FES roundtable on TTIPs impact on developing countries

On February the 25th, the Friedrich Ebert Stiftung organised a roundtable in Brussels about the impact of the Transatlantic Trade and Investment Partnership (TTIP) on developing countries. The keynote speech was given by Eveline Herfkens, Senior Fellow at John Hopkins University and former minister of development cooperation in the Netherlands, based on her recent paper ‘The TTIP: More Obstacles or More Opportunities For Sub-Saharan Exports?’.

In her talk she emphasised the negative impacts of TTIP, as it stands now, on developing countries, such as trade diversion and higher social and environmental standards. She argues that the preferential trade regimes of respectively the EU and the US with developing countries should be harmonised, especially with regard to country coverage and rules of origin. A lot depends on the design of the final TTIP agreement, and according to Herfkens it should include codifying existing trade agreements. The problem with the current system of rules of origin (RoO) is that they are too strict and prohibit the Economic Partnership Agreements (EPAs) from having the desired effect. Not only is administration of different RoO for Europe and the United States very costly (especially with very low institutional capacity in many developing countries), it is also an outdated system in an increasingly globalised world where production is spread across the world as a global value chain.

In a commentary to the keynote speaker, Edouard Bourcieu of the European Commission’s Directorate-General Trade agreed it was important not to create new barriers to trade for developing countries. He emphasised, however, that TTIPs impact is a bit more nuanced in the EU’s opinion. For example, TTIP can provide very useful contribution to the WTO negotiations that have been in a stalemate for some time now. It could facilitate the negotiations, provide leadership and show that EU/US convergence is possible, a very central point to any WTO progress since the two players are essential to any agreement. In addition, he stated that developing countries do not compete on the same products as the EU/US so trade diversion would not be as much of a problem as Herfkens stated. Bourcieu did agree that rules of origin are incompatible with global value chains, but they are an inherent limitation to preferential trade.

Further input to the discussion came from San Bilal, head of programme at ECDPM, who posited that it is indeed very important to consider the impact of TTIP on third parties. It is, however, not the only large-scale trade agreement out there and we should also discuss the potential proliferation of trade deals and the impact of that on Africa. He provided a more balanced view, stating that there will not be huge trade diversion but it will affect some countries and some products more than others. He argues that impacts such as preference erosion and profit diversion are a cause for concern, but will increase in the future anyway, regardless of TTIP. Therefore, finding a way to deal with this is the central challenge. TTIP can be seen as a new dynamic, creating a window of opportunity to discuss what to do for developing countries since TTIP clearly preference EU/US.

A lively discussion followed in which the panellists and the audience debated the possible impacts, with a focus on rules of origin and the possibility of increasing trade barriers for developing countries, for example through higher standards resulting from harmonising EU and US regulation. Main worries of the NGO representatives in the room was the way in which EU and US will be standard setters to the detriment of other parties. Some concluding remarks by Sidonie Wetzig, of the organising Friedrich Ebert Stiftung, emphasised the need for harmonising development efforts into a EU/US joint initiative within TTIP negotiations. hopefully, this could then lead to one common and generous system of trade preferences for low income countries.

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