EUROPE POLICY PAPER 2/2015

FRANCE’S UNEXPECTED ROLE ON THE WAY TO A REASONABLE AND BALANCED TTIPGUILLAUME XAVIER-BENDER

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The Europe Program aims to enhance understanding of the challenges facing the European Union and the potential implications for the transatlantic relationship. Analysis, research, and policy recommendations are designed to understand the dichotomy of disintegration and deepening of the EU and to help improve the political, economic, financial, and social stability of the EU and its member states. In 2015, the Europe Program focuses on integration and disintegration in the EU, the deepening of the euro area, the changing role of Germany in Europe and the world, as well as challenges in the EU’s neighborhood.

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The German Marshall Fund of the United States (GMF) strengthens transatlantic cooperation on regional, national, and global challenges and opportunities in the spirit of the Marshall Plan. GMF contributes research and analysis and convenes leaders on transatlantic issues relevant to policymakers. GMF offers rising leaders opportunities to develop their skills and networks through transatlantic exchange, and supports civil society in the Balkans and Black Sea regions by fostering demo-cratic initiatives, rule of law, and regional cooperation. Founded in 1972 as a non-partisan, non-profit organization through a gift from Germany as a permanent memorial to Marshall Plan assistance, GMF maintains a strong presence on both sides of the Atlantic. In addition to its headquarters in Washington, DC, GMF has offices in Berlin, Paris, Brussels, Belgrade, Ankara, Bucharest, and Warsaw. GMF also has smaller representations in Bratislava, Turin, and Stockholm.

On the cover: National Assembly of France. © Freepenguin/Wikimedia

France’s Unexpected Role on the Way to a Reasonable and Balanced TTIP

Europe Policy Paper

June 2015by Guillaume Xavier-Bender1

1 Guillaume Xavier-Bender is a transatlantic fellow in the Brussels office of The German Marshall Fund of the United States.

Policy Challenges and Recommendations. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

France’s Early Narrative and Positioning on TTIP . . . . . . . . . . . . . . . . . . . . . . . 2

The Politicization of TTIP in France. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Public Opinion on TTIP and Organized Interests . . . . . . . . . . . . . . . . . . . . . . . 7

From Process to Substance: The Case of Investment Protection . . . . . . . . . . . . . . 11

TTIP and France’s Embryonic Economic Diplomacy . . . . . . . . . . . . . . . . . . . . 13

Moving Forward . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

France’s Unexpected Role 1

Policy Challenges and Recommendations1

Policy Challenges

The Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States might never

see the light of day. Two years after the start of the negotiations, the focus of attention has shifted from Brussels to the member states, where strong popular and political skepticism is casting doubt on the ability of European leaders to convince the European Parliament, and — very likely — national parliaments as well, of the necessity of ratifying the agreement in due time. In many countries, such as in France, concerns are being raised over the kind of economic and social relationship that Europeans would like to have with their U.S. partners. Ratification of the agreement will therefore depend primarily on how European governments address these concerns. In France, the debate over TTIP has increasingly been politicized, spilling over into a broader rejection of any kind of greater integration with the United States. While perceptions of the United States remain favorable in France, there is lingering cautiousness when it comes to preserving French exceptionalism, and France’s strategic independence. The combination of traditional weariness to economic openness and globalization, a stagnant economic recovery, and strong principled positions on social and labor acquis have fashioned an expectation that France might obstruct the conclusion of TTIP. Such cautiousness by the EU’s third largest economy blurs the lines on what its true intentions are when it comes to signing a reasonable and balanced agreement with the United States. There is a risk that the French government may fail to convince its people of the benefits of the agreement, and of the Parliament of ratifying it. In so doing, France would miss a unique opportunity to establish itself as a leading voice in shaping the EU’s future trade and investment policy.

Policy Recommendations

The French government, like every other EU member state government, should actively engage in the public debate to limit growing misperceptions of TTIP, encourage fact-based discussions about the negotiations, and at the same time clarify its own public messaging when it comes to politically sensitive chapters of the agreement. The time might be right for the prime minister or the president to clearly state both what France aims to gain and what it hopes to protect in signing TTIP. In addition, France’s specific positioning in Europe on preserving the acquis, its special relationship with the United States, and its growing ambitions in economic diplomacy and economic security could mitigate the growing risks of failure of TTIP. As unexpected as it might have seemed at the start of the negotiations, France now finds itself in a position where it can act as a facilitator between the EU institutions and other member states in order to push for the conclusion of a reasonable and balanced agreement. While commentators expected the more pro-free trade Berlin to “deliver” Paris in the last moments of the negotiations, perceptions of TTIP in Germany give little margins of maneuverability to the German Chancellery. France should seize this opportunity to drive discussions on a more conciliatory and flexible agreement, and at the same time build a leadership role in designing the future of trade and investment policy in Europe.

The German Marshall Fund of the United States2

France’s Early Narrative and Positioning on TTIP2

Almost two years after the start of the negotiations for a Transatlantic Trade and Investment Partnership (TTIP), it

is still unclear whether the United States and the European Union will eventually conclude a successful agreement. What may constitute success in this regard is increasingly influenced by internal debates on TTIP within EU member states. When EU member states gave a mandate to the European Commission to start trade negotiations with the United States on June 14, 2013, many commentators agreed that the wheeling and dealing with EU governments and discussions within members states might prove as challenging as actual negotiations with the U.S. trade representative.

