Germany’s stance on the ttIPbackground, interests and concerns

konrad Popławski

52

Germany’s stance on the ttIP background, interests and concerns

konrad Popławski

nuMber 52WarsaWMarcH 2015

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Contents

THESES /5

I. TTIP – THE ESSEnCE of THE agrEEmEnT /7

II. THE PolITICal ConTExT of THE nEgoTIaTIonS from BErlIn’S PoInT of vIEw /9

III. THE TTIP’S EConomIC SIgnIfICanCE for gErmany /13

1. The liberalisation of trade in goods and services /132. The harmonisation of investment regulations /173. The diversification of energy supplies to germany /20

IV. gErman aCTorS In THE nEgoTIaTIonS /24

1. The federal government and the political parties /242. The public /263. The business circles /30

V. THE ConSEquEnCES of SIgnIng THE agrEEmEnT /32

aPPEnDIx /34

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THESES

• The political and economic co-operation between the United States andGermany has formany years been a subject of disputes and tension. Inaddition to the differences over the US engagement in the resolution ofinternationalconflicts,bilateral relationshavebeenstrainedasaconse-quence of the so-called Snowden scandal and the unproved allegationsthatChancellorAngelaMerkel’stelephonewaswiretapped.ManyGermaneconomistsandpoliticianshavecriticisedtheUSAforcontributingtothefinancialcrisisin2007asaconsequenceofmaintaininglowinterestratesandallowingbankstosellhigh-riskfinancialinstruments.USpoliticiansandeconomistshave,inturn,criticisedthemannerinwhichthegovern-ment inBerlinhasbeendealingwiththeeurozonecrisisandthe lackofconsentgiventothemutualisation ofEurozonedebts.GermanyandtheUnitedStateshavealsodisagreedoverforeigntradeontheinternationalarena.Germany,acountrywithoneoftheworld’slargesttradesurpluses,andtheUSA,acountrywithoneoftheworld’shighesttradedeficits,haveaccusedoneanotherofpursuingaflawedeconomicpolicy,asat theG20forum,forinstance.

• TheTransatlanticTradeandInvestmentPartnership(TTIP)appearstoof-ferachanceforimprovingrelationsbetweenGermanyandtheUSAforthefirsttimeinmanyyears.Producersandexportersfromthetwocountriesmaybenefitfromtheliftingofsomebarrierstotransatlanticeconomicco-operation.Enhancingmutualeconomicdependencemaycreateconditionsfortheimprovementofthepoliticalclimate.Furthermore,theemergenceofwhatisinfactaninternalEUandUSmarket,withreducedcustomstar-iffsandharmonisedlegalandeconomicrules,willpressuretheemergingeconomiestomaketheirmarketsmoreopen.Itmayalsohelpreducetheresistance of such countries as China and India inmultilateral negotia-tionsconcerning liberalisationofglobal tradeaspartof theWTO.Thesecountriesmayfearrestrictionsintheaccessoftheirdomesticcompaniestothecommontransatlanticmarket.ItmayalsobeexpectedthatfuturetradeandinvestmentagreementssignedbytheEUandtheUSAwithothercountrieswillhavetoincludestandardsbasedontheTTIP(forexample,asregardspatentprotection),whichwouldmakeitpossibletoexertpressureonothercountriesworldwideintoadoptingtransatlanticlegislation.

• German companies may be among the key beneficiaries of the TTIP.AccordingtodatafromtheFederalStatisticalOffice,in2014,theUSAwas

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thesecondlargestoutletforGermanexporters,whosoldgoodsthereworth96billioneuros(8.5%oftotalGermanexports). Inturn,USmanufactur-erssuppliedgoodsworth49billioneuros (5%ofGerman imports) to theGermanmarket.Germanythushadaconsiderablesurplus intradewiththeUSA, reaching47billioneuros.According to estimates, thepricesofGermangoodson theUSmarketcouldbeasmuchas20%higherdue tocustomsdutyandproductionstandardsdifferingfromthoseapplicableintheEU.GermanproducersalsohopethattheUSpublicprocurementmar-ketwillbecomemoreopentothem.Foreigncompaniesarecurrentlygivenaccesstoonly33%ofsuchtendersintheUSA,whiletherespectiveratiointheEUis90%.

• TheTTIPmaycreateconditionsforexportingUSrawmaterialsfromun-conventionalsourcestotheEuropeanUnion;andthiswillbeabenefitofgeopoliticalsignificanceforGermany.TheTTIPwillautomaticallyfacili-tatenaturalgasexports,sinceexportpermitsarenotrequiredinthecaseof countrieswithwhich theUnitedStateshas signeda free tradeagree-ment.BerlinhasputpressureonBrusselstomakeeffortstowardsconvinc-ingtheUSAtoatleastpartiallyliftthebanoncrudeoilexportsimposedinthe1970s.TheGermangovernmentisincreasinglyawareofthefactthatdiversificationofsuppliesoffossilfuelstoEuropewillmakeitmorediffi-cultforMoscowtousesuchsuppliesasaninstrumentofpoliticalpressureontheEU.Russia’spositionasareliablesupplieroffossilfuelstoGermanyhasbeenincreasinglyweakeningduetoitsmilitaryactivityinUkraine.

• ThegovernmentcoalitioninGermanyinitiallysupportedsigningtheTTIPalmost unreservedly. However, the Social Democrats (SPD) have foundthemselvesunderincreasingpressurefromleft-wingcircles.EventhoughtheSPDleader,SigmarGabriel,whoservesastheministerfortheeconomy,canseetheeconomicbenefitsfromGermanysigningtheTTIP,hecannotcompletelydisregardthecriticismfromsomeleft-wingorganisationsandsomeGermanbusiness.Therefore,heislikelytoinsistontheremovalofthemostcontroversialprovisions(asviewedbyGermanpublicopinion):therightvestedinforeigninvestorsundertheTTIPtobypasstheGermanlegalsystemandsuestateinstitutionsininternationalarbitrationcourts,whichisseeninGermanyasathreattothecountry’ssovereignty.GiventheresistanceinsidetheSPD,theGermangovernmentislikelytodemandthattheTTIPagreementberatifiedinthenationalparliamentsofEUmem-berstates.However, this solutioncarries therisk that someEUmemberstatesmightvetothedeal.

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I. TTIP – The essence of The agreemenT

AjointdeclarationoftheUSpresidentandthepresidentoftheEuropeanCom-mission (EC)at theG8 summiton 17 June2013marked thebeginningof thenegotiationsconcerningtheTransatlanticTradeandInvestmentPartnership(TTIP).Officially, thenegotiationshavebeenconductedby theEU’sDirecto-rate-GeneralforTradeandtheOfficeoftheUnitedStatesTradeRepresentative.AmongthereasonstheEChasmentionedforembarkingonthenegotiationsare:theglobaleconomiccrisis,thelackofeffectsfromthemultilateralnego-tiationsconductedaspartof theWorldTradeOrganisationandthedifficul-tiesinsettingoutcommonrulesforsubsidisingagricultureintheEUandtheUSA1.ThemaingoalsoftheTTIPinclude:eliminatingcustomsdutyintradebetweentheUSAandtheEU,reducingthenon-tariffbarriers(variousregu-lations restricting themarketaccess forgoods),harmonisationof standardsandtechnicalnorms,andadoptingregulationsthatwillofferstrongerprotec-tiontoforeigninvestmentthantheexistingdomesticlegislation.Bothpartieshope that theboost in traderesulting fromthe liquidationof thesebarrierswillcontributetoimprovingtheeconomicsituationafterthedifficultyearsoftheeconomiccrisis.IftheTTIPnegotiationsaresuccessful,amarketcovering800millionconsumers,50%ofglobalproduction,30%ofglobaltradeand60%ofglobalinvestmentswillbecreatedwithinafewyears’time.

TheEuropeanCommissionhasbeengrantedthemandatetoenterintothemostextensiveagreementpossibleaimedatliberalisingtradebetweentheEUandtheUSAonamuchdeeperlevelthanthathappeningaspartoftheWorldTradeOrganisation.TradeinculturalandaudiovisualgoodshasbeenexcludedfromliberalisationattherequestofFrance2.Thenegotiationshavebeenconductedinroundsscheduledeveryfewmonthsinover20workinggroups,andconsul-tationsontheirrepercussionshavetakenplacewithinthenarrowestpossiblecircles.BothWashingtonandBrusselswantthustoeliminatepressurefromlobbyistsandpublicopiniononthenegotiationprocess.BoththeEUandtheUSAhopethatthepresentationoftheagreementinthefinalversion,whichcanonlybeeitheracceptedorrejected,willincreasethelikelihoodofitsbeingimplemented.Furthermore,toavoidthegrowingconcerninpublicopinion,anadvisorygroupof14expertswasformed,consistingofrepresentativesoftradeunions,consumerorganisationsandbusinessgroups.SinceOctober2014,the

1 http://ec.europa.eu/trade/policy/in-focus/ttip/questions-and-answers/2 TheEuropeanCommission’smandatetonegotiatetheTTIPisavailableat:http://data.con-

silium.europa.eu/doc/document/ST-11103-2013-DCL-1/en/pdf

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mandateandmanydetailsconcerningthenegotiationprocessonthepartofthe EUhave been declassified as a result of pressure fromEuropean publicopinion.Bothpartiestothenegotiationshaveagreedtofinalisethenegotia-tionprocessbytheendof2015.Itisstillunclearwhattheprocedureforratifi-cationofthenegotiatedagreementwillbelike.OnepossiblesolutionisthattheCourtofJusticeoftheEuropeanUnionwilldecidewhethertheagreementisanordinaryagreementandwillhavetobeacceptedonlybytheCounciloftheEuropeanUnionandtheEuropeanParliament(EP)orwhetheritisaso-called‘mixedagreement’,inwhichcaseanadditionalconsentfromnationalparlia-mentswillalsoberequired3.Ifthelattervariantischosen,thiswillcomplicatetheprocessofnegotiatingtheagreement,sinceitmaygiverisetopubliccon-cerninmanycountrieswhichwereplungedintoeconomiccrisis.Manystatesview theTTIPasanother stageon theway towards the liberalisationofEUmarketswhichmayresultingrowingunemployment.ProblemswithratifyingtheagreementmayalsoappearattheEuropeanParliamentforum,sincetheleft-wingandEuro-scepticgroupingsmaybeunwillingtobackit.Forexample,theelectionmanifestoofFrance’sNationalFront,whichhashaditsrepresent-ativesintheEPsince2014,includesaprotestagainstthisdeal,whichhasbeencomparedtoan“ultraliberal,antidemocraticandanti-socialwarmachinethatservesmainlytheNeo-Liberalsandlargecorporations”4.

