and corporate leaders – is an example of the increasingly blurred lines between business lobby groups and elected representatives of the European public. The farcical process that led the European Parliament to approve a resolution full of TPN wording underlines the need for tougher transparency requirements for lobbying. The far-reaching political and financial commitment to the TPN and the TABD underline that there is a deep problem with the political culture of the European Commission. Will the new elected European Parliament make an end to these undemocratic practices within the EU institutions?