With lingering skepticism over TTIP in both Germany and the United Kingdom, France might have a greater role than expected in ensuring that any final agreement meets the original intention of the negotiations, one “which neither threatens Europe’s safety, health, social, and data protection standards, nor jeopardizes our cultural diversity.”1 While France seemed to be a possible thorn in the Commission’s ambitions at the start of the negotiations, there are reasons to believe that it could actively help the EU in delivering on TTIP. Indeed, domestic debates about the process of the negotiations, the substance of the agreement, and its geostrategic implications provide valuable indications on how member states in general could contribute in part to a successful TTIP.

By taking a strong stance on what TTIP should not be and which sectors it should not cover, the French government early on placed itself in a much more comfortable position than that of other European counterparts. In addition, by looking at the agreement as an economic opportunity for

1 Jean-Claude Juncker, “Mission Letter to Cecilia Malmström, Commissioner for Trade,” European Commission, November 1, 2014, http://ec.europa.eu/commission/sites/cwt/files/commis-sioner_mission_letters/malmstrom_en.pdf.

the country, it has so far avoided tricky domestic discussions over the strategic significance of a stronger transatlantic relationship. Indeed, a specific focus on the economics of the agreement allowed for sidestepping a generally instinctive caution toward strategic alignment with the United States in the French political elite. Yet paradoxically, Paris might have played its best cards too early.2

In June 2013, it took 13 hours of negotiations between EU leaders to navigate the French threat of a veto if the principal of cultural exception3 were not taken into account when it came to TTIP. Then French Culture Minister Aurélie Filipetti affirmed the government’s stance when she stated that “we cannot abandon culture to the blind laws of the market! This means, on the economic policy front, to put in place strong regulations in order to allow for the greatest possible diversity of expressions.”4 A mix of defensive interests and offensive principles, this position was backed by 13 other EU culture ministers.5 Eventually, audiovisual contents were excluded from the European Commission’s mandate to negotiate TTIP. Embracing its “victory,” Paris was quick to

2 Jean Quatremer, “Exception culturelle, l’art qui cache la forêt,” Libération, June 18, 2013, http://www.liberation.fr/economie/2013/06/18/exception-culturelle-l-art-qui-cache-la-foret_912011.

3 “Through cultural exceptions, countries provide special support to domestic industries they consider culturally sensi-tive, such as through broadcasting quotas, subsidies, and local content requirements. These measures can limit market access to such industries for foreigners.” In Shayerah Ilias Akhtar and Vivian C. Jones, “Transatlantic Trade and Investment Partner-ship (TTIP) Negotiations,” Congressional Research Service, February 4, 2014, p. 21, http://transatlantic.sais-jhu.edu/publica-tions/CRS_TTIP_report_Feb_2014.pdf#page=21.

4 Aurélie Filipetti, “La France, fer de lance de l’exception culturelle face au marché libre,” Le Monde, June 13, 2013, http://www.lemonde.fr/idees/article/2013/06/13/la-france-fer-de-lance-de-l-exception-culturelle-face-au-marche-libre_3429051_3232.html (author’s translation).

5 Filipetti went on to say: “this is a European debate, a universal ambition, a non-negotiable conviction: France will do what it takes to defend this ideal.”

While France seemed to be a possible thorn

in the Commission’s ambitions at the start of

the negotiations, there are reasons to believe

that it could actively help the EU in delivering

on TTIP.

France’s Unexpected Role 3

signal that it had stood up to both the EU and the United States in making sure that its traditional stance on cultural services and products would be protected from any rapprochement with U.S. regulations and standards. France had, to its great satisfaction, fought and won a fight before the battle even began. Although audiovisual products are not entirely excluded from the negotiations (according to the Council conclusions, “the Commission will have the opportunity to make recommendations on additional negotiating mandates”),6 they are a red line that the European Commission will most likely not want to cross as opposition to TTIP grows across Europe.

With this feat, France positioned itself early on as a — if not the — guardian of Community acquis7 and high standards. At least, this was the perception in Paris; other European capitals frustrated with what they considered more traditional French stubbornness. In this context, there was hope at the time from negotiators on both sides of the Atlantic that the initial German and British enthusiasm in starting the talks over TTIP would slowly convince the French of the opportunities of a comprehensive deal. Yet in Paris, it was believed that the French public would not have approved of any kind of mandate without the government having made a strong stand over principled concerns. In the

6 Council of the European Union, “Press Release 10862/13,” PRESSE 250, PR CO 31, June 14, 2013, http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/EN/foraff/137486.pdf.

7 The Community acquis is the body of common rights and obligations that bind all the member states together within the European Union. It is constantly evolving and comprises the content, principles, and political objectives of the treaties; the legislation adopted in application of the treaties and the case law of the Court of Justice; the declarations and resolutions adopted by the Union; measures relating to the common foreign and security policy; measures relating to justice and home affairs; and international agreements concluded by the Community and those concluded by the member states between themselves in the field of the Union’s activities. Glossary of EU Legislation, http://europa.eu/legislation_summaries/glossary/community_acquis_en.htm.

first months of the negotiations, this preemptive positioning might have helped French officials to convince at least a small part of the population of the benefits of TTIP.

Since then, the French government has been steadfast in its support of TTIP. In fact, during the first state visit to the United States of a French president since 1996, French President François Hollande did much more than to reassure his counterpart of France’s commitment to TTIP. In a joint op-ed published in the Washington Post and Le Monde on February 10, 2014, Presidents Obama and Hollande identified the partnership as a “major opportunity to build on millions of jobs on both sides of the Atlantic […] It would also build a lasting foundation for our efforts to promote growth and the global economic recovery.”8 By stressing the need for combined efforts for growth and jobs on both sides of the Atlantic, the French president further emphasized the economic benefits of TTIP rather than focusing the discussion on strategic and political aspects.

