In an exclusive interview with Borderlex, the former WTO director general, who has also served as European Union trade commissioner and as chef de cabinet of Jacques Delors, architect of the EU’s single market, shared some of his views on the current politics of trade in Brussels. One of his key concerns is the Commission’s ability to handle member state pressures and TTIP politics in a ‘post-Lisbon’ environment.
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The European Commission has not sufficiently faced down member states trying to wrangle power away from Brussels since the Lisbon treaty came into force five years ago. It also mishandled so far the politics of TTIP, Pascal Lamy told Borderlex.
“I wrote the trade part of the Lisbon treaty myself”, Lamy quips in his high-ceilinged, wood-parqueted, office at the Jacques Delors Institute headquarters, the Parisian base from which he continues to act as political advisor in his new career after eight years at the helm of the World Trade Organization. The text that organises the functioning of the European Union since late 2009 shifted a great deal of powers away from the member states to Brussels. Its first version was finalised in 2004, the year Lamy’s term as trade commissioner ended.
The EU’s constitutional text introduced important changes in the EU’s common commercial policy: foreign direct investment became an exclusive EU competence, and the European parliament obtained co-decision powers, in other words the right to decide on equal terms with the member states on trade.
Many in Brussels criticise the members of the European parliament for not being technically competent enough on trade. Others worry about excessive politicisation of EU trade policy. But the parliament’s enhanced powers are a development Lamy welcomes – a view that could surprise some who remember him as an iron-fisted technocrat implementing ruthlessly Delors’ agenda.
Enhancing the EU Parliament’s powers? “It had to be done,” Lamy said. “On issues which are so sensitive for public opinion, you cannot move this out of national parliaments and put it in a limbo. You have to put it somewhere where there is democratic scrutiny”.
The Frenchman, who met the elected body’s trade committee in private last January, praised it: “there were a number of good old trade wonks still there, and the level of questions raised by different groups were from well-informed people”, he told of this behind-closed-doors encounter. He also noted that the MEP’s level of expertise is increasing, compared to the time when he was in charge of trade policy at the Commission.
Soft in his judgement on the parliament, Lamy is hard on the Commission.
To Lamy, Brussels’ executive body has let itself talk into accepting the notion that EU trade deals are “mixed agreements”, involving decisions that also cover policy areas that are of member state competence only, hence require ratification by 28 national parliaments.
The 2010 EU-Korea free trade deal was ratified this way. Last autumn, the Commission requested an opinion by the European Court of Justice on whether the yet-to-be ratified 2012 EU-Singapore trade agreement also qualifies as mixed agreement. “The Commission already accepted that TTIP would be a mixed agreement”, Lamy said.
This leads to “formidable complexity”, so the former European civil servant. “The Commission should not accept fringe mixity, thus allowing member states to negate what is de facto a federal competence. They’ve been too soft on that, institutionally”.
Lamy, drawing on his personal experience as trade commissioner, said the bloc’s member states like to “add miscellaneous issues” to the trade negotiating mandate they give to the commission “not because they want to open trade but they want this to be a mixed agreement”.
TTIP: not about ‘trade trade-offs’
Lamy also strongly criticises the EU Commission’s – and Washington’s – handling of the politics of TTIP. “They screwed it”, he said. “They totally mishandled the taking off of these negotiations, which is why for the moment [TTIP] is not at its proper altitude level. They didn’t explain the difference between an old [trade] agreement and this new category of agreement”, he said.
TTIP “is not about trade trade-offs, but about a process of regulatory convergence, which is a totally different ball game. They didn’t understand that it was about precaution, and not about protection”.
Hence “the blunder they made at the beginning about transparency. When it’s about precaution you have to be hyper-transparent. If it’s about quotas on socks or shirts that doesn’t really matter. When it’s about health, environment, toy safety, animal welfare, this is of huge sensitivity with civil society”.
Last autumn, the EU member states agreed to publish the negotiating mandate they gave to the EU Commission on TTIP in 2013. That text had been leaked a few months earlier. Late last year, the trade commissioner who took office in November, Cecilia Malmström, launched a series of initiatives to increase transparency of TTIP negotiations, allowing a greater number of negotiating texts to be declassified and more MEPs to see classified documents. The EU ombudswoman continues to call for more systematic transparency.
These moves came after an unprecedented mobilisation by civil society groups and increasing political pressure to ensure that TTIP would not reduce food safety, labour, environmental standards, and potentially give excessive privileges for foreign investors.
Another mistake the EU Commission did in Lamy’s view “is pretending this could be done in two years. The notion that it can be done in two years is either a huge lie, which is what politicians should not do, or a deep misunderstanding of what they were after, which is also worrying”.
Brussels is trying to put this back on track, Lamy acknowledged. “This is what Ms Malmström [the new EU commissioner] has started to do, but there is a long way to go to re-track the TTIP”. This holds for Washington too. “The way to re-track this negotiation is to accept and agree on both sides that one of the purposes is to align precaution on the best of the two sides”, so the former WTO chief.
To Lamy, this is the way to go to alleviate fears that this could be about what he terms “precautionary dumping”. It is also the way to win over Germany’s public opinion, which has turned sceptical on TTIP.
“If you can’t win over German public opinion, it’s going to be tough. It’s the country that so far has been the anchor of EU trade policy – pro open trade, with a proper understanding of how it works – which has drifted [and turned] anti TTIP. This is a serious problem”.
Lamy’s suggestions, aired in Brussels meetings and a Financial Times op-ed last autumn, start being heard in Brussels: TTIP chief negotiator Ignacio Garcia Bercero told the European parliament in January that the highest precautionary standard of the EU or the US would be adopted “inasmuch as there will be regulatory harmonization”. Late last week the Commission threw the gauntlet to member states by requesting they adopt new transparency requirements in the investment dispute settlement procedures of their bilateral investment treaties.
Five years after Lisbon, the power wrangling over Europe’s commercial policy continues.