3 http://www.taz.de/!137588/4 Polish Press Agency’s dispatch, 26 May 2014, ‘Sukces wyborczy Frontu Narodowego –

począteknowychpodziałówpolitycznychwUE’.

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II. The PolITIcal conTexT of The negoTIaTIons from BerlIn’s PoInT of vIew

FromBerlin’sviewpoint,thenegotiationsconcerningtheTransatlanticTradeandInvestmentPartnershipwiththeUSAmaybringnumerousbenefitsaswellassomethreats.Firstandforemost,thedealwiththeUSAisinlinewithGer-many’seconomicinterestsworldwide.AneconomicconsolidationofWesterncountriesthatwillbeanoutcomeoftheTTIPmayofferboththeUnitedStatesandtheEUmoreopportunitiestoinfluencetheemergingeconomies.TheUSAfearsthegrowingsignificanceofChina,whoseGDPmaysoonbelargerthanthatof theUS.Germany is alsomoreandmoredependenton theemergingeconomies,butatthesametimeseestheriskofleakageofkeyGermantech-nologies,sinceitisdifficulttoimposeWesternlegalstandardsondevelopingcountries,forexampleasregardspatentprotection.Furthermore,theprocessoftrade liberalisationandharmonisationoftraderulesaspartoftheWorldTradeOrganisationhasfailedtobringtheexpectedresultsoverthepastfewyearsdueto the increasingassertivenessof theneweconomicpowers,suchasChina,IndiaandBrazil5.Germanyhasalsobeendissatisfiedwiththenu-merousrestrictionsonaccesstopublictendersinthelucrativenon-EuropeanmarketssuchasChina,forexample6.Westerncountries,asaneconomicblocwithsimilartraderegulations,mighthavemoreopportunitiestoimposetheirstandardsandtechnologicalnormsonothercountries.OneproofofthisisintheEuropeanCommission’sgoals:theECintendsaspartoftheTTIPnegotia-tionstosettheconditionsforpromotingacommonpatentprotectionandcre-atea common framework for theuseof subsidiesandanti-dumping instru-ments7.IftheTTIPgavetheEUanewexternalstimulus,giventheabsenceofotherpromisingprojectsintheEU’sexternalpolicyatthismoment,GermanywouldseethisasanadditionalbenefitaccruingfromtheTTIP.Furthermore,theTTIPmay alsohelp improve the economic situation in theEU and thuscounteract theeconomicstagnation linked to theeurozonecrisis.Easierac-cesstotheUSmarketwillalsocertainlyaddstrengthtoGermanexporters,whoalreadyholdalargeshareintheUSmarket.

5 ‘WTO gescheitert: Indien verweigert Abbau globaler Handelshürden’, http://www.deutsche-mittelstands-nachrichten.de/2014/08/64679/

6 Konrad Popławski, ‘Chasing globalisation: Germany’s economic relationswith the BRICcountries’,OSW Report, Warsaw2013,http://www.osw.waw.pl/sites/default/files/raport_05_bric_ang.pdf

7 http://europa.eu/rapid/press-release_MEMO-13-564_en.htm?utm_source=API&utm_medium=twitter

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TheRussian-UkrainianwarisanewelementthatwillmaketheGermangov-ernmentmorewillingtosupporttheTTIP.BerlinmayfearthatRussia,whoseforeignpolicyisaggressiveandeverlesspredictable,willalsobealessreliablesupplierofrawmaterials to theGermanmarket8. In2014,Moscowmadeat-temptstoputpressureonEUmemberstatestolimittheirsupportforUkraine,forexample,byembarkingonnegotiationsconcerningRussiangassuppliestoChina,andcuttinggassuppliestothosecountriesengagedinsendinggastoUkrainefromthewest,suchasPolandandSlovakia.ThecontinuationoftalksonTTIP isa formofdefenceagainstsuchmoves fromMoscow,demonstrat-ingthat theEUalsopossessesstrongarguments intheeconomicconfronta-tionwithRussia.Therefore,evenifthescopeoftheTTIPislimitedandfailstobringabouta significant increase in importsofoilandgas fromtheUSAtotheEU,whatis infacttheemergenceofaninternalWesternmarketmaybe viewed by Russia and China as tightening a politico-economic alliance,somethingthatcouldbedefinedasaneconomicNATO.Asaconsequence,theymayfear thataccess for theircompanies toEUandUSmarketscouldbere-stricted.However,thisperceptionoftheTTIPdealbytheemergingeconomiesmayalsobeposeathreattoBerlin’sforeignpolicy.ManyGermananalystsareconcernedthatthetransatlanticpartnershipcouldbeviewedbytheemergingeconomiesasanattemptbyWesterncountriestoisolatethemselvesfromthedevelopingcountries9.GermanydoesnotwanttheTTIPtobeviewedinthisway,becauseitmightharmitsinterestsintheemergingmarkets,whichhavebeenanimportantengineforGermaneconomicgrowthduringthetimeoftheglobaleconomiccrisis10.

PoliticalrelationsbetweenWashingtonandBerlinalsoprovideanimportantcontextfortheTTIPnegotiations,especiallygiventhefactthatmoreandmoreeconomicdisputeshavebeenseenbetweenthemininternationalforumsoverrecentyears.Themaintendencyvisibleinrelationsbetweenthesetwocoun-tries isGermany’s increasingemancipation in foreignpolicyandunwilling-nesstocontinueplayingtheroleoftheUS’syoungerbrother.WashingtonandBerlinhavealreadypresenteddifferentstances,suchasontheUSintervention

8 http://www.haz.de/Nachrichten/Politik/Deutschland-Welt/DIW-Energieexpertin-Kem-fert-ueber-Gas-Versorgung-in-Europa-aus-Russland

9 EvitaSchmieg, ‘TTIP–ChancenundRisikenfürEntwicklungsländer’,http://www.swp-berlin.org/fileadmin/contents/products/zeitschriftenschau/2014zs01_scm.pdf

10 Konrad Popławski, ‘Chasing globalisation: Germany’s economic relationswith the BRICcountries’,OSW Report, Warsaw2013,http://www.osw.waw.pl/sites/default/files/raport_05_bric_ang.pdf

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in Iraq, anddiffered in their approaches to reformof theUnitedNationsorothervisionsregardingthearchitectureofinternationalfinancialmarketsasinthetimeofGeorgeW.Bush’spresidency11.However,theeconomiccrisispre-sentsince2007hasbroughtoutamajordifferenceintheirapproachestotheeconomy.Consumptionhastraditionallyplayedamajorrole inUSeconomicdevelopment.As a consequenceof this, theUShas a long-standingproblemwithitshightradedeficit.Inturn,Germany’ssituationisquitethecontrary;ithashadasignificantsurplusinforeigntradeowingtothefrugalitypolicyadoptedbyitoverthepastdecade.

ThesedifferenteconomicbackgroundshaveledtoeconomicdisputesbetweentheUSAandGermany.Forexample,theUSAaccusedGermanyattheG20sum-mitin2010ofpursuingaharmfulandmercantilisteconomicpolicyfocusedonlyon stimulating its ownexports,whichwasnotbalancedbyanequallyrapidincreaseinimports,thuscontributingtotheemergenceofeconomicim-balancesworldwide.Berlinretorted,pointingoutthechronictradedeficitintheUSAcombinedwiththe lowcompetitivenessof theUSeconomyandthetendencytowardexcessivedebtaccumulation.

Whentheeconomicsituationintheeurozonedeteriorated,theUSAintensifieditscriticismoftheGermaneconomy,which,intheopinionofmanyAmericaneconomists,suchastheNobelPrizewinnerPaulKrugman12orthefinancierGeorgeSoros,wasbasedtoanexcessiveextentonsignificanttradesurpluses,thusbeingharmfultotheeurozoneandtheworld.Accordingtothem,Germa-ny,capitalisingontheeconomicboomathome,shouldhaveraiseditsinvest-mentspendingandwages,andthussupporttheEuropeaneconomy.AmericanexpertsalsosuggestedthattheEuropeanCentralBankshouldreprintmoney(launchloanstocountriesandcommercialbanksunsecuredbytheeurozonememberstates’realincome)orfindanyothermeansfordistributingtheeu-rozone’sdebtamongallitsmemberstates.Washingtonwasinterestedaboveallincalmingthesituationintheeurozoneassoonaspossible,sincetheriskofitscollapsemightbringlossestoUSbanksandinvestmentfunds.Germa-nyalsohadadifferentstanceontheeurozonecrisis.Eversincetheriskthatmonetaryunionmightdisintegrateemerged,Germanyhaspromotedtheneedtointroducethefrugalitypolicyinthosecountriesfacingthehighestriskof

11 AndreasGeldner,‘GerhardSchröderindenUSA:DerehemaligeBush-KritikerpreistAmeri-ka an’, http://www.stuttgarter-zeitung.de/inhalt.gerhard-schroeder-in-den-usa-der-ehe-malige-bush-kritiker-preist-amerika-an.54c2e595-d85d-4907-b633-9b7b3a43ebb1.html

12 http://www.nytimes.com/2013/11/04/opinion/krugman-those-depressing-germans.html

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bankruptcy,andhasblockedthepossibilityofjointresponsibilityfortheeuro-zone’sdebts.NooneinBerlinwasreadytomakesuchseriousconcessionsandriskGermantaxpayers’moneytosavetheeurozonememberstatesatriskofinsolvency.GiventheeconomicdisputeswitnessedbetweenBerlinandWash-ingtonoverthepastfewyears,theTTIPoffersachanceforanewbeginninginmutualrelationsandforfewereconomicdisputes.

