Over the past year, I have spent a lot of time listening to people all over the Kingdom of Denmark. In dozens of cities, towns and small communities where I’ve been, speaking with farmers, labourers, teachers, students, business executives, bankers, mayors and ministers, I have heard a common theme underlying many of the questions, arguments and comments I’ve received: that Denmark is rightly proud to be an innovative, green, creative and humane member of the Western community of democracies and free markets.
I feel the best way we can achieve those goals of mutual economic growth, mutually open markets, mutual high standards and mutual success is through the Transatlantic Trade and Investment Partnership, or “TTIP”. I have followed the debate building in Denmark in recent months about this free trade agreement, and I welcome and applaud it. A deal as big and important as this should continue to be debated in editorial pages and dinner tables around Europe and the US. I’d like to convey why we believe TTIP is so important both to the United States and to the EU.
Throughout our history, it would be difficult to identify an ally as important to us as Europe. I spent part of my childhood in London where my parents instilled in me that this alliance, having withstood wars and recession on both sides of the Atlantic, is fundamental to who we are as Americans. So, as Ambassador to Denmark, every day I ask myself these questions: How do you take what is great and make it better? How do you tear down the walls that continue to exist? How does this great alliance continue to thrive in the 21st Century? In short, we have shared interests economically, politically, and strategically.
We live in a world that is changing rapidly due to emerging markets, rising powers, and new technologies. Together, the US and the EU are seeking to create a global open trading space. With our economies covering over half of global GDP and about one third of global trade, we have the opportunity to set the new global rules for trade and investment worldwide. And we have a shared commitment to enforceable environmental protections, food that is safe, strong labour rights, and intellectual property rights that encourage innovative entrepreneurship. TTIP can demonstrate to the world that you don’t have to sacrifice regulatory protections to create new opportunity.
And this global space that we will create together will help ensure greater prosperity for our citizens into the future: we believe that open trade and investment markets create networks of prosperity. Openness, transparency, and the rule of law are the cornerstones of our democracy, stability, efficiency, and long-term economic health. This approach has served our two economies well. TTIP is a partnership that needs our vigorous support to promote our common prosperity together. Moreover, the time to act is now: with our unprecedented strong economic growth in the United States this year; new challenges from actors along Europe’s eastern borders and in the Middle East who seek to return to an era of authoritarianism, economic command control and repression; and small, medium, and large Danish businesses looking to advance Denmark’s and Europe’s economy through more job creation and investment, there has been no better time to reach an agreement than now.
Who will benefit
Ultimately, this is not an agreement designed for big business: it is an agreement about and for our citizens. If we get this deal right, consumers will have a wider choice of products and services from a greater range of producers, and the best of the strong safeguards in force on both sides of the Atlantic. Consumers and producers both will benefit from lower tariffs and fewer barriers to trade and small businesses will face fewer hurdles to sending exports across the Atlantic in both directions.
If we unite the 800 million citizens of the EU and the US within a common understanding about the rules for trade and investment – and we get rid of many or most of the internal trade taxes and barriers to trade, and the inconsistent rules and regulations that slow down commerce and make it unnecessarily expensive today – we will naturally create more opportunities for everyone involved. That leads to growth, and growth leads to employment.
That applies to Denmark more than anywhere. The vast majority of independent analyses, including several from Copenhagen Economics, show a significant net benefit to both consumers and businesses from TTIP. Sectors where Denmark is strongest – such as life sciences, clean technology and shipping – are expected to be the greatest benefactors of an agreement; and consumers will have a larger and cheaper variety of products from which to choose. Small and medium sized companies stand to gain much more than big industries: as the rules and standards are made simpler, more transparent, and more consistent – but not lower! – SMEs become able to compete more widely in a newly enlarged market, gaining the same competitive advantages that only large multinationals enjoy today.
In fact, a key lesson from European economic integration has been that by reducing costs, eliminating tariffs at the border and making customs procedures faster and simpler, we create new opportunities for small businesses to sell their products outside their traditional home market. So, we are optimistic that TTIP will make it cost-competitive for more small Danish businesses to export their products to the US as well, just as they currently do the European Union.
Transparency in complex trade negotiations
Now, I have to admit that TTIP is a complex deal and the mere mention of the topic causes some people to lose interest. After all, we have very complex economies, very large economies, many rules governing them, and there is a lot of detail to these agreements. Many observers have strong opinions over some of the details, which is why we need to make sure we debate based on facts, and not insert unrelated issues into these discussions.
This is why in the United States we are trying to be as transparent as possible about our negotiating goals. We have set time aside in the US during every round of negotiation for civil society, unions, business associations and others to give our negotiators feedback and present their views when they meet with the negotiators. We do this before every round, we do it during every round, and we do it after every round. These meetings are all recorded and available online. Both the EU and the US have both published their detailed objectives for the negotiations.
High standards and transparent regulations
One hot topic of debate, for example, is the area of product standards and consumer protections. I want to underline that maintaining strong consumer protections, safe food, and safe products is our top priority. Neither the US nor the EU negotiators have any intention whatsoever of reducing health, safety and environmental protection or limiting government’s ability in either economy to regulate in the public interest in a fair, transparent and non-discriminatory manner. In fact, we intend to make sure that TTIP specifically protects the right to regulate in the public interest. Returning to the issue of transparency, we view accountability in the rule-making process, one of the key US objectives, as essential to ensuring high quality regulations that achieve objectives efficiently and effectively.