8 Barack Obama and François Hollande, “Obama and Hollande: France and the U.S. enjoy a renewed alliance,” The Washington Post, February 10, 2014, http://www.washingtonpost.com/opin-ions/obama-and-hollande-france-and-the-us-enjoy-a-renewed-alliance/2014/02/09/039ffd34-91af-11e3-b46a-5a3d0d2130da_story.html.

France positioned itself early on as a — if not the — guardian of Community acquis and high standards.

The German Marshall Fund of the United States4

There is a clear political cost to supporting TTIP in France. In the midst of these dynamics, the French government has been

too timid in providing an adequate platform for reasoned discussion on the agreement. Occasional support, expressed by the president or his ministers, fails to cultivate any debate, and is far from able to convince both doubtful citizens and policymakers who might be skeptical of the agreement but would not necessarily oppose it as much as its harshest critics. The government has yet to find the appropriate message and channel to communicate publicly on TTIP, in a way that does not nurture negative perceptions of the agreement.

In this regard, national governments and public institutions bear a responsibility to inform citizens about the trade agreement. Early on in the process, the French trade minister created a Strategic Committee on the TTIP Negotiations, composed of elected officials, industry representatives, and economists, to meet every three months to take stock of the advancement of the talks. This committee was designed to keep the National Assembly and Senate informed of the progress in the negotiations, as well as to provide the government with adequate input from experts and stakeholders. Yet it still falls short of providing the French public with information on TTIP and on France’s official positions. Interestingly, it is the National Digital Council (Conseil National du Numérique) that may have expressed the clearest public messaging of why TTIP matters: “the digital chapter of the proposed Transatlantic Trade and Investment Partnership is crucial to the future of society and the economy.”9

9 Conseil National du Numérique, “Strengthening EU’s negotia-tion strategy to make TTIP a sustainable blueprint for the digital economy and society. Opinion of the French Digital Council,” April 2014, p. 3, http://www.cnnumerique.fr/wp-content/uploads/2014/05/Version-web-ANGLAIS-19.05.pdf.

In a study published in September 2013, the CEPII (Centre d’Etudes Prospectives et d’Informations Internationales) found that trade in goods and services between the United States and the EU would increase by 50 percent on average as a result of the agreement. In this scenario, by 2025, French imports by volume would increase by 2.5 percent, its exports by volume would increase by 2.6 percent, more than German exports would (2.1 percent). While French agricultural exports would be slightly negatively affected, the study found that “France is not expected to have more defensive interests in agriculture than the EU average, but would have more offensive interests in industry and would gain slightly more than Germany in services.”10 Overall, the benefits would outweigh the losses. With projected GDP growth of only 1.2 percent in 2015, an unemployment rate that could reach 10.6 percent, a public deficit expected to fall to 3.8 percent, and inflation to fall to 0.0 percent, the French economy could indeed find some solace in a successfully concluded negotiation.

But unfortunately for the French government, since the early stages of negotiations, opposition to TTIP in France has not been based on contesting the agreement’s potential economic benefits. Despite differences in methodology and specific outcomes, the majority of studies on the economic implications of a trade and investment partnership between the EU and the United States have concluded that gains would outweigh losses

10 Lionel Fontagné, Julien Gourdon and Sébastien Jean, “Transat-lantic Trade: Whither Partnership, Which Economic Conse-quences?,” CEPII, September 2013, p. 10, http://www.cepii.fr/PDF_PUB/pb/2013/pb2013-01.pdf.

The Politicization of TTIP in France3

The government has yet to find the appropriate message and channel

to communicate publicly on TTIP.

France’s Unexpected Role 5

on both sides of the Atlantic.11 Some studies, however, point to the uneven distribution of gains between the United States and the EU, as well as to possible negative spillover effects for internal European economic integration.12 In this game of unconvincing predictions, France comes out overall as a beneficiary of greater economic integration with the United States. Yet Paris has also failed at explaining the economic benefits it keeps referring to; vague promises about jobs and growth no longer suffice to gain the support of the French public. This may also explain why opposition to TTIP has so far stayed cleared of any economic argumentation.

Rather, opposition has mainly focused on non-quantifiable aspects of the negotiations, such as general concerns over globalization, the belief that TTIP is solely a business-friendly initiative, and consequent fears over downgraded standards and rules. As a French member of the European Parliament, Yannick Jadot, put it: “We

11 Joseph Francois (project leader), Reducing Transatlantic Barriers to Trade and Investment. An Economic Assessment, Center for Economic Policy Research, March 2013, http://trade.ec.europa.eu/doclib/docs/2013/march/tradoc_150737.pdf; DG Trade, Transatlantic Trade and Investment Partnership (TTIP). What others are saying?, European Commission, July 18, 2013, http://trade.ec.europa.eu/doclib/docs/2013/june/tradoc_151373.pdf; Gabriel Felbermayr, Benedikt Heid, and Sybille Lehwald, Transatlantic Trade and Investment Partnership (TTIP). Who benefits from a free trade deal?, Global Economic Dynamics and Bertelsmann Stiftung, June 17, 2013, http://www.bfna.org/sites/default/files/TTIP-GED percent20study percent2017June percent202013.pdf; Werner Raza (project leader), Assessing the Claimed Benefits of the Transatlantic Trade and Investment Partnership (TTIP), Austrian Foundation for Development Research, March 31, 2014, http://www.guengl.eu/uploads/plenary-focus-pdf/ASSESS_TTIP.pdf.