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III. The TTIP’s economIc sIgnIfIcance for germany

Germanymaybenefit strongly from theTTIPbeing signed, considering thelargevolumeofUS-Germantrade.TheUSAisGermany’sfourthlargesttradepartnerintermsoftradevolume–onlyFrance,HollandandChinaaremoreimportanttradepartnersforGermany.Germanfirmsemploy600,000peoplein theUSA,whileUScompaniesoffer800,000 jobs inGermany.Berlinmayexpecteconomicbenefitsasaresultoftwochanges:liberalisationoftradeingoodsandservices,anddiversificationofenergysuppliestoGermany.Inturn,harmonisationofinvestmentregulationsisthesourceofgreatestconcerninGermany.

1. The liberalisation of trade in goods and services

AccordingtodatafromtheFederalStatisticalOffice13,in2014,theUSAwasthesecondlargestoutletforGermanexporters,whosoldgoodsthereworth96bil-lioneuros(8,5%oftotalGermanexports).Inturn,USmanufacturerssuppliedgoodsworth49billioneuros(5%ofGermanimports)totheGermanmarket.GermanythushadaconsiderablesurplusintradewiththeUSA,amountingto47billioneuros.Germanyachievedthissurplusmainlybysellingcars,ma-chinery, chemistry, opticalproductsandelectronicdevices.USpartners, inturn, benefited from trade in cellular telephones, aviationdevices, preciousmetals and some chemical and electronic products14. Tradewith theUnitedStates brought Germany the largest surplus, followed by other EUmemberstates,suchasFrance(36billioneuros),theUnitedKingdom(33billioneuros)andAustria(19billioneuro).ItisworthemphasisingthatGermanexportstotheUSAhaveoutweighedimportsfromthiscountryevenmoresincethefi-nancialcrisis,mainlyowingtotheconstantincreaseinthesalesofGermangoodsontheUSmarketoverrecentyears.

The large imbalance inGerman-US trade toGermany’s advantage is oftencriticised byUSpoliticians and economists.Germanyhas been accused ofexcessively stimulating exports by artificially withholding an increase inwages.TheUSAhasalsoaddressedsimilaraccusationstoChinaonamuchlarger scale. The USA criticises Germany even though it knows that thefederalgovernmentlackstheability(andalsothewill)toreducethetrade

13 https://www.destatis.de/DE/ZahlenFakten/GesamtwirtschaftUmwelt/Aussenhandel/Handelspartner/Handelspartner.html

14 http://www.census.gov/foreign-trade/statistics/country/

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surplus.Furthermore,Washingtonhasfailedtomentionthebenefitsresult-ingfromtheinfluxofcheapGermancapital,whichallowsfinancingof in-vestments and innovations in theUSA.Data concerningGerman-US tradealsoprovesthatGermanyhasbeenrapidlydevelopingtradeandinvestmentco-operationwiththeUSAandhasaneconomywhichismorecompetitivethanthatoftheUnitedStates.Forthisreason,Germanproducersmayben-efitthemostfromtheTTIPbeingsigned.Inturn,boostingservicesalestoEUcountriesmaybeusedbytheUSAtostimulateitsexportstoGermany,sinceithasacompetitiveadvantageinthisarea.UScompaniesaretheleadersinglobalrankingsasregardsofferingvariousonlineservices,softwaredevel-opmentandproductionofelectronicappliances.Furthermore,WashingtonmayexpectthattradefacilitationswillmakeUSfirmsmorewillingtoexporttheirgoodsandservicesattheexpenseofdomesticsales.Germanyisoneofthemostopeneconomies.AccordingtotheWorldBank’sdata,Germanex-portsaccountfor51%ofthecountry’sGDP,whileinthecaseoftheUSAthiscoefficientismuchlower,reaching13%.

Curbingtheso-called‘non-tariff’measures,i.e.variousadministrativebarri-ers,suchaslicences,permitsandapprovals(especiallyasregardsregulationsconcerning food and product safety standards),which increase the productpriceonthetargetmarket,mightbeamuchmoreimportantbenefitoftheTTIPdealthanthereductionofcustomstariffs.AccordingtotheGermanyMinistryfortheEconomy,thepricesofGermangoodsontheUSmarketcouldbeeven20%higherduetotheneedtomeetadditionalrequirementstothoseexistingin Europe. Savings resulting from limiting the spending on bureaucracy instateinstitutionsandcompaniescouldrepresentanadditionalbenefit,sinceproductcertificationproceduresrequireengagementfromthestateapparatusandaretime-consumingforfirms.Furthermore,theTTIPislikelytoresultinliberalisingmutualaccesstopublictenders.Forexample,publicinstitutionsintheUSAarerequiredbylawtofavourUSproducers.Germanycouldbenefita lot fromtheopeningupof theextremely lucrativeUSpublicprocurementmarkettoforeignproducers.Atpresent,foreigncompaniesareprovidedac-cesstoonly33%ofsuchtendersintheUSA,whiletherespectiveratiointheEUis90%15.However,theUSAexpectsthattheEU’sstructuralfundswillbecomemoreopentoUSfirmsinexchangefor this.Paradoxically, theTTIPmaybeusedbyGermanyasawayofreducingthebarriersforGermanproducersintradewithintheEU.Forexample,overthepastfewyearsFranceandItalyhave

15 http://www.boeckler.de/pdf/p_arbp_303.pdf

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protected their domestic markets from competition offered by German carmanufacturersbyintroducingverystrictecologicalregulationsunderwhichCO2emissionsmustbeonaverylowlevel,arequirementdifficulttomeetformanyGermanluxurycarmanufacturers.

FinancialservicesarelikelytobeexcludedfromtheTTIP,sinceitisalreadyknownatthepresentstagethatthedifferencesinmechanismsforregulatingthecapitalmarketsaretoosubstantial.TheUSA,whichhassignificantlytight-enedsupervisionoverthefinancialmarketssincethefinancialcrisis,iscon-cernedthattheseregulationsmightbedilutedasaconsequenceofapossiblealignmentthereofwithEUlegislation16.TheEUisnotinterestedinharmonis-ingstandardsinthisareasincenumerouscomplexmechanismsforthesuper-visionoffinancialinstitutionscharacteristicoftheeurozone,forexampleaspartofthebankingunion,havebeenintroducedoverthepastfewyears17.Fur-thermore,theGermanpoliticalandeconomiceliteshaveputtheblamemostlyon theUSA forGermany’seconomicproblems following theglobalfinancialcrisis.Germanbankswereamong themajorbuyersofUSbonds in therealestatesector.Whenthespeculativebubbleburst,theGermanfinancialsectorsustainedenormouslosses,whichforcedtheGermangovernmenttobailoutinstitutionsatriskofbankruptcy,suchasCommerzbank18andsomeLandes-banken19.ThebreakdownofthefinancialsystemandthelossesGermanysus-tainedasaconsequenceofthisprovokedcriticismoftheUSeconomicmodelamongGermanpoliticiansandeconomists.Thisalsogaverisetoafeelingoffailure, in particular the commonly shared impressionwas that “GermanyhadswappeditsprofitsfromthesaleofitsluxurycarsintoworthlessUSjunksecurities.”Germanbankswerefreetocheckthefinancialinstrumentstheywereinvestingin,buttheirdesiretogeneratehigherprofitsthanontheGer-

16 BenjaminFox,‘EUandUSaimfor2015tradedeal,excludefinancialservices’,http://euob-server.com/news/124159

17 KonradPopławski,‘TheshapeofthebankingunionconfirmsBerlin’sprivilegedpositionintheeurozone’,OSW Commentary,10January2014,http://www.osw.waw.pl/en/publikacje/osw-commentary/2014-01-10/shape-banking-union-confirms-berlins-privileged-position

18 CommerzbankisGermany’ssecondlargestbankafterDeutscheBank.Untilthefinancialcrisis came, this institutionwas developing at a very rapid rate. For example, it boughtashareinDresdnerBank.However,thefinancialcrisiscaughtitcompletelyunawaresandforcedittoacceptabailoutof€18.2billionfromtheGermangovernmentinexchangefora25%stakeinthecompany.

19 LandesbankenarebankswhoseshareholdersareGermanregionsandwhosemaintaskistohandleclients intheregionsandtofinanceinvestments.However, theseinstitutions,insearchofprofits,alsoinvestedasignificantshareofthesavingsentrustedtotheminUSrealestatebonds.

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manmarketpushedthemintotakinggreaterrisk.ThustheEuropeanUnionisunlikelytoagreetounilaterallyadopttheAmericanrulesaftertheUSAre-jectedtheproposaltomutuallyharmonisesuchrulespertainingtofinancialmarkets.

Theestimatesoftheeconomicbenefitsofthedealdiffer.TheCentreforEco-nomicPolicyResearchhasassumedthattheagreementwillcontributetoanincreaseintheEU’sGDPwithinthenextdecadebyonly1%,andhasnotedthattradewouldbenefitmuchmoreifthefluctuationofcurrencyexchangerateswas limited20, since, forexample, theeurostrengthenedagainst theUSdol-larbetween2002and2008by64%.ThecustomsdutyratesbetweentheUSAandtheEUarenothigh,rangingbetween3%and4%inthecaseofindustrialgoods.Althoughareductionofthesedutiesmightliftpartoftheburdenfromtheautomotiveindustry,whoseannualexpensesrelatedtothisreachedUS$1billion(asaconsequenceofa2%customsdutyrateimposedoncarimporttotheUSAanda10%rateoncarimportstotheEU).Ananalysisshowsthatthefollowingindustrieswillgainmost:themetallurgical,thefoodprocessing,thechemical,thetransportandtheautomotiveindustriesandmanufacturersofotherindustrialproducts21.ThisdistributionofbenefitsfromsigningtheTTIPsuggests thatGermanywillbe among thekeybeneficiariesof thedeal.TheEuropeanCommissionbelieves,onthegroundsofsurveys,thatcountriesun-coveredbytheTTIPwillalsobenefitfromitowingtothesideeffectsofthetwoareasbecomingricherandtheirincreaseddemandforimportofgoods.

