Standstill of the traffic light in trade policy – Union increases the pressure

Berlin, Brussels Christian Lindner (FDP) would rather be a contractual partner than a guest. The Federal Minister of Finance is currently at the spring conference of the International Monetary Fund. If Lindner had his way, he would use the visit to Washington for initial talks on a new free trade agreement between the US and the EU.

Just a few weeks ago, Lindner made exactly this move and proposed such a new agreement. It would have been the chance for a new edition of the “Transatlantic Trade and Investment Partnership” (TTIP), which was negotiated for years and never came to a conclusion.

No sooner had Lindner voiced the idea of ​​a new TTIP than his coalition partners put the brakes on him. But the decoupling from Russia and the dangers emanating from China are increasingly threatening the traffic light in its trade policy.

If prosperity is to be maintained, there is agreement across party lines that trade with the West must be intensified – above all with the USA. But there is a great deal of disagreement in the traffic light as to how this is to be achieved.

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The hurdles to an agreement with Washington would undoubtedly be high even under the administration of US President Joe Biden. Compared to his predecessor Donald Trump, Biden has rhetorically disarmed, but is also banking on the isolation of the domestic economy. And Brussels is also not showing any interest in a new TTIP.

But the opposition is now making a proposal that could show a way out. The Union faction calls for a gradual approach, as their Vice Jens Spahn explains: “The key to a new trade agreement with the USA is to proceed step by step.”

TTIP was an attempt to solve everything in one go. “It’s better to negotiate the individual topics bit by bit, separately from each other,” says Spahn.

The Union’s US representative, Thomas Silberhorn, also advocates “a small package”. There could be sectoral agreements on handling data, one on energy issues, one on regulating large Internet companies and one on taxes and customs. “The Americans are interested,” reports the CSU politician.

The SPD and FDP are speeding up, the Greens are slowing down

But in the traffic light government there is still deadlock on questions of trade policy. The Greens not only moderated Lindner’s TTIP initiative. The rifts within the coalition are also deep when it comes to the European trade agreement with Canada, Ceta. The agreement is provisional and only partially in force. Ratification by the Bundestag is still pending.

In the coalition agreement, the SPD, Greens and FDP had agreed to first wait for the procedure for the provisional application of Ceta by the Federal Constitutional Court. The verdict has been in place since mid-March: there has been intricate criticism of the agreement here and there, but the complaints themselves have been dismissed.

For SPD and FDP it is clear: Ceta has to be ratified now. The Greens, on the other hand, have a party conference resolution against ratification. So it may be a while before a final decision is made on the agreement. Some traffic light politicians expect that this will not even happen before the summer break.

In government circles it is said that the legal examination of the judgment from Karlsruhe would take time. It doesn’t help to ratify if the next lawsuits come straight away. Because if they were successful, Ceta might be completely dead.

In addition, a directional battle over the agreement has broken out between the party wings of the Greens. The Realos want to ratify the agreement, but at least change the implementation of the controversial chapter on investment protection, government officials report. The main issue here is the planned, much-criticized court and committee system.

The system would introduce its own arbitration courts, which should provide clarification in disputes between states and companies. The two powerful Green Federal Ministers, Robert Habeck and Annalena Baerbock, are among the Realos, and thus probably among the supporters of this approach.

The party left around parliamentary group leader Katharina Dröge, on the other hand, continue to insist not to ratify Ceta. “Free trade also works without special courts,” says Maik Außendorf, who is responsible for trade policy in the Greens parliamentary group. Ceta proves that every day in preliminary application.

In the case of new agreements that have already come into force, such as with Japan and Vietnam, Brussels also separates trade from investment protection. “Why shouldn’t we just do the same with Ceta?” Asks Außendorf.

This is not an easy situation, especially for Economics Minister Habeck. On the morning of the Ceta ruling in Karlsruhe in mid-March, he and his officials were still firmly assuming that Karlsruhe would refer the issue to the European Court of Justice, the ministry said. That would have bought Habeck time.

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But things turned out differently, and in addition to war and Corona, the traffic light must now also clarify the Ceta dispute for everyone while saving face. In the last legislature, the FDP pushed the Union ahead with proposals to ratify Ceta. At that time, the SPD was still the brakeman. Now the Union is turning the tables.

There is sharp criticism from parliamentary group leader Spahn: “If the Greens don’t even want to trade with Canada anymore, then with whom? The only thing that remains is trading with Bullerbü.” Group colleague Silberhorn says in the direction of Habeck and his much-criticized trip to Qatar: “Ceta is the opportunity for a handshake with a straight back.”

From Silberhorn’s point of view, the way out of the green dispute lies in ratification. “We must not question the package because of individual points,” he says. The package could always be corrected if there were problems.

Nervousness is growing in the FDP. A Liberal MP says he would have preferred the Ceta issue to be resolved within days of the Karlsruhe ruling. It is not conducive that the Greens now need more months.

Trade and Technology Council the way out?

While a compromise on Ceta is still a long way off, the United States could be a ray of hope. After TTIP was shelved, a Euro-American Trade and Technology Council (TTC) was created instead. Traffic light politicians in both Berlin and Brussels consider upgrading the TTC to be a realistic opportunity to intensify cooperation with the USA.

Bernd Lange (SPD), Chairman of the Trade Committee in the European Parliament, sees the Council as a “low-threshold continuation” of the TTIP project. Although it is not possible to remove trade barriers such as tariffs, the further development of common standards or the recognition of certification processes is possible. The talks were “really constructive” and both sides showed great interest.

The Ukraine war has shown how necessary and useful such an alliance is, says Tyson Barker of the German Council on Foreign Relations (DGAP) in Berlin. Thanks to close cooperation, the EU and the USA were able to decide on the export ban for dual-use goods to Russia in less than two weeks. Without TTC, this would have taken at least six weeks, according to Barker.

Katharina Dröge (left), Britta Hasselmann, Robert Habeck

The leaders of the Greens and the Minister for Economic Affairs have a lot to clarify internally when it comes to trade agreements.

(Photo: Imago Images)

The Russian war of aggression has rapidly accelerated cooperation in the Technology Council. Suddenly there were breakthroughs that had long seemed unthinkable – such as the data protection agreement between the US and the EU agreed in March.

From Barker’s point of view, a forum like the TTC also has a distinct advantage over a trade agreement. An agreement is static, says Barker. The TTC, on the other hand, is constantly evolving because the working groups can always pick up new topics.

“A trade treaty is a policy tool for the industrial age,” says Barker. The TTC, on the other hand, is the right instrument for the digital era.

The first meeting of the Technology Council was in Pittsburgh in September 2021. The second is in Paris in mid-May. Between the summits, official-level work takes place in ten working groups.

Further concrete progress is expected in Paris. Among other things, the USA and the EU want to work more closely together in setting up western semiconductor production. The procurement of rare earths, an important raw material for tech products, should also be better coordinated.

Another important agreement concerns the development of global standards in the technology sector: the EU and the USA want to work together to curb China’s growing influence in organizations such as the International Telecommunication Union (ITU).

More: More trade with the West is necessary – but according to economists, Berlin and Brussels are standing in each other’s way

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