12 Jeronim Capaldo, “The Trans-Atlantic Trade and Investment Partnership: European Disintegration, Unemployment and Instability, Global Development and Environment Institute,” Working Paper No. 14-03, Tufts University, October 2014, http://www.ase.tufts.edu/gdae/Pubs/wp/14-03CapaldoTTIP.pdf.

are negotiating rules that are societal choices.”13 In addition, following revelations over U.S. surveillance and espionage activities in Europe, mistrust and rejection of closer ties with the U.S. partner have contributed to fueling anti-TTIP rhetoric.

The European parliamentary election campaign of spring 2014 offered an ideal platform for opponents of the agreement. Many in France understood that a link could be made between the election of new members of the European Parliament and the TTIP negotiations. In the end, it is these new MEPs who will have to ratify the final agreement. In addition to this responsibility, the European Parliament has to be “immediately and fully informed at all stages of the procedure” on matters related to international agreements by the European Union.14 In a May 2013 Motion for Resolution on EU trade and investment negotiations with the United States, the European Parliament positioned itself as a key institution in the initiative. It has since been an instrumental advocate of increased transparency and of the preservation of high EU standards in any final deal.

During the election campaign in France, anti-TTIP candidates monopolized most of the debate, focusing on a specific set of topics that included the lack of transparency in the negotiations, the risk of allowing chlorinated chicken to be sold in Europe, and the looming doom of France’s terroir. In addition, anti-EU parties such as the right-wing populist National Front (Front National) and the left-wing Leftist Front (Front de Gauche) depicted TTIP as yet another instrument of Brussels’

13 Touteleurope.eu, “Yannick Jadot - Accord de libre-échange UE-USA : ‘il existe des risques très lourds pour l’Europe dans cette négociation’,” February 12, 2014, http://www.touteleurope.eu/actualite/yannick-jadot-accord-de-libre-echange-ue-usa-il-existe-des-risques-tres-lourds-pour-leurope.html.

14 Article 218.10, Treaty on the Functioning of the European Union, http://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:12012E/TXT&from=EN #page=100.

France comes out overall as a beneficiary of greater economic integration with the United States. Yet Paris has also failed at explaining the economic benefits it keeps referring to.

The German Marshall Fund of the United States6

domination over national interests. Generally pro-EU parties also voiced their concerns regarding TTIP during the campaign. For instance, in one of their campaign clips, the Greens (Europe Ecologie les Verts), promised “a Europe that will stop the inacceptable project of transatlantic free trade.”15 More spectacular expressions of this opposition have included activists dressing up in chicken suits and jumping into public swimming pools to raise awareness regarding the alleged dangers of chlorinated chicken.

To illustrate this point, during a TV debate between party leaders, Jean-Luc Mélenchon, head of the Front de Gauche, described the bottle of wine that he had brought with him in the following terms: “This wine is possible because it contains a particular condition for workers, social standards, it contains environmental standards, it contains a way of doing things, it contains a civilization. I am attached to this delicate civilization. And tomorrow, you will have chablis from Mississippi, champagne from Oklahoma.”16

In the period leading up to the elections, nation-wide news outlets published special editions on the negotiations, with often deliberately pronounced views. 17 For example, the magazine Marianne’s reporting on “How the Americans Will Eat Us” illustrates a straight-forward attack on a “pro-business” TTIP. As it turned out, there was very little coverage of the negotiations themselves and

15 http://www.dailymotion.com/video/x1twob7_1er-clip-officiel-de-campagne-europe-ecologie_webcam.

16 Rémi Duchemin, “Européennes 2014 : la pomme de Jadot, le vin de Mélenchon et la carte de Bayrou,” Europe1, May 22, 2014, http://www.europe1.fr/Politique/Europeennes-2014-la-pomme-de-Jadot-le-vin-de-Melenchon-et-la-carte-de-Bayrou-2129749/# (author’s translation).

17 Maxime Vaudano, “Il pourrait changer la face de l’Europe : le traité transatlantique décodé,” Le Monde, April 15, 2014, http://www.lemonde.fr/les-decodeurs/article/2014/04/15/il-pour-rait-changer-la-face-de-l-europe-le-traite-transatlantique-decode_4399476_4355770.html.

of the European Commission’s mandated positions. Most of the reporting either focused on specific dangers (chlorinated chicken) or on the meaning of signing a trade agreement with the United States (Atlanticism).

The overall politicization of TTIP in France reflects entrenched positions from anti-free trade and anti-globalization groups. More interesting is the fact that the implications of TTIP have shifted toward fundamental considerations regarding the preservation of the French “exception” and of what many consider to be integral values. The agreement’s potential economic benefits are often disregarded by anti-TTIP advocates. It seems that to many critics, it is more about what TTIP means rather than about what TTIP is. And the French government has so far failed to properly explain either of those perspectives.

To many critics, it is more about what TTIP

means, rather than about what TTIP is.

France’s Unexpected Role 7

Overall, concerns expressed by civil society, interest groups, and politicians in France do not differ much from those expressed

in other EU member states. But the French case is particularly interesting. Over the past year and a half, the French government’s public statements related to TTIP have mostly focused on calling for increased transparency in the negotiation process. At the same time, officials have carefully avoided public discussions of the substance of a potential agreement. The newly appointed EU leadership’s “fresh start” in TTIP negotiations, heralded by both the U.S. trade representative and the EU trade commissioner, followed a similar approach. By focusing on addressing concerns over transparency in the TTIP negotiations, officials on both sides of the Atlantic are finally recognizing the fact that TTIP is not a traditional trade agreement, and therefore cannot be negotiated the same way as other trade agreements have been in the past. While negotiators on all sides insist that ultimately substance is more important than process, they recognize the fact that progress on substance cannot be made without progress on process.