Theseestimates,somewhatoptimisticforGermany,resultfromtheforecastsprovidedbythe Ifo Institute inMunich.Theypredict that, if tradebetweentheEUandtheUSAisliberalisedtoasignificantextent,theGermaneconomyoverthelongertermwillgain4.7%inGDP,andthiswillbetheseventhlargestgainaftertheUSA(+13.4%),theUnitedKingdom(+9.7%),Sweden(+7.3%),Spain(+6.6%),Greece(+5.1%)andItaly(+4.9%)22.Theseprofitswillbegeneratedmain-lyasaresultofbetteravailabilityofproductstoconsumersand lowercostsofinternationaltradebetweentheUSAandtheEU.Ifthemaximumvariant

20 ‘WährungskooperationbringtmehralsTTIP’,http://www.boeckler.de/46683_46737.htm21 ‘Transatlantic Trade and Investment Agreement Partnership: The Economic Analysis

Explained’,http://trade.ec.europa.eu/doclib/docs/2013/september/tradoc_151787.pdf#world22 ‘Dimensionen und Auswirkungen eines Freihandelsabkommens zwischen der EU und

denUSA’,IfoInstitut,Munich2013,http://www.bmwi.de/BMWi/Redaktion/PDF/Publika-tionen/Studien/dimensionen-auswirkungen-freihandelsabkommens-zwischen-eu-usa-summary,property=pdf,bereich=bmwi2012,sprache=de,rwb=true.pdf

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oftradeliberalisationisimplemented,asmanyas109,000newjobscouldbecreated in Germany. The analysis criticised the possible negative repercus-sionsthedealmayhaveforthecountrieswhicharenotcoveredbyit.

2. The harmonisation of investment regulations

CapitalrelationsbetweenGermanyandtheUSAaresimilartotraderelationpatternsbetweenthetwocountries.Germanyhasforseveraldecadesinvest-editstradesurplusesintheUSeconomy,ensuringcompaniesaccesstocheaploans.AccordingtodatafromtheBundesbank,Germanyinvested€266billionintheUSAin2012,whileUSinvestmentsinGermanyreachedonly20%ofthissum.Sincetheglobalfinancialcrisisin2007,GermaninvestmentsintheUnit-edStatesofAmericahavebeenregularlygrowing,whileUS investments inGermanyhavebecomestagnant.Itappearsthatliberalisationofcapitalflowsandlegalregulationsmayofferopportunitiesfromwhichbothsideswillben-efit.ThestandardisationofinvestmentconditionsexistingintheUSAandtheEUwillalsocutthebureaucracycostssustainedbyGermancompanies,whicharetheeight largest investorontheUSmarket23. Investmentshavebeenin-cludedinthedealontheinitiativeoftheAmericans,whowouldliketheEUtoextenditsprotectionovertheentireinvestmentcycleandnotonlyatthetimeofplanning.TheTTIPnegotiationsinthebilateralformat,betweenonlytheUSAandtheEU,willalsoenablenewstandardsfortradeandinvestmentpro-tectiontobeadopted;andthishasbeenimpossibleaspartoftheWorldTradeOrganisation.Giventhegreatsignificanceofthetransatlanticmarket,othercountrieswillhavetoadjustthemselves,andthenewstandardswillalsobeadoptedbyinternationalorganisations24.However,Beijingisstillunwillingtoenterintoasimilaragreement,becauseitdoesnotalwaysrespectinvestors’rightsandfailstoprovidesufficientprotectionforEuropeancompanies’pat-ents.Inthiscontext,includingtheinvestmentprotectionclauseintheTTIPwouldofferBrusselsastrongargumentinnegotiationswithBeijing25.

Despitethepotentialbenefitsofferedbytheregulationsprotectinginvestors,adoptingtheseregulationsaspartoftheTTIPhasunexpectedlybecomethesubjectofthemostseriousdisputeasyetbetweenBrusselsandWashington.

23 http://www.ofii.org/sites/default/files/FDIUS_2013_Report.pdf24 SpeechgivenbytheGermanministerfortheeconomy,SigmarGabriel,on5May2014in

Berlin,http://www.bmwi.de/DE/Presse/reden,did=637294.html25 http://www.die-gdi.de/die-aktuelle-kolumne/article/ein-europaeisches-investitionsab-

kommen-mit-china-begrenzte-wirkung-aber-globale-bedeutung/

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TheEUfearsthatincludingregulationsconcerningtheprotectionofforeigninvestors in the TTIPwill put into jeopardy the sovereignty of itsmemberstates.Brusselssuspectsthat,usingtheseregulations,theUSAinfactwantstotransplantAmericanrulesfortheprotectionofforeigninvestors intoEu-ropeanlegislation.TheserulesguaranteetheUSAextensivecompetencesinprotectingtheirrightsinfrontofsupranationaltribunals,bypassingnationaleconomiccourts.

Fromtheverybeginning,Germanyhasstronglyopposedsuchmeasures,in-cludinginvestor-statedisputesettlementregulationsintheTTIP,eventhoughregulationsof thiskindarepresent inaround1,400 investmentagreementsconcludedbyEUmemberstateswithothercountriesworldwide.Theseregula-tionsgiveinvestorstherighttosuecountriesatinternationaltribunalsincaseswherestateinstitutionshaveinfringedupontheireconomicinterests.Regu-lationsofthiskindareatpresentincludedasstandardininvestmentagree-mentsbetweencountries.BeforetheTTIPnegotiationsstart,theintroductionofsuchregulationsisviewedbybothBrusselsandWashingtonasanopportu-nitytoexpandthescopeofprotectionforforeigninvestments.TheEuropeanCommissionwasonlyvestedwiththecompetencestonegotiateagreementsontheprotectionofinvestmentswithothercountriesfollowingtheamendmentoftheEuropeanTreatiesinLisbonin2007,andintendedtousethesepreroga-tivesduring theTTIPnegotiations.However,adebateunfolded inGermanyatthebeginningof2014astowhethersuchchangescouldleadtolimitingthefederalgovernment’ssovereigntyintheareaofeconomicpolicy,whichsome-timesmaybecontrarytotheinterestsofglobalcorporations.ThereisconcerninGermanythatUScompanieswillmisusetheregulationsontheprotectionofforeigninvestors,andwillusethemforcontestingtheGermangovernment’sdecisionsatinternationalarbitrationcourts.

Meanwhile,Germanybelieves that itsnational legalsystemofferssufficientprotectionofprivateinvestors’rights,andforeigncompaniesshouldnothaveadditionalprivileges,sincethiswouldinfringeuponthecountry’ssovereign-ty26. In Germany’s opinion, international arbitration courts work in a non-transparent manner, and no appeals procedure is envisaged. The Germangovernmenthashadproblemslinkedtodisputesbeingconsideredbyanarbi-trationcourtinconnectionwiththecountry’senergytransformationpolicy.

26 KonradPopławski,‘TheSPDpresentsitsconditionsregardingtheacceptanceoftheTTIP’,http://www.osw.waw.pl/en/publikacje/analyses/2014-10-01/spd-presents-its-conditions-regarding-acceptance-ttip

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FollowingthedisasteratFukushimanuclearpowerplantinJapanin2011,theGermangovernmentannouncedthatsomeoftheGermannuclearpowerplantswouldbeclosed immediately.TheGermancompanieswhichhavesustainedlossesasaconsequenceofthisdecisionhavetherighttoclaimcompensationinfrontofdomesticcourts.Inturn,Sweden’sVattenfallhaschosenadiffer-entway.ItinvokedtheinvestmentclauseintheEuropeanEnergyCharterandsuedtheGermangovernmentattheInternationalCentreforSettlementofIn-vestmentDisputesinWashington.NooneinBerliniscertainwhatthefinalverdictcanbe,andhowmuchindamagesVattenfallmightbeawarded.There-fore,theGermangovernmentislikelytostronglyobjecttoanyadditionalreg-ulationsconcerninginvestmentprotectiontobeincludedintheTTIP;andthusmayalsoprovoketheAmericanstofightforspecificconcessionsinotherareas.

ItisdifficulttostatebeyondanydoubtwhethertheGermanconcernsoverin-cludingregulationsprotecting foreign investors in theTTIPare reasonable.BeforetheTTIPnegotiationsstarted,itwasbelievedthatguaranteeingstablelegalstandardsforinvestmentsthatwouldapplyintheUSAandtheEUwasespeciallyvitalfromthepointofviewofsmallandmedium-sizedcompanies,andwouldallowcompaniestocutexpenses inconnectionwith investing innewmarkets.Inturn,Berlinhasemphasisedfromtheverybeginningthattheinterestsofsmallandmedium-sizedbusinessesmustbetakenintoconsidera-tionintheTTIP.Investorprotectionhasgivenrisetoapoliticaldispute,eventhoughrecentlegalanalysesconductedbytheGermanMinistryfortheEcono-my,forexample,haveshownthattheinvestmentclauseposesnoriskoflimit-ingthefederalgovernment’ssovereignty.IfinvestmentprotectionregulationsanalogoustothoseusedinasimilaragreementbetweentheEUandCanadaareappliedintheTTIP,whichseemsverylikely,companieswillberathermorewillingtorelyonGermanlawregulationsindisputeswiththegovernment,becausetheseregulationsofferbetterprotectiontothem.Furthermore,Ger-manbusinesscircleshavesuggestedthatthisriskcanbeeliminated,forex-ample,bydevelopingappealsprocedurerules.Ifinvestmentprotectionregu-lationsareeliminatedfromtheTTIP,itwillbemoredifficulttoconvincetheemergingeconomiestointroducesimilarrules.

