Will Snowden Affair Derail EU-US Free Trade Talks?

Will Snowden Affair Derail EU-US Free Trade Talks?
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The latest revelations made by NSA whistleblower Edward Snowden that US security agencies are actively involved in electronic surveillance of European phone and internet traffic cast another shadow on the progress of the recently announced start of the US-EU free trade agreement, officially known as the Transatlantic Trade and Investment Partnership Agreement (TTIP). Is there a real danger that the Snowden affair will endanger the pace of the negotiations? It most likely will not for the simple fact that the stakes are too high.

EU-US trade already accounts for 50% of world GDP and 30% of world trade. The TTIP would hugely increase these numbers and therefore create the world’s largest free trade area. According to the European Commission the agreement could increase European exports to the US by 28% and make an additional €187bn profit for the European exporters of goods and services. On the other side of the Atlantic the benefits are even higher. The recent Bertelsmann Foundation study estimates show that the TTIP would increase the US long-term GDP per capita by 13.4% and create an additional 13 million jobs in the US and Europe.

As a result, the agreement will, along with the potential benefits of the EU-Canada free trade agreement, have a huge impact on the global economy, and  potentially have a strong impact on both the United States’ and Europe’s long-term geostrategic positioning in the world economy. This fact did not go unnoticed in Asia. The recent English edition of People’s Daily, the Chinese Communist Party organ, pointed to the symbolic fact that the official start of the negotiations was announced at the G8 summit held in Northern Ireland last month and compared the TTIP with an economic version of NATO.

The stir caused in European capitals by the surveillance accusations is therefore probably a short-breath reaction, mostly due to public pressure. As the Financial Times recently pointed out it is very unlikely that European leaders were not aware of US intelligence activities in Europe. Moreover, despite Washington’s intelligence activities in Europe, the US does not consider European nations as enemies. The sharing of information and cooperation between Washington and the European security agencies is enormous, in particular on potential terrorist activities. Still, apart from the four nations (the UK, Canada, New Zealand and Australia) with which the US is openly sharing information under the “five eyes” agreement, all other nations are potential targets for US intelligence.

This concerned French president François Hollande, who threatened to postpone the start of negotiations, and to a more moderate degree German chancellor Angela Merkel. According to the Parisian paper Le Monde, the French foreign intelligence service DGSE has an equally extensive surveillance programme as does its US counterpart. The German based newspaper Der Spiegel indicated in their interview with Edward Snowden that the German intelligence services have much closer ties with their American partners than has previously been publicly known.

Both French and German political leadership must have had complete insight into this matter. On the other hand, there were no similar reactions from Downing Street. This not only points to the “special relationship” between the UK and US, but also to the British government’s efforts to play down the role of the British cyber security agency GCHQ in the global eavesdropping scandal recently revealed by The Guardian. It seems that espionage is an open game, with very few rules, and with all sides widely involved.

It will be interesting to see the impact of the Snowden affair on the first round of EU-US trade negotiations this month. Most likely it will be mild. Angela Merkel has already tried to play down the affair, and we can expect similar reactions from François Hollande. The most visible consequence might be the cancellation of two data-sharing agreements that the EU currently has with the US. The EU Commission started a regular revision of the Agreements in Washington on 8 July, following EU’s home affairs commissioner Cecilia Malmström’s critiques over US conduct. The move was also backed by the EU Parliament’s resolution calling for a full investigation into the matter.

Categories: Economics, Europe

About Author

Ante Batovic

Ante was previously a lecturer in International History at the University of Zadar where he specialised in Cold War and East European history. He was also a visiting fellow at the LSE IDEAS centre and the fellow of the Robert Schuman Foundation in the European Parliament. He holds a master’s degree in Global Politics from the London School of Economics and a PhD from the University of Zadar.