However harsh the criticism of a transatlantic deal might be in the public debate, French public opinion toward the United States remains largely positive. In 2014, the Transatlantic Trends Survey Report confirmed that a majority (51 percent) of French respondents found it desirable that the United States exert leadership in the world,18 and 73 percent of French respondents at the time had a favorable opinion of the United States.19 More telling, in 2013, 55 percent of French respondents believed that proposals to increase trade and investment between the United States and the EU

18 The German Marshall Fund of the United States, “Trans-atlantic Trends Topline Data 2014,” September 10, 2014, p. 4, question 1a, http://trends.gmfus.org/files/2012/09/Trends_2014_ToplineData.pdf.

19 German Marshall Fund, p. 13, question 4.1.

would help their economy grow, while 40 percent believed that it would make their economy more vulnerable.20

A survey published by the Pew Research Center in September 2014 found that while 73 percent of French respondents agree that growing trade and business ties between countries are good, only 24 percent of respondents think that trade leads to more jobs. Further, only 14 percent believe that trade leads to an increase in workers’ wages.21 Trade in itself is not thought of as a bad thing, but its impact on everyday life and on the well-being of workers is traditionally perceived as being more costly than beneficial.

These concerns are fueled by an underlying hesitancy when it comes to signing free trade agreements in France. Caution toward globalization in general, a constant supposition that France’s economic woes are mainly due to external factors, and an underlying fear of Americanization of the French Exception in general have had a determining impact on perceptions of economic relations.

When it comes to TTIP specifically, public knowledge of the proposed partnership remained low until the European elections. A May 2014 survey ordered by the communist newspaper L’Humanité revealed that 55 percent of respondents had never heard of TTIP.22 Nonetheless, 71 percent

20 German Marshall Fund of the United States, “Transatlantic Trends Topline Data 2013,” September 6, 2013, p. 52, question 32, http://trends.gmfus.org/files/2013/09/TT-TOPLINE-DATA.pdf.

21 Pew Research Center, “Faith and Skepticism about Trade, Foreign Investment,” September 16, 2014, http://www.pewglobal.org/files/2014/09/Pew-Research-Center-Trade-Report-FINAL-September-16-2014.pdf.

22 Institut CSA, “Les Français et le traité transatlantique de libre-échange. Sondage Institut CSA pour L’Humanité,” May 20, 2014, p. 4, http://www.csa.eu/multimedia/data/sondages/data2014/opi20140514-les-francais-et-le-traite-transatlantique-de-libre-echange.pdf.

Public Opinion on TTIP and Organized Interests4

However harsh the criticism of a transatlantic deal might be in the public debate, French public opinion toward the United States remains largely positive.

The German Marshall Fund of the United States8

of respondents supported the harmonization of regulations and standards, and 68 percent had a favorable opinion regarding the elimination of tariff barriers to trade and creating a common market with the United States. These rather positive views were, however, balanced by strong views against the lowering of standards for consumer goods or the introduction of mechanisms that would circumvent traditional courts in case of dispute. When it comes to reciprocity, 84 percent of respondents found the idea unacceptable that French and European supermarkets would be able to sell products that would comply only with U.S., but not with European, standards.23

The survey received little publicity, but its findings highlight the existing contradiction in France of how the public perceives TTIP. Greater integration with the U.S. economy is desirable, if and only if it is not at the expense of any acquis. In other words, oui mais…

A striking example of TTIP’s deeper political resonance in France can be found in semantics. Supporters and opponents to the partnership do not call it the same thing: for the proponents, it is referred to as “TTIP;” for the critics, it is TAFTA, or the Transatlantic Free Trade Agreement — making no mention of the idea of investment and partnership. Tellingly, a coalition of opponents to TTIP has been organized under the “Stop TAFTA” movement. This coalition of more than 110 organizations representing civil society groups, political parties, trade unions, and NGOs are pushing for a full stop of TTIP.24 On October 11, 2014, an “anti-TTIP day” saw more than 70 actions organized in France by the movement, out of the 1,000 that were organized across Europe including

23 Breaking down the answers to this question, 3 percent of respondents answered that this would be acceptable, 12 percent mostly acceptable, 24 percent not really unacceptable, and 60 percent not acceptable at all.

24 https://www.collectifstoptafta.org.

in 22 European capitals. By early June 2015, an online petition launched by the movement to stop TTIP had gathered more than 1.97 million signatures, and local “anti-TTIP” initiatives had multiplied all across Europe.

Labor unions have also been given further guarantees that they would be kept regularly informed of the progress of the negotiations.25 Indeed, in contrast to the MEDEF,26 the main French business association, most unions oppose any kind of agreement that would result in further liberalization of the European economy. Many fear that TTIP will favor U.S. businesses over domestic — and smaller — ones. They also fear that any agreement with the United States will result in the lowering of standards in agricultural products, labor rights, and environmental protection in France and in Europe. From the start, there has been little trust in then-EU Commissioner for Trade Karel De Gucht’s assurances that “Europe is going into these negotiations enthusiastically, but realistically. Domestic environmental, labor, privacy or safety standards, and policies to protect consumers cannot and will not be lowered as a means to promote trade and investment.”27

In this sense, the public debate in France over TTIP mirrors that found in other EU member states, but perhaps to a lower degree of political sensitivity. In Germany, the debates over the potential inclusion of an Investor State Dispute Settlement mechanism (ISDS) and over the need for greater transparency

25 Zonebourse, “Traités commerciaux : FO reçue aux Affaires étrangères,” July 13, 2014, http://www.zonebourse.com/actualite-bourse/FO-Force-Ouvriere--International--Traites-commer-ciaux--FO-recue-aux-Affaires-etrangeres--18732443/.