Furthermore,evenifthelawregulatesthisareacorrectlyinmanycountries,theeffectivenessofnationaleconomiccourtsisusuallylow.Forthisreason,investors find enforcing their rights extremely time-consuming. It appearsthatthedisputeovertheinvestorprotectionclausewillnotimpederatifica-tionoftheagreement,buttherelatedcontroversiesmaydelaytheadoptionoftheTTIP.

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3. The diversification of energy supplies to germany

TheTTIPmayturnouttobevery important,especially ifenergy issuesareincluded in it. Its signing could create a better legal environment for sup-plyingEuropewithfossilfuelsproducedintheUSA,especiallyshaleoilandgas.ChancellorAngelaMerkelstatedduringhervisittoWashingtoninMay2014thattheenergysectorcouldbenefitmostfromthetransatlanticpartner-ship.Germany’sannual importsof rawmaterials for energyproductionareworth in total around €100 billion. TheGerman economy also recently hadproblemsduetogrowingenergypricesresultingfromtheimplementationoftheenergytransformationinGermanyandgeneroussubsidiesofferedtotherenewableenergysector,whileUScompaniescouldbenefitfrommuchlowerenergycosts.AlthoughtheGermansystemofallowancesforenergy-consum-ingindustryprotectsthelargestcompaniesfromanincreaseincosts,manysmallandmedium-sizedbusinessesarefacingevermoreseriousproblemsinconnectionwiththis,especiallygiventhefactthattheamendedactonrenew-ableenergysourcesofJuly2014restrictedthenumberoffirmseligiblefortheallowances.PublicopinioninGermanyisgraduallycomingtotherealisationthatacontinuationof thesetendenciesmayadverselyaffecttheGermanin-dustry’scompetitivenessintheimmediatefuture,andineffectleadtoareduc-tionofworkplacesintheircountry.

Until 2013, companies operating inGermany expressed their dissatisfactionwithgrowingenergycosts,mainlyinthepress.In2014,someofthemstartedmakingattemptstocounteractthis.OneexampleisBASF,Germany’slargestenergyconsumer.Thecompanyannounceditsintentiontobuildapropyleneproductionplant in theUSA,stating that themainreasonbehind thisdeci-sionwas the fact that gasprices therewere three times lower than inGer-many.Theinvestmentwillbeworthmorethan€1billionandwillbethelargestinvestmentinasingleplantinthecompany’shistory27.BASFBoardofDirec-torsexplained that theirdecisionwasstrongly influencedby thecompany’sfinancialresultsfor2013.Theworld’slargestchemicalcorporationincreaseditsrevenuesby1%andprofitby50%in2013mainlyowingtocheapUSgas.ThecompanyhasrecentlyputintooperationlargegasprocessinginstallationsintheUSA,thusincreasingitsUSbranch’sprofitfrom€0.5billionto€1.5billion.Thisimprovedtheentirecorporation’sprofitabilitydespitethestagnationonglobalmarkets.Inthenextfiveyears,BASFintendstoreducetheshareofits

27 ‘Fracking:BilligesErdgaslocktBASFindieUSA’,http://deutsche-wirtschafts-nachrichten.de/2014/05/02/fracking-billiges-erdgas-lockt-basf-in-die-usa/

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investmentsinGermanyfrom1/3to1/4,andinvestmentexpensesinEuropetolessthan50%.BMWhassimilarplans.ItisplanningtobuilditslargestfactoryworthUS$1billionintheUSAby2016.Althoughinthecaseofmanyotherfirmsenergycostsdonotrepresentthelargestshareinthestructureofexpenses,energypricesatthetimeofthefinancialcrisisarebecominganincreasinglyimportantfactorindecisionsconcerningthelocationoftheinvestment.OneexampleisprovidedbyInfineon,themanufacturerofelectroniccomponents,whichspendsannuallyaround€120milliononenergy(3%ofitsincomes).EventhoughGermanyisnotthemainoutletforthisfirm(accountingforonly23%ofitssales),asmuchas47%ofitsenergycostsaregeneratedinthiscountry28.Wacker,themanufacturerofchemicalproducts,hashadasimilarexperience.Itselectricityexpensesoverthepastfiveyearshavegrownby70%toalevelof€0.5billion,whilethecorrespondingexpensesofitsUScompetitorshavefallenbymorethan20%29.Accordingtoquestionnaires,almosthalfoflargecompa-niesseethat theircompetitivenesshasworsenedduetothe implementationoftheenergytransformation,andonethirdofthemareconsideringmovingproductiontoothercountriesduetogrowingenergyprices30.

Diversification of energy supplies to Europe is an equally urgent issue forBrusselsandBerlin,consideringRussia’slesseningreliabilityandpredictabil-ity.PoliticiansinBerlinareincreasinglyawareofthisproblem.Russiaisthelargestsupplierofcrudeoil(35%),naturalgas(38%)andhardcoal(27%)totheGermanmarket.Ontheonehand,GermanyisnotasstronglydependentonRussian supplies as aremanyCentral European countries.However, on theotherhand,Moscow’scuttingofoilandgassuppliesisnolongerviewedasanunrealisticscenarioinGermany.Ifthisscenarioisimplemented,theeconomywillsustainmajorlosses,andenergypriceswillcertainlygrowsignificantly.Inparticular,Russiangassuppliesaredifficulttoreplace,becausethenexttwolargestsuppliers,HollandandNorway,areunabletoincreasetheirproductionpotentialsignificantly,anditisclearthatinthecaseofHollandtheoutputisgoingtofall31.Inadditiontothis,theGermanpublicwouldnotacceptshalegas

28 UlfSommer,MarkusFasse, ‘FluchtnachAmerika:IndustriekonzernebeklagendieteureEnergie’,Handelsblatt,25June2014,pp.4-5.

29 ChristophSteitz,ErnestScheyder,‘SpecialReport:HowfrackinghelpsAmericabeatGer-man industry’, http://www.reuters.com/article/2014/06/02/us-usa-germany-power-spe-cialreport-idUSKBN0ED0CS20140602

30 ‘EinigungbeiEnergiewende’,Handelsblatt,2April2014,p.10.31 Anna Kwiatkowska-Drożdż, Konrad Popławski, ‘The German reaction to the Russian-

Ukrainianconflict–shockanddisbelief ’,OSW Commentary,3April2014,http://www.osw.waw.pl/sites/default/files/commentary_132.pdf

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extractiononalargescale,eventhoughlargedepositsofshalegasmightexistthere,accordingtoestimatesfromUSgeologicalinstitutes.Ecologicalmove-mentsactiveinGermanyarespreadinginformationabouttheenvironmentalrisksposedby this technology.For this reason, the importof rawmaterialsfromtheUnitedStatesseemstorepresentthesimplestwayofdiversifyingen-ergysuppliestoEurope.Anadditionalbenefitfromthissolutionwouldbeare-ductionofthecompetitiveadvantageofUSindustryresultingfromlowenergypricesstemmingfromrestrictionsongasexportsimposedbytheUSgovern-ment.ThissolutionwouldthusprotectGermanyfromthethreatofitsnationalcompaniesmovinginvestmentstotheUSAandtheensuingliquidationofjobsinGermany.

The United States has been reluctant as yet to grant permits for export ofAmericangas toEurope;and thesewereblockedbyvarioussupervisoryof-fices.TheUSgovernmentdidnotwant to lose theeconomicbenefitsofferedbythepricecompetitivenessoftheUSindustryasaresultofaccesstocheapnaturalgas.Overthepast fewyears,manyUScorporationshavedecidedtomoveinvestmentsbacktotheirdomesticmarket,noticingtheprofitsofferedbylowerenergypricesintheUSA.MostanalystsexpectthattheUnitedStatesmaybecomeamajorexporterofbothLNGandcrudeoilinthecomingdecade.Fromtheviewpointof theEUandGermany,signingtheTTIPmaymarkanimportantsteptowardsthediversificationofsourcesofgassuppliestoEurope.IftheTTIPissigned,itwillnolongerbenecessarytoapplyforconsenttoex-portnaturalgastotheEuropeanmarket,sincesuchconsentsarenotrequiredwithregardtocountriescoveredbyfreetradeagreementsunderUSlaw.Overthepast fewyears,naturalgashasbeenimportedfromtheUSAbyMexico,Canada,ChileandSouthKorea,withwhichtheUSAsignedfreetradeagree-ments.AsignificantproportionofUSgasexportshasbeensuppliedtotheKo-reanmarket32.EventhoughgaspriceshavebeenmuchlowerinAsiathaninEuropeoverthepastfewyears,itcannotberuledoutthatthistendencywillbereversed.Globalgaspricesmaybealignedasaconsequenceofthediscoveryofnewgasdepositsworldwide,technologicalprogressingasliquefaction,re-ductionofgasconsumptioninJapanasaresultofapossiblebringingbackintouseofnuclearpowerplants,andprobablepressurefromRussiaonEuropeancountriesasaresultoftheconflictinUkraine.AllthesefactorsmayconvincesomeUSproducerstoexportgastoEurope,wherethepricesarehigherthanintheUSA,evenwhentheliquefactioncostistakenintoaccount.

32 Cathleen Cimino, Gary C. Hufbauer, ‘US Policies toward Liquefied Natural Gas and OilExports:AnUpdate’,PetersonInstiuteforInternationalEconomics,July2014,p.4.

