Brexit: An opportunity for a stronger TTIP

Brexit: An opportunity for a stronger TTIP

Tarkan Kadooğlu
After three years and 14 rounds of negotiations, the Transatlantic Trade and Investment Partnership (TTIP) remains at the center of attention in the 21st century trade policy debate. This mega-trade agreement between the world’s two largest economic blocs will undoubtedly shape and redefine global trade rules, with its comprehensive and ambitious goals that go beyond traditional bilateral trade deals. 
However, the TTIP is under pressure from various sides, and there is growing concern about the eventual fate of the TTIP. If the leaders fail to conclude an agreement that addresses the ambitious and comprehensive goals that have been identified, including a strong mechanism to leverage their core economic partners’ contribution to the Transatlantic economy but end up with a smaller, less ambitious and isolated deal, both the potential economic and strategic impact of the TTIP will be jeopardized to a large extent. 

More often than not, the obstacles that we face signal the need to change our approach. In this regard, the new reality that has emerged after the British referendum presents a great opportunity to adopt an innovative approach that would provide effective solutions to the issues at hand and create a rule-setting agreement that will shape the 21st century trade paradigm.

It has been widely argued that designing the TTIP in a way that would allow third countries such as non-EU European economies, namely Norway, Switzerland, Iceland, Lichtenstein, and Turkey to join the TTIP would not only enhance the direct and indirect economic benefits of the deal, including positive spillover effects, but also the soft power benefits of the TTIP. Indeed, both the EU and the U.S. have indicated that they recognize the merits of designing the TTIP in a way that is open to expansion. The readiness of the negotiating partners to design the TTIP as an open agreement is definitely a welcome development. However, delaying engagement with third countries and EU candidate countries in order to identify the specific ways in which they would join the TTIP undermine a crucial element of the TTIP’s substantial success on a global level. 
In keeping with this vision, the Turkish Enterprise and Business Confederation (TÜRKONFED), the main representative organization of small and medium-sized Turkish enterprises (SMEs), published a policy paper in February 2016 to explore the potential impact of the TTIP on the SMEs operating in Turkey, and to identify alternative policy options that can be adopted by decision-makers in Turkey.

The findings indicate first of all that including Turkey in the TTIP through a “docking mechanism” would be the most reliable, efficient, and sustainable long-term option to maximize the benefits of the agreement for the transatlantic economy as a whole. Secondly, the various aspects of a “docking mechanism” should be analyzed cautiously with the participation of all involved parties. Thirdly, in order to ensure a smooth, efficient, and timely transition, the planned negotiations between Turkey and the EU on the modernization and enhancement of the Customs Union Agreement which would improve the alignment of the rules and regulations, especially in the field of public procurement, agriculture, and intellectual property rights, should start in the first quarter of 2017 without any delay. Finally, the Turkish public sector, in collaboration with the private sector, should establish the financial and technical support mechanisms to promote the alignment of SMEs with the emerging the TTIP rules and standards. 

The policy paper published by TÜRKONFED indicates that due to the specific nature of EU-Turkey economic and political relations, the exclusion of Turkey from the TTIP would exacerbate trade imbalances, and the potential negative economic impact of the agreement will be deeper and broader than it will be for other interested third countries. It must be also taken into consideration that any negative outcome triggered by a “TTIP without Turkey” will also hurt EU and U.S. companies operating in Turkey.  

The last quarter of 2016 will be a crucial period for the TTIP. Leaders from both sides of the Atlantic need to make bold decisions and take immediate action. Bringing third country participation back into the discussions will serve as a catalyst and provide much needed momentum and the innovative approach required to overcome the existing issues. 
* Tarkan Kadooğlu is President of the Turkish Enterprise and Business Confederation (TÜRKONFED). This is an abridged version of the original published in Turkish Policy Quarterly’s (TPQ) Summer 2016 issue.