Jean-Claude Juncker has said he intends to support a free trade agreement with the U.S. and maybe renegotiate UK membership in the European Union. But will contradictory positions on EU governance, reflected in the lack of consensus over Juncker’s nomination, determine the prospects for the Transatlantic Trade and Investment Partnership (TTIP)?
As the debate over the presidential appointment of Luxembourg’s former prime minister, Jean-Claude Juncker, comes to an end, the spectre of the “democratic deficit” looms again over the European Union. The European Council voted to back Juncker, but in an unprecedented move, the decision was made by majority rather than consensus, with the UK’s David Cameron and Hungary’s Viktor Orbán voting against the nomination.
The European Council will put the matter to a vote in European Parliament on July 16th.
Junker nomination exposes idiosyncracies
Debates around Juncker’s nomination reflect two contradictory positions in European politics when it comes to the nomination of Commission presidents. One places single member states’ objections above even clear majorities in the European Council, while the second takes the clause about parliamentary election results very seriously.
This contradiction will be one, if not the most important, deciding factor in the negotiations over free trade, as Jean-Claude Juncker, known as a genial but European-style bureaucrat, faces a landscape of shifting priorities as President of the European Commission.
Juncker supports the negotiation of a free trade deal with the United States, as well as the reform of the European Commission, renegotiation of the UK’s membership, and a five-year freeze on further enlargement.
On the other hand, he will have to negotiate calls for greater European humanitarian and military involvement abroad, especially in times of crisis in Syria and Iraq, a greater foreign policy role for the European Union, and the recently signed association agreements with Ukraine, Moldova, and Georgia, not to mention perennial issues like EU membership for Turkey.
Future rounds of negotiations over the TTIP could raise questions about democratic participation in the European Union. As with the passage of the North American Free Trade Agreement (NAFTA) in 1994, free trade deals entail significant political risks.
While free trade deals are often signed on the principle they will increase foreign investment, eliminate tariffs, and make markets more efficient, domestic lobbyists can encourage a return to protectionism. An example of this would be the push in the past year by the European Left, Greens and Eurosceptics to make free trade an issue in national elections (although not in European elections).
Ultimately, the European Commission president will have to balance domestic concerns if he wants a successful implementation of the TTIP.
Debating the EU-U.S. trade deal is tricky
In a March 2014 letter to the EU’s trade commissioner, Karel de Gucht, the German Minister of Economy, Sigmar Gabriel, criticized mechanisms to give companies leverage over national governments under a free trade deal, and warned that the issue of investment protection was “a sensitive core point, which may end up being decisive on approval by Germany.” He has since softened his position.
The case at the back of Gabriel’s mind was no doubt the lawsuit against the German government by a Swedish power company after Germany decided to begin phasing out nuclear power plants in 2011. The company, Vattenfall, claimed that by deciding to phase out nuclear power, Germany led the company to incur major losses. It is currently demanding over €1 billion in compensation.
Meanwhile, opponents of the TTIP argue it will weaken social and consumer protection standards, encourage intransparency, and create leverage for foreign companies to file lawsuits against national governments. The concern over consumer protection was reflected in a recent debate in Ireland. In the struggle against GMO in Europe, the European Union recently reached a deal allowing member countries to make their own decisions on the use of genetically modified crops.
Anti-U.S. sentiment in Europe
Aside from a mistrust of free trade, anti-U.S. sentiment – which could help fuel opposition to the TTIP – might also jeopardize support for free trade. The NSA disclosures damaged the close foreign policy ties that had existed between the U.S. and Europe since the end of the Second World War.
Importantly, European Parliament has often provided a historical check against European Commission initiatives, most recently in its 2012 rejection of ACTA, the intellectual property rights enforcement act. This, in theory, strengthens the role of the parliament as a mediator of European citizens’ interests, especially since European Parliament became active only after mass protests in member states.
Possible scenarios
Possible future scenarios include country-based adoption of the free trade pact with the U.S., as well as adoption of some clauses and elimination of more controversial ones, like the investor-state dispute settlement (ISDS), which the U.S. supports but many European countries fear.
For example, countries like Germany could cooperate with the U.S. in the field of health; drugs entering the market for the first time could be tested on the basis of a single TTIP test, making the common market more efficient.
One thing is certain: Jean-Claude Juncker, who holds the title of longest-serving prime minister of any European Union country, is likely to have the perseverance to see a free trade pact through. However, like Delors and Barroso before him, Juncker will need to cooperate with his opponents, including David Cameron and Viktor Orbán.