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According tomedia reports, the EuropeanCommission sees complete liber-alisationofexportsofrawmaterialsfromtheUSAtoEuropeasoneofthekeygoals of thenegotiations33.Thismeans thatBrusselswill alsowant tobringaboutliberalisationofregulationsconcerningcrudeoilexports.ThebanonoilexportswasimposedintheUnitedStatesinthe1970s,followingtheoilcrisisandasignificantriseinglobaloilprices.Sincethen,theUSAhasconsistentlyblockedanyopportunities of lifting thisban.However, given the recentUSproducers’ successes in shale oil extraction, these restrictions have becomeasubjectofdebate.AccordingtoanalysespresentedbytheUs-basedresearchfirmHIS,liftingthebanwouldboostoilproductionintheUSA,andwouldalsocreatenewjobsthere34.Itwashintedinmid2014thattheUSadministrationmightagreetomakeconcessionstoBrusselsasregardsthisissue,especiallysinceinJuly2014,forthefirsttimeinmorethanfortyyears,theUSAagreedtograntconsentforafirmtoexportsmallamountsofcrudeoiltoSouthKorea35.SpeculationshaveappearedthattheAmericansmightagreetoexportingoiltotheEUinexchangeforareductionofEUcustomsdutiesonagriculturalprod-ucts36.Atpresent,itisdifficulttostatehowthedownwardtrendinoilpriceswill influence theUSgovernment’sdecisions. Itmaybe concluded from thechangesvisibleonthefuelmarketthatUSshaleoilproducersarebecomingthestrongestcompetitorsforSaudiArabia,whichhasmadeattemptsoverthepast fewmonths to contain their expansion throughmaintaining its crudeoiloutputatahighlevelandthusputtingpressureonoilprices.Itisunclearwhether,giventhissituation,WashingtonwillwantUSproductionfirmstobeofferedbroaderaccesstotheEuropeanmarket,whichmightprotectthemfrombankruptcy.

33 BenjaminFox,‘Leakedpaper:EUwants‘guaranteed’accesstoUSoilandgas’,https://euob-server.com/news/124910

34 http://www.wnp.pl/drukuj/227130_1.html35 http://www.wnp.pl/wiadomosci/231549.html36 ‘Eksperci:możliwaropazUSAzaotwarcierynkurolnegowUE’,PAP,29September2014.

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Iv. german acTors In The negoTIaTIons

1. The federal government and the political parties

TheGermangovernmenthasbeenoneofthemajorpromotersofsigningtheTTIP,wantingthustostrengtheneconomicbondswiththeUnitedStates.Ber-linalso sees thepositive impactof signing thedealon thediversificationofrawmaterial supplies to the EU,which has been emphasised on numerousoccasionsbyChancellorMerkelinherstatementsconcerningtheTTIP37.ThegovernmenthasalsomadeeffortstoensurethatGermanyhasastrongrepre-sentationamongthenegotiators.Fiveoutofthethirty-fivemembersofthene-gotiatingteamareGermans,andtheyaretheheadsoffiveworkinggroups:forcompetitionpolicy, forstate-ownedcompaniesandsubsidies, formachineryandelectronics,forthechemicalindustryandforservices.However,neitherthemainnegotiatornorhisdeputyare representativesofGermany38.TherearetwoGermansinthegroupoffifteennegotiationadvisors39.Accordingtopressreports,ChancellorMerkelmadeeffortstoensurethatGüntherOetting-er,whohadpreviouslyservedastheEuropeanCommissionerforEnergy,wasnominatedCommissionerforTradeinthenewEuropeanCommission40.Shedidnotsucceedinthis,andCeciliaMalmströmfromSwedenwaschosenthenewEUCommissionerforTradein2014.OettingerwasnominatedCommis-sionerfortheDigitalEconomy.

Itappearedforalongtimethatthegovernmentcoalitionwouldremainunitedinitsstance,sinceitclearlybackedtheTTIP.TheChristianDemocratssupportthedeal,whichhasbeenemphasisedonnumerousoccasionsbyChancellorAngelaMerkel.However,somedeputieswantedthenegotiationstobehaltedinresponsetothedisclosureofinformationthatUSstateagenciescontinuedtappingGermanyinJuly2014.However,theseviewswerequicklyneutralisedbyAngelaMerkel,whomanifestlysupportedthecontinuationofthetalks41.

37 ChancellorAngelaMerkel’spressconferenceinWashingtonon3May2014,http://www.bundesregierung.de/Content/DE/Mitschrift/Pressekonferenzen/2014/05/2014-05-02-pk-obama-merkel.html

38 http://trade.ec.europa.eu/doclib/docs/2013/july/tradoc_151668.pdf39 http://trade.ec.europa.eu/doclib/press/index.cfm?id=101940 http://www.euractiv.de/sections/europawahlen-2014/merkel-will-oettinger-als-neuen-han-

dels-kommissar-303608?utm_source=EurActiv.de+Newsletter&utm_campaign=b7b52cf4a0-newsletter_t%C3%A4gliche_news_aus_europa&utm_medium=email&utm_term=0_d18370266e-b7b52cf4a0-47178529

41 Stefanie Reulmann, ‘Merkel will Gespräche über Freihandelsabkommen fortsetzen’,

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The Social Democrats revised their stance on the TTIP in October 2014.Atthebeginning,theSPDavoidedcriticisingthedeal,regardlessofthenu-merous reservations from left-wing non-governmental organisations andthinktanks.Thepartyleader,SigmarGabriel,whoservesasministerfortheeconomyanddeputychancellor,promisedthattheSPDwouldbecomemoreorientedtowardscompanies’needs,tostriptheChristianDemocratsofpartofitselectorate.Forthisreason,hepresentedhimselfasastaunchsupporterofsigningtheTTIP.However,whenthefinalversionoftheCETAtradeagree-mentnegotiatedwithCanadawaspublishedbytheEuropeanCommission,whichwasseenasanimportantsteptowardssigningtheTTIPwiththeUSA,Gabrieldemandedthattheinvestorprotectionregulationsberemovedfromit.ItisdifficulttopredictwhetherthepartiestotheCETAnegotiationswillmeettheSPDleader’sdemands.However,ifinvestorprotectionregulationsarenotincludedintheCETA,theywillmostlikelynotbepresentintheTTIP,aswell.GabrielhasalsosuggestedthatBrusselsshouldadoptamixedproce-durefortheratificationoftheTTIPandtheCETAagreements,whichmeansthatthesedealswillhavetobeputtothevoteatthenationalparliamentsofEUmemberstates.IfthisdemandissuccessfullypushedthroughintheEU,itwouldincreasethelikelihoodthatinvestorprotectionregulationswillberemoved,becausetheSPDmightwarnBrusselsthattheBundestagwillop-posesigningtheTTIPandtheCETA?42.

TheotherpartiesintheBundestag,theGreens,thePiratePartyandtheLeftParty,areclearlyagainsttheTTIP.Inprincipal,thetwopartiesusesimilarargumentation:theTTIPisadealnegotiatedunderdictationfromlargecor-porations,itwilllowerfoodprotectionstandards,allowthehydraulicfrac-turingmethodforshalegasextractiontobeusedinGermany, itwill limitdemocraticlegitimacy,anditwilladverselyaffecttheprotectionofworkers’rightsandenvironmentalprotectionstandards.TheGreenPartyandthePi-ratePartyare lackingattractivepolitical slogansata timewhenGermanyhasbeenconsistentlyimplementingitsenergytransformationstrategy,andcybersecurityissueshavebecomelesspopular.Forthisreason,thetwopar-tieswillwant tobuild theirpolitical capitalon fears linked to signing theTTIPdeal.

http://www.heute.de/bundeskanzlerin-angela-merkel-im-zdf-sommerinterview-zur-spi-onageaffaere-und-dem-verhaeltnis-zu-den-usa-34027868.html

42 http://www.zeit.de/2013/50/handelsabkommen-europa-usa

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2. The public

TheGermanpublicisdividedovertheTTIPissue.Publicopinionisconcernedaboveallaboutthepossibledeteriorationinfoodprotectionstandards,sinceUSstandardsareviewedasmuchlowerthanEuropeanones.Severalexam-plesof foodproductionandprocessing technologiesseenascontroversial inGermanyhavebeenpublicisedinthedebateintheGermanmedia(forexampletheuseofGMObyAmericanfoodmanufacturers,aswithgeneticallymodifiedmaize,orwashingchickenswithchlorinefordisinfectionpurposesasopposedtothermalprocessingusedintheEU).CircleslinkedtotheLeftPartyandtheGreensviewthedealasanotherexampleofbusinessmenandlobbyistsfrominternationalcorporationspromotingtheirowninterests,whicharecontrarytotheexpectationsofthegeneralpublicandwhichmayresultinhigherun-employment levels inGermany.Themanner of conducting thenegotiationsduringsecretmeetingsofEUandUSArepresentativeshasalsobeencriticised.Forexample,theEuropeanCommission,underpressurefromGermanpublicopinion,decidedinOctober2014todeclassifythenegotiatingmandategrantedtoitbyEUmemberstates43.Someleft-wingpoliticianshavemadeattemptstofueluppeople’sfearsbycomparingtheTTIPtoACTA,thecontroversialagree-ment intendedatcombatingpiracyon the Internet.However, theyhavenotsucceededatprovokingunrestamongthepublicatalevelcomparabletothatcausedbyACTA.Despitethemanyconcerns,nomajordemonstrationsagainsttheTTIPhavebeenseenasyet,apartfromtheactivityofnumerousorganisa-tionsincyberspace44.

Public opinion polls suggest that a smallmajority of the public in the USAandGermanyseethebenefitsofsigningtheTTIP.AccordingtoPewResearchCenter,55%ofGermansand53%ofAmericanssupportedthedealinApril2014,while25%ofGermansand20%ofAmericanswereagainstit.45.InthecontextoftheTTIP,theGermanpublicisconcernedaboveallaboutapossibledeterio-ration in foodqualitystandards, ifgeneticallymodifiedproductsareadmit-tedasimports.76%ofAmericansandonly45%ofGermansbackedtheideaofharmonisingUSandEUstandardsconcerningproductsandservices.Whenasked about preferences concerning security standards, respondents fromGermanychoseEUfoodprotectionstandards(94%),environmentalprotection

43 http://www.euractiv.de/sections/eu-innenpolitik/laengst-ueberfaellig-eu-veroeffentli-cht-ttip-verhandlungsmandat-309069

44 https://www.freitag.de/autoren/felix-werdermann/der-neue-anti-ttip-protest45 http://www.pewglobal.org/2014/04/09/support-in-principle-for-u-s-eu-trade-pact/

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standards(96%),carsafetystandards(91%)andpersonaldataprotectionstand-ards(85%).InthecaseoftheAmericanpublic,theanswersaremorediversi-fied,andAmericanstandardsaregivenpreferenceoverEuropeanstandardsbybetween49%and67%respondents,dependingonthestandardcategory.

