Podcast Summary

LSE Public Lectures: The Transatlantic Trade and Investment Partnership (TTIP): Implications for Multilateral Economic Integration

Date: November 24, 2014
Host: LSE Film and Audio Team
Chair: Ambassador Peka Hutaniemi
Panelists:

• Pascal Lamy (Former Director General of the WTO)
• Ignacio Garcia Bercero (EU's Chief Negotiator for TTIP)

Overview

This episode explores the implications of the proposed Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US—one of the most ambitious bilateral trade agreements—on the broader framework of global trade and multilateral economic governance. The discussion moves beyond the technicalities of TTIP negotiations to critically examine its potential to reshape or challenge the rules and norms of the World Trade Organization (WTO) and other multilateral processes. The speakers, with decades of experience in international economic governance, debate whether TTIP is a complement to or competitor with multilateralism, and consider how its regulatory innovations and underlying philosophy might shape the future of global economic integration.

Key Discussion Points & Insights

1. Context and Framing by Chair, Ambassador Peka Hutaniemi

• Ambassador Hutaniemi situates the discussion in the "stalled and unspectacular" progress of multilateral trade liberalization through the WTO (specifically the Doha Round), leading to the rise of bilateral/plurilateral agreements like TTIP.
• He introduces the central questions:
  • Can bilateral initiatives complement multilateralism or are they a long-term substitute?
  • How can the results of such agreements feed back into the multilateral framework?
  • What are the implications for third countries? Should agreements like TTIP be open to accession by others?

Memorable quote:
"How can the results of these bilateral agreements be fed back into the multilateral process and help re-energize the multilateral negotiations? Is this likely to be an easier route to global understandings than by pushing directly on the multilateral WTO platform in Geneva?"
(B, 10:28)

2. Pascal Lamy: Contrasting the "Old" and "New" Worlds of Trade

(12:44–34:59)

A. Old World of Trade: Tariffs and Preferences

• Trade centered on protecting national producers with tariffs/regulation.
• “Preferences” (bilateral, regional deals) in tariffs ultimately self-erode as more countries join; multilateralism prevails by default.
• The famous GATT Article 24 (rules for regional/bilateral trade agreements) was historically vague and unenforced because the practical tension wasn't sharp.

Notable quote:
"In this old world there is a sort of automatic convergence between bilateral and multilateral preferences… at the end of the day, you multiply the AB, CD, and at the end of the day you have an asymptote which mathematically is zero."
(C, 18:17)

B. New World of Trade: Regulatory Barriers and Standards

• Shift from protecting producers (tariffs) to protecting consumers (regulatory standards).
• Divergence in regulations/administered precautions (e.g., crash test standards, food safety) becomes the main trade barrier.
• Bilateral regulatory convergence does not automatically lead to multilateral convergence; it may deepen divergence if major economies harmonize in different directions.
• US/EU could become "global standard-setters" via TTIP, with others (Japan, Korea) having little choice but to follow for practical reasons.

Memorable analogy:
"TTIP is the first example of a trade agreement which would fit with this new world… Instead of multilaterally leveling the playing field, you create ruptures between regulatory systems, which then become obstacles to trade."
(C, 22:47)

C. The Geopolitics and Legitimacy of Standard-Setting

• TTIP’s real strategic aim may be to cement EU/US global rulemaking power.
• Benefits for third countries: Larger, harmonized market; but raises questions of legitimacy and transparency.
• Proposes WTO (or similar multilateral body) should monitor regulatory convergence for transparency and inclusion.

Key recommendation:
"To entrust WTO with a mandate… to monitor these processes of regulatory convergence in ensuring, notably, something which is extremely important for third countries and which is transparency."
(C, 29:20)

D. The Challenge of Investment and Dispute Settlement

• Trade and investment are now deeply intertwined (global value chains).
• The "investor-state dispute settlement" (ISDS) controversy: Most existing bilateral agreements have ISDS, but there's no equivalent at multilateral level.
• Calls for a review of the relationship between bilateral investment regimes and the potential for convergence at multilateral level.

E. US vs EU Vision

• US sees trade as strategic/political; EU tends toward multilateralist rhetoric, but lacks a clear answer for global regulatory convergence.
• Concludes that TTIP could drive the next stage of trade governance, but a multilateral solution is not obvious.

Closing thought:
"Whether the EU has an answer to this question… of how do you ensure multilateral and bilateral convergence in a world of regulatory convergence remains to be seen."
(C, 34:25)

3. Ignacio Garcia Bercero: The EU Perspective and Potential Global Spillovers

(35:14–End)

A. TTIP as a 21st-Century Agreement with Global Consequences

• Both EU & US see TTIP as having global, not just bilateral, impact.
• Three areas of potential positive global spillover identified:
  1. Classical Market Access: High ambition on tariffs, services, government procurement as a demonstration effect.
  2. Regulatory Issues: First time regulatory convergence is being seriously negotiated between two highly regulated, equivalent partners.
  3. Reconciling Policy Philosophies: New ground in combining EU/US approaches on labor, environment, competition, investment protection.

