How to revive TTIP

FLORENCE, Italy — Looking back on the three years I served as U.S. ambassador to the European Union, my greatest regret is that we were unable to conclude the Transatlantic Trade and Investment Partnership Agreement (TTIP), a landmark trade deal that would have solidified the economic and political partnership between Washington and Brussels.

Despite the Donald Trump administration’s initial insistence on concluding quick free-trade deals with individual countries, the recent meeting between U.S. Secretary of Commerce Wilbur Ross and European Commissioner for Trade Cecilia Malmström suggests that Washington may be open to pushing ahead on a trade deal with the EU.

Trump’s protectionist convictions — his inaugural promise to buy American and hire American, as well as his readiness to deploy unilateral restrictive measures, even outside the World Trade Organization — promise to complicate many of the issues that bedeviled TTIP in the past. But with growing friction toward China and Russia and a bilateral deal with the U.K. off limits until it formally leaves the European Union, the transatlantic partnership with the EU looks more attractive.

If we don’t set the rules of global trade together during the next five to 10 years, others, such as China, will.

As ambassador, I spent years debating the ins and outs of this deal with businesses, government officials, labor unions and representatives of environmental, youth and consumer groups in 16 European member countries. Here are 10 lessons I took from the experience that may prove useful in a future attempt to restart negotiations.

Lesson #1: Emphasize partnership

The “partnership” aspect of the deal will become increasingly important in this turbulent political time. A wide cross-section of the public, especially in Europe, distrusts free trade and globalization. It simply doesn’t believe projections that TTIP will promote jobs, investment and economic growth. But one argument did gain traction across the EU’s political spectrum: free-trade agreements done the right way will shape globalization to benefit our economies and democracies — with high levels of protection for consumers, health and the environment. Delivering on this message is where we should focus our efforts.

If we don’t set the rules of global trade together during the next five to 10 years, others, such as China, will. Put crudely, skeptics in Europe should be told: You may not like the U.S., but surely you’d rather do a deal with us, who abide by the same high standards of social protection, than with countries or regions that don’t share these values.

This partnership will only be successful if negotiators are instructed to consider the deal as a common project rather than a zero-sum game. Talks should not become a hostage exchange exercise in which each side lists its set of demands.

Lesson #2: Manage expectations

Concluding a comprehensive agreement by January 2017 was an overly ambitious goal. The media, and the political and business elite didn’t believe it could be achieved, especially in the spring of 2016, when it became clear that major disputes remained and public opposition was on the rise.

When governments allow rhetoric to outpace the reality, cynicism and hostility toward their initiatives will grow — and this is especially true when it comes to free-trade agreements.

If negotiations start up again, we need to do a better job of managing expectations. The deal will require several more years of hard work.

Similarly, it was a mistake to suggest that TTIP would transform our economies. A claim that TTIP would give every European family €545 of disposable income each year was based on optimistic assumptions and, unsurprisingly, left us open to attack when it didn’t hold water.

Equally unhelpful was the U.S. claim that negotiations could be wrapped up in a quick “grand bargain” through sheer political will. Both sides mistakenly allowed TTIP to became the touchstone of the transatlantic relationship — leading the media and public to believe that it was being put at risk by the sluggish pace of negotiations. The relationship is much broader and deeper than this — or any — agreement.

A woman with a flyer stuck on her forehead reading “Stop TTIP” and “Stop CETA” | John Thys/AFP via Getty Images

If we can’t make fast progress on the original, ambitious agenda, it may be worthwhile to adjust our objectives to better reflect political realities. This would include postponing discussions on government procurement, given that both parties diverge so strongly in their appraisals of the other’s degree of market access. Although the U.S. has legitimate concerns about the EU’s proposed investor-state dispute settlement model, it is highly unlikely that any other is achievable.

Lesson #3: Share facts and real examples, not projections

Rather than attempting to sell a skeptical European public on uncertain projections about jobs and growth, our message should have focused on the benefits of free-trade agreements more generally and emphasized previous deals that have yielded tangible benefits.

Since NAFTA was implemented 23 years ago, the U.S. has signed free-trade agreements with 17 other countries, and our trade balance in goods improved in 14 of those countries as a result. The EU, too, has a good track record to draw on. Following a free-trade agreement with Korea, its exports to the country have increased by 55 percent, and the bilateral trade of goods reached a record level of more than €90 million in 2015. Such concrete achievements, especially with regard to labor and environmental standards, would have helped to silence many of the uninformed critics of free trade.