AnotherargumentraisedbytheGermanoppositionpartiesagainsttheTTIPdealisthethreattotheGermanwelfaremodelposedbyintegrationwiththeUSmarket,which–asviewedfromGermany–offersmuchmoremodestsocialsecurity.ThisisatypicalargumentraisedinGermanywithregardtothreatslinkedtoglobalisation,andleft-wingpartiesareespeciallysensitivetosuchargumentation. This argument resonates with the German public, becauseof thedebateovergrowingpoverty,especiallyasaconsequenceofso-called‘trashcontracts’,hasbeenintensifyinginGermanydespiteitsgoodeconomicsituation.However, as regards complete lifting of import duties and invest-mentbarriers,therearecertainconcernsonbothsidesoftheAtlantic.Thesemoveshavebeensupportedbyonly41%ofAmericansand38%ofGermans.Theconcerns linked to this agreementwidely sharedamong theGermanpublichavemostlikelyinfluencedthefactthat65%ofrespondentspreferthefederalgovernment’sengagementinthenegotiations,while28%ofthemsupportEUinstitutionsinthiscontext.Accordingtopublicopinionpolls,theexistingde-batehasslightlyreducedthelevelofsupportfortheTTIPamongtheGermanpublic.AccordingtoasurveyconductedbyEmnidinstituteinOctober2014,48%ofGermansseethisdealasbeneficialfortheircountry,32%areofthecon-traryopinion,and63%ofrespondentswantthenegotiationstobecontinued,while24%wantthemtobediscontinued46.

TheTTIPissuehasraisedconcernmainlyamongnon-governmentalorgani-sationswhichareinclinedtotheleftanddealwithecology,consumerrightsprotection and agriculture. The non-governmental sector has become unit-ed against theTTIPusing theplatformwww.unfairhandelbar.de.Themainsupporters of this action include environmental organisations (Greenpeace,Friends of Earth Europe, Food andWater Europe, Attac, Powershift, Bund,NABU, Umweltinstitut München), as well as organisations engaged in thestruggle forhumanrightsand theruleof law (Menschenrechte 3000,Com-pact.de)andpromotinghealthyfood(GentechnikfreieLandwirtschaft,BundÖkologischeLebensmittelwirtschaft,ZukunftsstiftungLandwirtschaft,Bio-land).Theyhaveraisedthekeyecologicalaspectsoftheagreement,pointing

46 The Emnid survey is available at http://www.foodwatch.org/fileadmin/Themen/TTIP_Freihandel/Dokumente/Emnid-Ergebnisse_TTIP-Umfrage.pdf

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tothethreatposedtoEUclimatepolicy(asaconsequenceofimportingfossilfuelsfromtheUSAandsupportingtheirproductioninthiscountry,whichisharmfultotheclimate).TheyarealsoconcernedaboutthefactthattheTTIPmayresult in lowerfoodproductionstandardsbeingadopted.Furthermore,GermanconsumerorganisationshavepointedtothefactthattheEUandtheUSAhavedifferentfoodprotectionsystems.Europeancountrieshavesystemswhichrestrictmarketdistributionofproductswhichposeahealthriskex ante,whileintheUSsystemconsumerhealthisprotectedthroughcourttrialsandopportunitiestobringcomplaintsex post.ManyorganisationsareconcernedthatWashingtonwillmake efforts to push through its own foodprotectionsystemattheexpenseofweakeningEUcontrolsystems.

Regardlessofthesemoves,theGermanNGOsectorhasnothadanymajorsuc-cessesinopposingtheTransatlanticTradeandInvestmentPartnershipbeingsigned. As representatives of these organisations admit themselves, despitethenumerousattemptstoholddemonstrationsagainsttheTTIPinGermany,noneoftheinitiativeshasbeengivensufficientpublicitybythemedia47.Theirsuccesses have been limited to online protests in socialmedia (for example,470,000peoplesignedtheonlinepetitionagainsttheTTIPonwww.campact.de)andpropagationofactionsaimedatsignifyingtheresistancetotheTTIPinintergovernmentalconsultationsheldbytheEuropeanCommission.Adem-onstrationofactivistsopposingtheTTIPhasalsobeenobservedinBrussels,where250weredetainedafterriots48.AccordingtotheEuropeanCommission’sdata,Germansformedthethirdmostnumerousgroupengagedinsocialcon-sultations concerning theTTIP.Almost 23%of the 150,000 responses sent totheEuropeanCommissioncamefromGermany. It isworthnotingthatmorethanhalfoftheopinionauthorsdidnotagreetotheircontentbeingrevealed,whichmayprovethattheyweresentonamassivescalebynon-governmentalorganisations49.TheEuropeanCommissionerforTrade,KareldeGucht,shortlybeforeleavinghisfunctionin2014admittedthisindirectly,statingthatmanyresponseswere identical, and thus theymighthavebeen sentusinga singlepatternbymembersofnon-governmentalorganisations50.InJanuary2015,the

47 https://www.freitag.de/autoren/felix-werdermann/der-neue-anti-ttip-protest48 http://www.zeit.de/wirtschaft/2014-05/freihandelsabkommen-ttip-eu-usa-demonstra-

tionen-bruessel49 http://www.euractiv.com/sections/trade-industry/commission-swamped-150000-replies-

ttip-consultation-30368150 http://www.faz.net/aktuell/wirtschaft/wirtschaftspolitik/karel-de-gucht-attacke-

gegen-ttip-13055875.html

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EuropeanCommissionpublishedtheresultsofpublicconsultationsconcerningtheinclusionoftheinvestmentprotectionclauseintheTTIP,wherenegativeopinionsclearlypredominated.97%oftheresponsessentpresentedanegativestance,andmanyoftheseweremostlikelycompletedbyrepresentativesofthenon-governmentalsector.AlthoughNGOshavenotmanagedtoencouragethepublicintomakinganymoredecisivemovesagainsttheTTIP,astrongermobi-lisationoftheopponentsofthisdealcannotberuledoutinthecomingmonths,especiallyiftheBundestagdecidestoratifyit.TheNGOsectorwillmostlikelymakeattemptstospreadthemessageinthemassmediaconcerningnewthreatslinkedtotheTTIPinsuchareasasfoodsafety,ecology,digitalsecurityorsocialthreatstoGermancitizens.However,itappearsthatthegovernment,regard-lessofexistingdividesinthecoalition,willbeabletopresentacommonstanceontheTTIPandtosuccessfullydefyopponentsofthedeal.

Theconcernsaboutapossibledeteriorationoffoodsafetystandardsanden-vironmentalthreatsneedtobeviewedinthecontextofGerman-USrelations.AccordingtodatafromtheGermanMarshallFund,supportfortheUSAsig-nificantlyfellinGermanyin2013.57%ofGermancitizenswantedtheircoun-try’spolicytobemoreindependentfromtheUSA(anincreaseof17percentagepoints).Only19%supportedstrongGerman-USrelations(adecreaseof20per-centagepoints).Nevertheless,60%expectedthat theUSAwouldremainthegloballeader(adecreaseof3percentagepoints).TheworsenedperceptionoftheUnitedStatesinGermanyhascertainlybeeninfluencedbytheinforma-tionrevealedin2013bytheformerCIAworker,EdwardSnowden,thatUSse-cret serviceshadbeen tapping the communicationsofGermancitizens andfirmsforyearsonamassivescale.Whatraisedspecialconcern inGermanywasthefactthattheUSserviceshadviolatedtherighttoprivacy,onesymbolofwhichwerethemediareports51,whichwerelaterdispelled,thatevenChan-cellorAngelaMerkel’sprivatephonewastapped52.However,Germanywasun-abletoforcetheUSAintosigninganagreementthatwouldsetmoredetailedrules of co-operation between the secret services, underwhichUS serviceswouldbeobligedtoreducethescopeoftappinginGermany53.Washingtonhas

51 ‘Range: Kein Beweis für Ausspähung von Merkels Handy’, http://www.faz.net/aktuell/politik/inland/nsa-affaere-kein-beweis-fuer-ausspaehung-von-angela-merkels-handy-13315918.html

52 ‘ManhörtsichnichtabunterFreunden’,Handelsblatt,24July2014,p.8.53 MartaZawilska-Florczuk,KamilFrymark,‘TheNSA:theimpactofthewiretappingscan-

dalonGerman-Americanrelations’,OSW Commentary, 14 January2014,http://www.osw.waw.pl/en/publikacje/osw-commentary/2014-01-14/nsa-impact-wiretapping-scandal-ger-man-american-relations

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disregardedBerlin’sdemandstothiseffect.InJuly2014,Germanyaccusedtwolower-rankingofficersfromtheFederalMinistryofDefenceandtheFederalIntelligenceServiceofspyingfortheUSA,andforcedaresidentoftheUSintel-ligenceservicestoleaveGermany.ThisunprecedentedmovewithregardtoanalliedstatewasprobablydictatedbythedesiretoputpressureontheUSAtolimittheactivityofitsintelligenceservices,andalsoservedtheGermangov-ernment’s interests,becauseitwasintendedtoconvincepublicopinionthatGermansecretservicesneededbetterfunding54.