26 MEDEF, “Négociations commerciales Union Européenne - Etats-Unis : une grande chance à saisir,” June 10, 2014, http://www.medef.com/medef-tv/actualites/detail/article/negociations-commerciales-union-europeenne-etats-unis-une-grande-chance-a-saisir.html.

27 Karel de Gucht, Press conference, June 14, 2013, http://ec.europa.eu/avservices/video/player.cfm?ref=I079163.

The public debate in France over TTIP mirrors

that found in other EU member states, but perhaps to a lower degree of political

sensitivity.

France’s Unexpected Role 9

in the negotiation process have reached “the potential to affect the scope and scale down the depth of the agreement.”28 In the United Kingdom, fears that TTIP might threaten the public nature of the National Health Service (NHS) led both the European Commission29 and the British government30 to officially assure a concerned public that TTIP would not impinge on member states’ rights to regulate healthcare.

In an interview with the left-wing newspaper Liberation in December 2014, French Trade Minister Matthias Fekl declared that France “will be very attentive to the respect of social and environmental standards. It is out of the question that public policies or collective choices be questioned.”31 It is indeed in the preservation of these collective choices — of the acquis — that French officials may be able to contribute to a balanced agreement that would be politically acceptable first in France and then throughout Europe.

In addition, as public scrutiny of the negotiations rose, the French government intensified its calls

28 Peter Sparding, “Germany’s Pivotal Role on the Way to TTIP,” GMF Europe Policy Paper 5/2014, November 13, 2014, http://www.gmfus.org/publications/germanys-pivotal-role-way-ttip.

29 Ignacio Garcia-Bercero, “Letter to Rt. Hon. John Healy, MP and Chair, All-Party Parliamentary Group on TTIP, House of Commons,” July 8, 2014, http://trade.ec.europa.eu/doclib/docs/2014/july/tradoc_152665.pdf.

30 Department of Health, Response to The People’s NHS campaign about TTIP, November 11, 2014, https://www.gov.uk/government/news/response-to-the-peoples-nhs-campaign-about-ttip.

31 Lilian Alemagna, “Interview : Matthias Fekl, secrétaire d’Etat chargé du Commerce extérieur sur le traité de libre échange,” Libération, December 14, 2014, http://www.libera-tion.fr/politiques/2014/12/14/tafta-respecter-les-standards-sociaux_1163646.

for greater transparency and openness.32 In June 2014, the minister assured the National Assembly’s Foreign Affairs Committee, that “the debate over the transatlantic treaty does not only touch upon the substance of the issues, but also deals with the methodology of negotiating a trade agreement of this magnitude, and more broadly, with the issue of necessary democratic transparency. […] In my view, it is no longer about talking about transparency, but about implementing it.”33

On August 20, 2014, De Gucht signed a letter sent by the Italian Presidency of the Council asking all member states to agree to the publication of the TTIP negotiation mandate. This initiative aimed as much at responding to calls for greater transparency in the negotiations as to tackle some of the misperceptions resulting from the politicization of TTIP throughout Europe. On October 9, the Council of the EU made public the negotiating directives for talks on TTIP.34

The new EU leadership has taken the issue of transparency in TTIP head-on. In late November 2014, newly appointed Trade Commissioner Cecilia Malmström launched a transparency initiative to increase access to EU negotiating

32 Mounia Van de Casteele, “TTIP : Fleur Pellerin promet plus de transparence dans les négociations,” La Tribune, May 21, 2014, http://www.latribune.fr/actualites/economie/international/20140520trib000830923/partenariat-transatlantique-fleur-pellerin-promet-plus-de-transparence-dans-les-negociations.html.

33 Assemblée Nationale, “Audition, ouverte à la presse et conjointe avec la commission des affaires européennes, de Mme Fleur Pellerin, secrétaire d’État chargée du Commerce extérieur, de la promotion du Tourisme et des Français de l’étranger, auprès du ministre des Affaires étrangères et du Développement inter-national, sur le projet de partenariat transatlantique,” Commis-sion des affaires étrangères, Compte rendu n° 70, June 17, 2014, http://www.assemblee-nationale.fr/14/cr-cafe/13-14/c1314070.asp#P7_410.

34 Council of the European Union, “Directives for the negotia-tion on the Transatlantic Trade and Investment Partnership between the European Union and the United States of America,” 11103/13, October 9, 2014, http://data.consilium.europa.eu/doc/document/ST-11103-2013-DCL-1/en/pdf.

It is indeed in the preservation of these collective choices — of the acquis — that French officials may be able to contribute to a balanced agreement that would be politically acceptable first in France and then throughout Europe.

The German Marshall Fund of the United States10

texts.35 On January 7, 2015, as part of this initiative, the European Commission published eight EU textual proposals cover competition, food safety and animal and plant health, customs issues, technical barriers to trade, small and medium-sized enterprises (SMEs), and government-to-government dispute settlement (GGDS).36 It remains to be seen how this unprecedented decision to publicize positions while negotiations are still ongoing will be received in Europe. It will be particularly interesting to see what effect it has in France, where Malmström has repeatedly made assurances that TTIP is the most transparent agreement ever negotiated by the EU, during her visits to Paris in December 2014 and April 2015.37

35 Press Release, “Opening the windows: Commission commits to enhanced transparency,” European Commission, November 25, 2014, http://europa.eu/rapid/press-release_IP-14-2131_en.htm.