On global ambition:
"We would aim to ensure that the agreement that we conclude with the United States has a similar level of ambition on classical market access issues… Even here, I think apart from the demonstration effect, there is a potential significant positive spillover."
(D, 37:50)

B. Regulatory Convergence in Practice: Typology and Limits

• Three categories of regulatory divergence:

  1. Deep Policy Differences (e.g., GMOs, chemicals): Irreconcilable due to culture/political system—“just recognize the difference.”
     • "One should not even try to solve those regulatory divergences because they are deeply enshrined in the culture... trying to find a way forward just simply condemns this agreement to unworkability."
       (D, 40:38)
  2. Duplicative Processes (e.g., inspections): Can be solved by mutual recognition, provided there’s sufficient trust.
  3. Historical Legacy (e.g., car safety): Differences arise from separate evolution, but with effort could be harmonized or mutually recognized, ideally using international organizations (e.g., UNEC in Geneva).

• Emphasizes that convergence in TTIP, especially in regulations/standards, can have positive global effects by setting benchmarks that exporters worldwide would use.

C. TTIP as a Platform for Broader Rules

• Areas such as labor, environment, competition policy, geographical indications, and ISDS will set precedents beyond EU/US.
• If TTIP manages to reconcile EU/US approaches, it sets up potential for eventual expansion to multi-party rules—even if not immediately.

D. Impact on WTO and Openness of TTIP

• Suggests TTIP’s completion will force a rethink of the WTO’s post-Doha agenda—implies the need for institutional adaptation (monitoring/regulatory issues, new rule-making mechanisms).
• Acknowledges debate on whether TTIP could become an “open agreement” for other countries:
  • Turkey is highlighted as a special case due to its customs union with the EU; its exclusion from TTIP would be “unsustainable.”
  • Full accession by others is “a complicated issue… still needs a lot of reflection.”

On openness:
"We are seriously reflecting upon it… whether TTIP, once concluded, could be open for other countries under certain conditions to join is a complicated issue and something… that needs a lot of reflection in terms of how it would actually work in practice."
(D, 50:40)

Notable Quotes & Memorable Moments

• Pascal Lamy:

  • “They just on the whole, want trade to be more open… they don’t mind the color of the cat, provided the cat catches mice.” (C, 13:27)
  • “In this old world there is a sort of automatic convergence between bilateral and multilateral preferences… at the end of the day you have an asymptote which mathematically is zero.” (C, 18:17)
  • “TTIP is the first of the new generation [of trade agreements]… The sort of obscure, unadvertised real strategic purpose of the TTIP probably being to make sure that EU and US… become the standard setters.” (C, 25:30)
  • “There is a huge benefit for third countries, for instance, in EU and US adopting a similar regulation, because they will benefit from the economy of scale in exporting to this larger market.” (C, 27:25)
  • “To entrust WTO with a mandate… to monitor these processes of regulatory convergence in ensuring, notably, something which is extremely important for third countries and which is transparency.” (C, 29:20)

• Ignacio Garcia Bercero:

  • “I would very much agree with Pascal Lamy that the TTIP is potentially the first 21st-century agreement in tackling regulatory issues. But we should not forget that you cannot do a 21st-century agreement without also solving 19th-century trade issues which are still out there.” (D, 36:30)
  • "Trying to find a way forward [on regulatory differences like GMOs] just simply condemns this agreement to unworkability." (D, 40:38)
  • “The more that as a result of TTIP, you have a situation in which progressively, regulations and standards in the European Union and in the United States are sufficiently close… the more that this would also have a potential positive effect on certain countries.” (D, 44:20)
  • “Whether TTIP, once it is concluded, could be open for other countries under certain conditions to join is a complicated issue and something… that needs a lot of reflection.” (D, 50:40)

Key Timestamps

• 01:52 – Ambassador Hutaniemi’s contextual framing, central questions of the debate.
• 12:44 – Pascal Lamy: “Old world” vs. “new world” of trade; regulatory convergence and the strategic logic of TTIP.
• 18:17 – Mathematical analogy on convergence of tariff preferences.
• 22:47 – On regulatory divergences and the risk of deepening rather than reducing trade barriers.
• 27:25 – TTIP’s impact on third parties, with reference to exporter benefit.
• 29:20 – Call for WTO oversight on regulatory convergence.
• 35:14 – Ignacio Garcia Bercero’s intervention: TTIP’s ambition, categories of regulatory divergence, and spillover potential.
• 40:38 – Deep policy differences as unbridgeable in practice.
• 44:20 – On global “benchmark” effect if EU/US regulations converge.
• 50:40 – Discussion of TTIP as a potentially open platform and Turkey’s unique situation.

Conclusion

The episode offers a nuanced, historically grounded, and forward-looking discussion on TTIP’s place in the global trade architecture. Both speakers agree that TTIP—if ambitious and successful—will not simply affect US-EU relations, but could create new norms, processes, and pressures for the broader multilateral trading system. However, both also highlight uncertainties and challenges: the risk of increased divergence, issues of legitimacy and inclusivity, and the difficulty of “plugging in” third countries to such a deep agreement. The fate of the WTO and the specifics of TTIP’s design (especially openness to others) will be decisive in shaping the future of multilateral economic integration.

This summary captures the intellectual flavor and major content of the discussion, with direct attributions, timestamps, and explanation of context.