TherecentdisputesbetweenGermanyandtheUSAovertheoperationofthesecretservicesmayadverselyaffecttheTTIP.TheGermanpublicmayfearthattheTTIPwillofferUScorporationsmoreopportunitiestointerferewithGer-mancitizens’privatedata.ChancellorAngelaMerkel,fearingpublicprotests,didnotdecide toratify theACTAagreementoncounteractingdigitalpiracyin2012intheBundestag.Furthermore,peopleinGermanyareconvincedthatGerman-USrelationsarelackingbalance.ExamplesoftheseincludeUScorpo-rations’failuretocomplywithGermanlawandthestricttreatmentofEuro-peanfirmsbyUSinstitutions.HighfinancialpenaltiesimposedonEuropeanbanksviolatingUSregulationsandtheforbearingapproachadoptedbyGer-manstateinstitutionswhilecontrollingUS-basedInternetcorporationsthatviolateGermanregulationsconcerningprivacyhavebecomesymbolsofthisasymmetry55.

3. The business circles

Representativesofbusinesscircleslieattheotherextreme.Theystronglysup-portthegovernment’sactions,emphasisingthatsigningtheTTIPagreementwillmeanenormousopportunitiesfortheGermaneconomy56.Thelargestin-dustrialassociations,suchastheGermanIndustryAssociationandtheGer-manChamberofIndustryandCommercesupportthedealalmostunreserv-edly.Thetwoassociationsevenwantthecontroversialinvestor-statedisputesettlementregulationstobeincludedinthedeal,althoughtheirrepresenta-tiveshavemadethereservationthatthesuccessoftheentiredealmightnot

54 Justyna Gotkowska, ‘The consequences of the spy scandal in Germany’, OSW Analyses,23 July 2014, http://www.osw.waw.pl/en/publikacje/analyses/2014-07-23/consequences-spy-scandal-germany

55 Handelsblatt,22July2014,p.10.56 http://www.welt.de/debatte/kommentare/article127607351/Der-Mittelstand-braucht-das-

Freihandelsabkommen.html

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depend on the implementation thereof. Company representatives are awareofthefactthatlegaldisputesbetweenEuropeanfirmsandUSadministrationhavedominatedtransatlanticrelationsoverthepastfewyears;andthismaymeanthatEuropeancompanieswillbenefitmorefrominvestorprotectioninthefuture.Criticismfrombusinesscirclesconcernedonlythescopeofthene-gotiateddeal.TheheadoftheGermanChamberofIndustryandCommercehasemphasised,forexample,thatnotonlylargecorporationsbutalsosmallandmedium-sizedbusinessesshouldbenefitfromtheagreement.AssociationsofthekeyGermanindustries,suchasthechemical,themachine-buildingandtheautomotiveindustry,havebeenactivelyengagedinpromotingtheTTIP.

Although thekey sectors of theGermaneconomyplainly support theTTIP,therearealsoopponentsoftheagreement,representingmainlysmallersec-torsoftheeconomy.TheGermanFarmers’Associationseesmorebenefitsthanthreatsintheagreementbeingsigned,butstillemphasisesthattheUSAwithitslargedomesticmarketisforthetimebeingasmalleroutletforGermanagri-culturalproductsthanRussia.Representativesofthisassociationhavepointedoutthatmeatmustremainprotectedbyimportquotas.TheUSAhashadacom-petitiveadvantageduetotheuseofhormonesinanimalbreeding.Organisa-tionsofproducersofculturalgoodshavealsoprotestedagainsttheTTIP,eventhough the European Commission has nomandate to negotiate the consentto liberalise trade inaudiovisualgoods. Importersofgoods fromdevelopingcountriesaspartoffairtradealsofearthattheTTIPwillsanctionasystemofsubsidiesbetweentheUSAandtheEU,thusdiscriminatingagainstproducersfrompoorercountries.SincesigningtheTTIPwilladverselyaffectthegenuineinterestsofthesesectors,onecannotexcludethepossibilitythattheywillsup-port(alsofinancially)theopponentsofthisdeal.

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v. The consequences of sIgnIng The agreemenT

ThechancesthattheTTIPwillbesignedseemhigh.Consideringthelongper-spectiveofsigningtheagreement(atimeframeofasmuchastwoyears),itre-mainsfeasiblethatresistanceamongtheGermanpublicwillgrow,especiallyiftheeconomicsituationinthecountryworsensorlevelsofpopularsupportforthegovernmentfall.Theeffectivenessofthenon-governmentalsector,whichasofyethasbeenunabletoinfluencethepublicstronglyenoughforthedealtobetorpedoed,willalsobeamajordecisivefactor.However,furthermovestoachievethisgoalshouldbeexpected.Atpresent,itisdifficulttopublicisetheprotestsagainsttheTTIPduetothetenseinternationalsituation,wherenumerous conflicts worldwide attract the attention of public opinion (theRussian-Ukrainianwar,thedestabilisationofthesituationintheMiddleEastandthedebateontheriskofterroristattacksinGermany).AnintensificationoftheprotestsmightreduceGermany’sdeterminationtosigntheagreement.TheGermangovernmenthassofarinsistedthattheTTIPshouldberatifiedbyconsentfromnationalparliaments.Thissolutionisintendedtoaddlegiti-macytothedeal,butthissolutioncarriestheriskthatsomeEUmemberstatesmightvetothedeal.ThereisstillaconsensusinthegovernmentcoalitioninGermanythattheTTIPshouldbesigned.However,theSPDmaystillchangeitsmind.ItsleaderhasrecentlysuggestedthattheSPDmightbeopposedtotheinvestorprotectionregulations.Therefore,itisunclearwhatstancetheSocialDemocratswilltakeontheTTIP,iftheothercountriesdisagreeaboutelimi-natingtheseregulationsfromtheagreement.

TheTTIPalsooffersachancefordiversifyingrawmaterialsuppliestotheEU.EventhoughthedealisunabletoguaranteecompetitivepriceconditionsfortheexportofrawmaterialsfromtheUSAtotheEU,thepastfewmonthshavesuggestedthatareductionofhighgaspricesinAsiaisincreasinglypossible.TheliberalisationofUSprocedureswillcreatestableinstitutionalconditionsforforeigntradeinrawmaterials,especiallyiftheTTIPliftssomeofthere-strictions imposedonAmericanoilexports.TheEuropeanmarkethasbeenuncompetitivewith theAsianmarket forUSgasexporters for two reasons.Firstly,gasprices intheEUwere lowerthaninAsia,wherethepriceswentupafterJapanhadceasedusingnuclearenergy.Secondly,someAsiancoun-tries,suchasSouthKoreaandSingapore,signedfreetradeagreementswiththeUSA,whicheliminatedtherequirementtoseekconsentfortheexportofnaturalgastothesecountries.TheTTIPwillautomatically lift thisrequire-mentinthecaseofgasexportstotheEU.Evenwiththepresentlevelofprices,theEuropeanmarketmaybeappealingtoUSproducersofshalegas,especially

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ifthereisasignificantoversupplyofgasontheUSmarket.Americanproduc-ersmayalsofinditmoreprofitabletoexportgaswithouttherequiredpermitstotheEUthan,forexample,toapplyforpermitstoexportgastoJapan.

IftheTTIPnegotiationssucceed,strongereconomicbondswillbeestablishedbetweentheUSAandtheEU,whichmayalsotranslateintobetterpoliticalre-lations.Thetwoeconomicblocs,whichhavesimilarstandardsandproductionnorms,willbecomeconnectedthroughmuchstrongereconomicinterestsandwillbeable toadoptmoresimilarstancesonmanyeconomic issues inrela-tionswiththeemergingeconomies.ChangeinthisdirectionissomethingBer-linexpects.GermanyiswonderingwithadoseofanxietywhetherattemptsbyBRICScountries(Brazil,China,India,RussiaandtheRepublicofSouthAfrica)tobuildaninstitutionalarchitecturereminiscentoftheWesternone(aBRICSregionaldevelopmentbankreminiscentoftheWorldBankoraBRICSfinancialfundreminiscentoftheInternationalMonetaryFund)mightleadtotensioninrelationswiththeWest.Giventhiscontext,transatlanticrelationsreinforcedthroughtheTTIPmayturnouttobeanadditional instrumentfor influenc-ingtheemergingeconomies,whichwillwanttohaveaccesstotheextremelylucrativeEUandUSmarkets.Furthermore,thesealingoftheTTIPdealmayalsofacilitatenegotiationsaspartoftheWorldTradeOrganisation.Companiesfromemergingmarketswillwanttobegivensimilarconditionsofaccesstothetransatlanticmarket(similarstandardsandcustomsdutyrates)liketheirEuropean and American competitors. The German government wants Ger-mancompaniestobeofferedinvestmentandtradefacilitationsontheemerg-ingmarketsthroughsuchmovesas liberalisationoftrade,betterprotectionofcopyrightandpatents,protectionofforeigninvestmentsandtheintroduc-tionofWesternnormsandstandards.However,GermanywillmakeeffortstoensurethattheTTIPnegotiationprocessandtheramificationsofitspossiblesigningdonotresultinisolatingtheEUandtheUSAfromtherestoftheworld.SuchasolutionwouldnotbebeneficialforacountrywhichheavilyreliesonexportsandhasstrongeconomicbondswithBRICcountries.

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APPENDIX

EU and US customs duty rates on some groups of goods (an average from 2012)

Product group eu usa

Dairyproducts 52.9 19.9

Sugarsandconfectionary 32.1 14.4

Beveragesandtobacco 19.9 14.0

Clothing 11.5 11.6

Textiles 6.6 7.9

Oilseeds,fats&oils 2.0 4.8

Fruit,vegetables,plants 10.7 4.7

Cotton 0.0 4.1

Leather,footwear,etc. 4.2 3.8

Coffee,tea 6.2 3.3

Cereals 17.1 3.1

Transportequipment 4.3 3.1

Chemicals 4.6 2.8

Preparations 2.7 2.4

Animalproducts 20.4 2.2

Mineralsandmetals 2.8 1.7

Electricalmachinery 2.8 1.7

Non-electricalmachinery 1.9 1.2

Otheragriculturalproducts 4.3 1.1

Petroleum 2.8 1.1

Fish&fishproducts 11.8 0.8

Wood,paper,etc. 1.0 0.5

source:http://www.kas.de/wf/doc/kas_38104-544-2-30.pdf?140618145124,p.9