36 DG Trade, “European Commission publishes TTIP legal texts as part of transparency initiative,” European Commission, January 7, 2015, http://trade.ec.europa.eu/doclib/press/index.cfm?id=1231.

37 Richard Hiault, “Cécilia Malmström défend à Paris les vertus du traité transatlantique,” Les Echos, December 15, 2014, http://www.lesechos.fr/monde/europe/0204017898151-cecilia-malmstrom-defend-a-paris-les-vertus-du-traite-transatlan-tique-1075238.php?hrg1XR5ywwb4EvM0.99.

France’s Unexpected Role 11

As it has across Europe, in France the possible inclusion of an ISDS mechanism within TTIP has “become a symbol of

broader unwelcome trends: a loss of democratic control, growing corporate influence and a lack of transparency.”38 But with strong vocal opposition to ISDS, it is somewhat surprising that only 6.55 percent of contributions to a European Commission’s public consultation on ISDS originated in France (compared with 34.81 percent originating in the U.K., and 21.76 percent in Germany).39 While this should not necessarily be interpreted as a lack of involvement from French civil society in the EU-wide debate over the issue, it is indicative of the varying levels at which TTIP and ISDS are present on member states’ political agendas.

The French government’s position on ISDS has remained ambiguous for a long time. In front of the Senate’s Economic Affairs Committee, Fekl assured legislators that “when it comes to arbitration panels, France did not ask for them and they were included in the mandate before this government came to power — but that is not essential. What matters is the preservation of states’ rights to regulate and implement these regulations, the principal of independence and impartiality of justice, and the capacity of peoples to avail their collective preferences.” 40 In early 2015, a leaked memo from the Secrétariat Général aux Affaires Européennes (Secretariat General for European Affairs — SGAE) called for caution when it came to excluding ISDS

38 Sparding, p. 12.

39 European Commission, “Online public consultation on investment protection and investor-to-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP),” Preliminary report (statistical overview), July 2014, p.2-3, http://trade.ec.europa.eu/doclib/docs/2014/july/tradoc_152693.pdf

40 Matthias Fekl, November2014, (author’s translation)

from TTIP.41 According to the SGAE, which is tasked with coordinating France’s official positions on EU affairs, a dispute settlement mechanism that involves arbitrage cannot be dissociated from investment protection. It recommended in its memo to look into proposals to reform the ISDS mechanism in order to make it more legitimate and more protective of states’ rights to regulate.

Following a stark reaction by the trade minister himself42 stating that the memo did not reflect France’s official position on ISDS, the SGAE issued a rectification. This new memo clearly expressed that “France estimates that the inclusion of an investor to state dispute settlement mechanism is neither useful nor necessary.” It therefore reflects the French government’s official position, according to which France considers that it is necessary to invent new modalities for ISDS, which would respect a series of fundamental principles.43

In other words, France might not oppose investment protection provisions full-stop within TTIP, provided these provisions do not threaten the preservation of the acquis in Europe. An improved ISDS mechanism, providing sufficient guarantees to member states, could very well be supported by Paris. The rectified memo published by the SGAE provides a number of such ideas put forward by France in order to improve ISDS

41 Secrétariat Général aux Affaires Européennes, “Position des autorités françaises sur le projet de rapport sur les recommanda-tions à la Commission européenne sur les négociations relatives au partenariat transatlantique de commerce et d’investissement (PTCI/TTIP),” 2014/2228, February 24, 2015, http://www.medi-apart.fr/files/SGAE-leak.pdf

42 Le Monde, Interview of Matthias Fekl, March 4, 2015, http://www.lemonde.fr/economie/article/2015/03/04/tribunaux-d-arbitrage-il-faut-inventer-quelque-chose-de-neuf-selon-matthias-fekl_4587028_3234.html

43 Secrétariat Général aux Affaires Européennes, “Position des autorités françaises sur le mécanisme de règlement des différends entre investisseurs et Etats dans le partenariat transat-lantique de commerce et d’investissement (PTCI/TTIP),” March 4, 2015, https://www.libre-echange.info/IMG/pdf/257756895-note-sgae-isds.pdf

From Process to Substance: The Case of Investment Protection5

France might not oppose investment protection provisions full-stop within TTIP.

The German Marshall Fund of the United States12

beyond a traditional arbitrage mechanism. As such, the French government could play a key role in advancing the debate over ISDS in Brussels, both between member states, and the European institutions. In addition, it could contribute to bridging existing disconnects between the rhetoric used by anti-ISDS advocates and the reality of investment protection.

Here too, France’s détachement from the imperative of concluding TTIP at all costs weighs in its favor. Indeed, should an ISDS mechanism be entirely excluded from TTIP in the end, or should an improved ISDS mechanism eventually find its way in the agreement, either way the French government will be in a position to argue domestically that it has heard the concerns of its citizens and contributed to preserving European and French interests.

France’s Unexpected Role 13

Deploying an economic diplomacy strategy while at the same time negotiating TTIP may prove to be a daunting task for France.

Indeed, economic diplomacy cannot only be the promotion of national economic interests by diplomatic means. It should also accompany a strategic vision of broader external relations, one that might sometimes conflict with direct economic interests. To some extent, in particular as it supports a closer economic partnership with the United States, France might be tempted to downplay TTIP’s strategic significance in order to reassure other commercial partners frightened by the agreement’s global ambitions. Paris therefore needs to strike the right balance between its geo-economic and geostrategic priorities. Addressing perceptions of TTIP from third countries could prove to be as crucial as addressing perceptions within France, the EU, and the United States. In this context, the French government’s ambitions in economic statecraft would benefit from a clearer distinction between economic diplomacy and commercial diplomacy.