Arguments about TTIP’s positive effects on jobs and growth fell flat in Europe — despite the fact that the Continent is starved of both. On trips, I was frequently reminded that it’s not what you say, but what people hear, that counts. The European public thought the gains were too small, remote and uncertain to make a significant difference or to even reach them at all. In the wake of terror attacks and a migration crisis, the Continent has been in a “protective crouch” and concerns over security and uncontrolled immigration often trump economic issues in opinion polls.

Because the European public pays far more attention to national media than to Brussels communiqués, it’s no surprise that public support for TTIP suffered as a result.

In the prevailing mood of cynicism, hostility toward elites, and opposition to free trade and globalization, it’s unlikely any message from a member of government — especially from a U.S. official — will have much traction. But one technique worked everywhere. In visits to small- and medium-sized enterprises outside major cities, I invited local and regional media to join the CEOs in a conversation about the concrete benefits of TTIP: revenue and profit growth, investment in plants and equipment, and job creation.

Lesson #4: European governments need to walk the walk

European heads of government often reaffirmed their support for the negotiations at European Council meetings, but then issued highly ambivalent, if not critical, statements a short while later. A number of leading officials, especially in France and Germany, contradicted their governments by disparaging the negotiations in order to advance their domestic political agendas.

Because the European public pays far more attention to national media than to Brussels communiqués, it’s no surprise that public support for TTIP suffered as a result. For this kind of deal to pass, European leaders have to be honest with their voters about their support for it. And they need to impose greater discipline on their bureaucracies to ensure consistent messaging.

Lesson #5: Campaign smarter

These negotiations were destined to be more sensitive than most. After all, they involved two large, sophisticated trading powers used to getting their way. TTIP was always going to be more complicated than the EU’s free-trade agreement with Canada (CETA). Given its focus on regulatory coherence and cooperation in various sectors, TTIP was bound to raise concerns, even strong emotions, about countries’ sovereign right to regulate, as well as their way of life and their health and safety standards. It was also guaranteed to become a proxy for other, unrelated issues, such as data privacy and misconceptions about U.S. safety and health standards.

As we now know, the approach to TTIP negotiations can’t be “business as usual.” From the start, our opponents put us on the back foot in the public debate, and we failed to rebut myths in clear, persuasive language.

We need to treat TTIP like a political campaign, not just a trade negotiation. Simple falsehoods peddled on social media trump complex truths, especially when these truths are packaged as dry studies. While respecting the facts, we could have done a better job at making our case with passion.

Next time, we should call on communications professionals and use focus groups to better understand what messages connect with the public. We need better tools to combat active disinformation campaigns organized by NGOs to play up people’s fear for financial gain. The Commission should review the funding it provides to NGOs that attack its trade policies. And the business community can do much more to get the message out among their own employees that free trade agreements offer opportunities for them too.

Lesson #6: Embrace transparency

During the negotiations, the U.S. was very reluctant to provide more than a small number of officials from the European Parliament, and national governments and parliaments, access to TTIP consolidated texts combining parties’ proposals. When the U.S. agreed to do so, it was late, under pressure and under restrictive conditions. We correctly claimed that TTIP was already the most transparent trade negotiation in history; that democratic accountability was ensured by the ratification process; and that negotiators needed to be able to discuss proposals in confidence in order to explore trade-offs, just as in any business negotiation.

We should have realized earlier, however, that these arguments would sound like a rejection of accountability and generate considerable ill will among senior European officials. To the wider public, we appeared to be negotiating “back room” deals as though we had something to hide. The EU’s regular publication of general negotiating objectives and summaries of progress achieved in the negotiating rounds was exemplary.

We should embrace transparency, but we should also demand that NGOs provide similar transparency about their sources of funding, which are usually opaque.

Lesson #7: Step outside the bubble

Both sides spent far too much time preaching to the choir rather than engaging with the broader community — and its many skeptics — including youth, labor, environmental and consumer groups outside the major capitals.

When I met these groups, I was never under the illusion that I would change many minds. The point was to be transparent and show that I understood and respected the critics.

Countries that shy away from tackling globalization will wind up paying a higher price later on.

Any future attempt to make TTIP work should make greater use of “third-party validators” (people unaffiliated with U.S., EU or national bureaucracies) to spread a pro-free trade and globalization message. That outreach should also rely far more on social media tools, rather than focus exclusively on printed materials and the press.