President Obama has called TTIP “a powerful demonstration of our determination to shape a free, open and rules-based world” and added later “I have fought my entire political career and as President to strengthen consumer protections. I have no intention of signing legislation that would weaken those protections. I fought throughout my political career and am fighting as we speak to strengthen environmental protections in the United States, so I have no interest in signing a trade agreement that weakens environmental standards.”
So what we want to do through this agreement is to find better ways for our regulators to work together across the Atlantic and to share more information. The fact of the matter is, we both have high standards. Our publics demand them. With our sophisticated economies, we both know what we are doing. There is an outdated image of the US as some kind of "Wild West" economy; that is dead wrong. Product safety standards and food safety standards in the United States compare favourably to anyone's. American mothers and fathers demand the same high standard in the food products they buy for their families as European parents do.
Through TTIP, we can bring our standards closer together, and make trade work even better. So to give you an example, if we agree that we can recognize each other’s already high standards for inspecting the quality of medicines produced in factories on both sides of the Atlantic, we can together inspect more factories, rather than wasting time inspecting the same place twice; that way, we increase consumer safety, while reducing the burden on our regulators. Our two different but similar regulatory systems can be streamlined to bring medicines to consumers more safely, quicker and cheaper. That should be welcome news for both Denmark’s world-class pharmaceutical firms and for transatlantic consumers.
Investment disputes: Setting the record straight
Many opponents of the agreement have singled out the ISDS, the Investor-State Dispute Settlement mechanism, as an undemocratic and dangerous mechanism. I would like to set the record straight. An ISDS is an integral part of any Bilateral Investment Treaty. It protects companies that invest in foreign countries from unfair practices from the host government. These investment treaties are quite common. European countries began adding ISDS clauses to investor arrangements in the late 1960s. Globally, over 3,000 bilateral trade and investment treaties include ISDS. About half of all treaties with ISDS included are European (1,400). Denmark alone has 40 in force. The US also has 40 investment treaties in force with ISDS a part of them, nine of which are with EU member states.
ISDS cases are usually about discrimination (e.g. preferential treatment of domestic companies) or expropriation without just compensation. Opponents have claimed that ISDS allows companies to sue the host government over the loss of future profits. This notion is absurd, and quite frankly seems to be willfully misleading. No court on either continent allows companies to sue over a perceived loss of future profits!
Others are concerned that ISDS will limit governments’ right to regulate. The US would not negotiate away its right to regulate in the best interest of its citizens, and we would not ask other countries to do so either. Our investment rules preserve the right of both sides to regulate to protect public health and safety, as well as regulating the financial sector, protecting the environment, and addressing any other area where governments seek to regulate. US trade agreements do not require countries to lower their levels of regulation, either. In fact, in the trade agreements we have pursued over the last several decades, it is the US that has required its partners to more effectively enforce environmental and labour laws, or to take on new commitments to increase environmental and labour protections.
What we seek to do by including ISDS in TTIP is make a stronger text, with clearer legal rules, enhanced safeguards, and greater transparency. That will help remedy the ails of some older agreements. So, this is not a question of “yes” or “no” to ISDS; ISDS is already here. The 3,000 agreements already in existence with ISDS clauses will continue to be in effect if we do not put something better in its place. The choice is whether to reform and improve the system, or to continue with agreements which in some cases both sides admit are flawed.
The strategic value of TTIP
Looking at a more global perspective, TTIP is a critical opportunity for the US and Europe to set global norms.
It is important to emphasize that when the EU and the US can agree on standards, and when we can work with like-minded countries to promote the wider adoption of those standards internationally, our collective size sets a de facto global standard. We are the world’s largest economies. What we achieve with TTIP will affect people far from Europe and North America. This international influence will help produce greater consumer safety everywhere, while also ensuring that the playing field for our companies worldwide is based on these new higher standards and best practices, not a race to the bottom.
And so we have this incredible opportunity to modernize global trade and investment systems. And the United States and Europe can show the way.
But it also bears recalling that the reasons to support TTIP go well beyond trade and well beyond economics.
The United States and Denmark – and the United States and the European Union – work together on a huge range of issues, from supporting economic development, to security cooperation in Nato, to our collective efforts to fight the terrorism. We work closely together to support Ukraine’s territorial integrity and its economic and political future, as well as to demonstrate to Russia that aggressive actions to annex new territory will not be accepted, and violation of international norms will be sanctioned. The world is a safer place when advanced democracies stand together, and a weaker one when we remain apart.
Building a stronger economic partnership and breaking down trade barriers will modernize our transatlantic alliance and make it more secure. Strengthening our economies through increasing trade and investment also underscores our societies’ shared commitment to democracy, freedom, and the rule of law. It will make our overall relationship even stronger and even deeper, and show the world how well we can work together for a common goal.
As President Obama has stated: “America and Europe have done extraordinary things together before. And I believe we can forge an economic alliance as strong as our diplomatic and security alliances — which, of course, have been the most powerful in history. And, by doing that, we can also strengthen the multilateral trading system.”
No one I’ve ever met wants to see the things we value and their global influence recede.
So together we must lead.
Together we face a once-in-a-generation opportunity in 2015: to make global trade and investment smarter, more effective, and more efficient. TTIP will institutionalize principles that enhance our mutual competitiveness, promote innovation on both continents, and lay the foundation for an international trading and investment system that reflects our shared values.
As we prepare to mark the 70th anniversary off the end of the Second World War this year, I hope we can build momentum and forge a new transatlantic free trade alliance that will banish the ghosts of the past and put us on course for a brilliant future. Together.
Rufus Gifford has been the US Ambassador to the Kingdom of Denmark since September 2013. You can find him on Twitter at @rufusgifford