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TTIP Can Be Forged by End of 2015, Greatest Benefit in Energy, Merkel Says

Tuesday, May 6, 2014

By Len Bracken  

May 2 — The U.S. and the EU should be able to forge a free trade area through the Transatlantic Trade and Investment Partnership (TTIP) negotiations by the end of 2015 and the biggest benefit of the pact could be facilitating trade in energy, German Chancellor Angela Merkel said May 2.

In remarks at the U.S. Chamber of Commerce following her meeting with President Barack Obama, Merkel said that an ambitious and comprehensive TTIP agreement could be reached by the end of next year that lowers customs barriers and nontariff barriers and that rectifies the high costs associated with duplicative regulations and divergent standards.

The Ukraine crisis, said Merkel in response to a question, will not make the TTIP negotiations more difficult and may in fact bolster the talks, with energy representing “perhaps the greatest benefit” of the prospective agreement, she said.

The TTIP talks provide an opportunity for the U.S. and the EU to deepen energy cooperation and a way for Europe to gain independence from a “unilateral” supply source, she said, referring to Russia. Without the TTIP, deliveries of liquefied natural gas (LNG) from the U.S. to Europe would take longer, and this fact could convince EU member states of the benefits of the pact, Merkel said.

DOE License Evaluations

Evaluations of LNG export licenses are made by the Department of Energy, and those exports are deemed to be in the public interest to countries with which the U.S. has free trade agreements.

At a press conference following the May 2 meeting with Merkel, Obama said that he and the chancellor discussed energy security, including the importance of Europe diversifying its energy sources.

“The United States has already approved licenses for natural gas exports, which will increase global supply and benefit partners like Europe,” Obama said. “And TTIP would make it even easier to get licenses to export gas to Europe.”

In her remarks to the U.S. Chamber, the German leader acknowledged the vulnerability of the EU with regard to energy supplies, noting that 50 percent of the EU's gas supplies come from Russia and pass through Ukraine. Large storage tanks in Ukraine currently need to be replenished, she said. Whereas Germany relies on this supply route for 30 percent of its gas supply, six EU countries are 100 percent dependent, and others are 50 percent dependent.

“It will be very important for us to bring the negotiations very quickly to a close on TTIP,” Merkel said at the press conference. “We are firmly convinced that for the European Union, for Germany and for the United States, this offers a lot of opportunities for the future, and it's so important for us to bring this agreement to a successful conclusion.”

Countering TTIP Skepticism

In her remarks to the business group and in the joint press conference, Merkel stressed the need to overcome critics of the TTIP through increased transparency and the participation of citizens in debates on the issues involved. She stressed that the pact would not lower standards on product safety or environmental protection but, rather, would increase opportunities for small- and medium-sized businesses that currently find it difficult to export.

“People have doubts,” she said at the press conference. “But these doubts, this skepticism can be overcome and it needs to be overcome.”

Merkel told U.S. business leaders that they need to speak with labor groups and others outside of the business community about the other trade negotiations that are taking place, such as those between the Chinese and Indonesians, to heighten the need to intensify the trans-Atlantic trade and investment relationship.

The experience of German industry, such as the auto supply sector, has been that free trade agreements tend to spur growth, she said. Other benefits of trade deals include lower prices and a greater variety of products, Merkel said, adding that small German beer breweries have had trouble exporting to the U.S. because of burdensome regulations. Machinery manufacturers in her country have also faced registration requirements for most components that pose compliance problems.

She said that the criticisms of the investor-state dispute mechanism are “blown out of proportion” and can be countered by showing what has been done in previous trade agreements. The EU is engaged in TTIP-related consultations with the public on this mechanism.

U.S. Trade Representative Michael Froman will meet May 5 in Berlin with German Vice Chancellor and Minister for Economic Affairs and Energy Sigmar Gabriel prior making remarks at a TTIP stakeholder event sponsored by the ministry. In addition to other meetings with senior German officials, Froman will also meet the same day with EU Commissioner for Trade Karel De Gucht.

To contact the reporter on this story: Len Bracken in Washington at lbracken@bna.com

To contact the editor responsible for this story: Jerome Ashton at jashton@bna.com

A May 2 White House fact sheet on U.S.-German ties can be found at http://www.whitehouse.gov/the-press-office/2014/05/02/fact-sheet-united-states-and-germany-leading-together.

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