Lesson #8: Promise evolution, not revolution

In the long aftermath of a brutal financial crisis, from which some EU countries have still not recovered, people are scared and skeptical of political promises. What could be more natural than for people to want to protect what they have from the winds of change? TTIP should not be branded as a “revolutionary” deal — a scary word during times of insecurity — but as  “evolutionary,” building on the firm foundations of transatlantic trade and investment.

The benefits of massive trade flows and direct investment across the Atlantic are well-known to business and political elites, but often mysterious to large sections of the public. In Europe, negotiators would do well to emphasize TTIP’s similarities with the EU’s own single market, which tore down tariff and most non-tariff barriers and that nearly everyone across the political spectrum in Europe agrees has been a motor for prosperity.

Lesson #9: Build on success

Early on, negotiations became stuck in a vicious circle. When talks yielded few “sellable” achievements, businesses became reluctant to invest time and money to promote a deal. And so an increasingly negative narrative took hold of the public debate, convincing other businesses to follow suit.

A successful negotiation will identify high-profile areas where progress can be made quickly and celebrate the resulting agreements. This would drive a positive perception of the deal.

We need to do a better job of explaining that globalization cannot be paused.

The EU did not want to offer deeper cuts in agricultural tariff lines until the U.S. showed more flexibility on geographical indications, for example. Both sides spent too little time looking for common ground. The U.S. and EU both provide intellectual property rights protections but go about it in different ways:  the U.S. uses a trademark system; the EU a specific geographical indications regime.

The U.S. has many legitimate reasons to criticize the EU’s system, including the protection of de facto generic names in the EU, but U.S. officials too often dismissed the economic importance of geographical indications without appreciating their cultural and emotional weight on the Continent. There was scope, for example, to assess whether current rules on labeling and packaging in the U.S. misled customers about geographical provenance and therefore should perhaps be tightened.

Similarly, including an energy chapter in the deal — at the insistence of countries in Central and Eastern Europe that are concerned about over-reliance on Russian gas — would have had a huge public relations benefit and provided a show of political solidarity with Europe. The chapter could have been largely a restatement of U.S. legislation and intent.

Progress in regulatory cooperation in certain sectors — including auto safety and pharmaceuticals — has been painfully slow. U.S. regulatory agencies have said their limited budgets and manpower would be better deployed by scrutinizing risks in less developed economies, but a successful deal depends on them more fully investing themselves in negotiations to resolve these issues.

Lesson #10: Be honest about globalization

Many of TTIP’s critics believe that globalization is something that countries can opt out of, or at least switch off for a while as businesses and communities adapt — and they see free trade as a vehicle for accelerating globalization.

But globalization is a reality, whether we like it or not. We need to do a better job of explaining that globalization cannot be paused. The ills ascribed to free trade — job losses, a weakened industrial base — are actually largely the results of productivity improvements in the workplace, especially the wider use of information technology and automation. Failure to adjust to these realities only postpones the problem.

People wait in line at an employment office in Madrid. “Neither the U.S. nor Europe has established an effective system to help those who lose their jobs as a result of globalization,” says the author | Sebastien Berda/AFP via Getty

Countries that shy away from tackling globalization will wind up paying a higher price later on. Germany, for example, took difficult decisions to improve its competitiveness 15 years ago and has thrived as a result; Italy has largely failed to do so, especially with regard to its unit labor costs, and continues to stagnate.

The rise of populism and protectionism can be largely explained by the perception that free trade and globalization have mainly served the 1 percent. Countering that narrative will be an uphill battle if we don’t first take serious steps to restore the social contract.

Both sides need to be more honest with voters. We must acknowledge that there are winners and losers from free trade and globalization. We can’t shy away from the fact that gains have too often been privatized, while losses are socialized. Our failure to speak more openly about the potential pitfalls of both breeds cynicism and skepticism. We don’t do ourselves any favors by glossing over them.

Neither the U.S. nor Europe has established an effective system to help those who lose their jobs as a result of globalization. Both sides have to get serious about providing adjustment assistance, in the form of retraining opportunities or allowances. Effective trade defense mechanisms will also be critical, and the recent approval of such legislative measures in Brussels is a significant step forward in protecting producers against unfairly subsidized imports. The U.S. and EU should also push ahead on measures such as the OECD’s base erosion and profit shifting initiative, which will ensure that multinationals pay their fair share of tax.

Only by doing the work on these important safeguards will both sides convince the public that governments are serious about protecting their welfare — providing the proponents of free trade on both sides of the Atlantic with a shot of taking TTIP out of “deep freeze” and making it a success.

Anthony Gardner is the former U.S. ambassador to the European Union and currently a visiting fellow at the Robert Schuman Centre of the European University Institute.