Early on in his tenure as French foreign minister, Laurent Fabius envisioned a special section in his ministry that would be tasked with promoting and defending France’s economic interests abroad. While the Treasury had long been responsible for representing and coordinating external economic policy, Fabius wanted a greater role for the ministry, one of economic diplomacy. In 2012, the Directorate for Enterprises and International Economy (DEEI) was created with the mission to accompany French investors abroad in facilitating contacts with local decision-makers. It was also intended to promote France’s assets and expertise to foreign investors. Still, despite this initial push, the minister delegate for trade remained under the authority of the finance and economy minister.

When Hollande reshuffled the government in April 2014, the question was raised whether trade policy

should remain a portfolio under the Treasury, or if it should move to the Ministry of Foreign Affairs (MFA). After a fierce political battle between the ministers for control over external economic policy, trade policy moved to the MFA. This “political” move also turned out to be “physical,” with the minister delegate for trade taking office in the MFA’s building.

The timing of this move coincided with a number of developments that had the potential to influence perceptions of TTIP in France: the acquisition of Alstom by General Electric; a strong French position on generic domain names such as .vin and the reform of the Internet Corporation for Assigned Names and Numbers; and a historic fine for the French bank BNP Paribas for having violated U.S. sanctions. Fabius had declared in early June 2014 that the fine could have negative consequences on the ongoing TTIP negotiations.44 In doing so, he was able to reiterate the European desire to see financial services included in the negotiations. But more importantly, he succeeded in establishing a direct link between two supposedly unrelated transatlantic issues; he brought TTIP to a level of political bargaining for France in its relations with the United States.

Leading to the adoption of the May 14, 2014, decree on foreign investments subject to preliminary authorization,45 the GE-Alstom-Siemens case reveals the French government’s willingness to link the future of strategic industries in France to the global role of the European economy. At the time, the immediate reaction from the French government was to call for the creation

44 HuffPost, AFP, “L’amende infligée à BNP aurait pu être encore pire, Fabius évoque des ‘conséquences négatives’,” Le Huffington Post, June 6, 2014, http://www.huffingtonpost.fr/2014/06/06/amende-bnp-fabius-consequences-negatives_n_5457411.html.

45 Décret n° 2014-479 du 14 mai 2014 relatif aux investisse-ments étrangers soumis à autorisation préalable, May 14, 2014, http://www.legifrance.gouv.fr/affichTexte.do?cidTexte=JORFTEXT000028933611.

TTIP and France’s Embryonic Economic Diplomacy6

Paris needs to strike the right balance between its geo-economic and geostrategic priorities.

The German Marshall Fund of the United States14

of “European giants” in the field of energy and transport, prompting the German Siemens to make a counteroffer for Alstom. In the words of then-French Minister Arnaud Montebourg: “we either create an Airbus of energy and one of transports, or we will be bought by Boeing.”46 This was not the first time that the French government brought up the idea of creating a European consortium in the energy sector, similar to what had been done in the past in aviation. Under this framework, French companies would have a crucial role to play, and would contribute to shaping Europe’s industrial future; and a strong industrial European economy would by definition have an impact on the evolving global economic order. GE’s intentions with Alstom, raised hopes of seeing this idea come to life, but unfortunately for Paris, it fell short of triggering the European reaction some might have hoped for.

While there were little reasons to believe that the GE-Alstom-Siemens case would derail TTIP as a whole, it provided a good illustration of what the French public might expect from its government when faced with the possibility of losing control over strategic assets to U.S. investors.

In different ways, these cases contributed to consolidating perceptions of what a stronger economic partnership between the two countries could mean. They also highlighted the sensitive economic and regulatory relations prevailing between France and the United States. While recognizing the need to set together the global rules and standards of tomorrow, Paris and Washington differ in their assessment of the future of the global economic order. At a time when both Europeans and Americans believe that trade is more and more geostrategic, how they use TTIP in order to strengthen their alliance will be carefully watched

46 Arnaud Montebourg, Twitter account, April 28, 2014, https://twitter.com/montebourg/status/460660376854863872 (author’s translation).

from other parts of the world, in particular from China. And for Paris, it is crucial that TTIP not be interpreted as an economic NATO aimed at containing China. As a result, TTIP does not bear the same strategic significance for France or the United States. It is therefore understandable that their priorities differ in how the agreement is being negotiated, and in how it is being perceived.

Economic statecraft will play an increasingly critical role in French foreign and security policy. With growing linkages being made between geopolitical and commercial interests, both a strong institutional framework and a clear political vision are required. And as trade openly becomes a foreign policy tool for France, navigating the complex politics of TTIP is the first major challenge that the French government has to face in this new strategy of economic diplomacy. Unfortunately, as it is currently using the TTIP negotiations and communicating about them, the government falls between two stools. TTIP should indeed be used as a geostrategic asset. It could help consolidate France’s global economic ambitions, especially in Asia, while at the same time strengthening the core principles of the transatlantic economy.

While recognizing the need to set together

the global rules and standards of

tomorrow, Paris and Washington differ in their assessment of

the future of the global economic order.

France’s Unexpected Role 15

Moving Forward7As the politicization of the debate in France

demonstrates, opposition to the agreement encompassed the modalities of greater

integration with the United States, the process of the negotiations, and the substance of its regulatory dimension. Its economic impact is rarely put forward. Similar debates are ongoing throughout the EU, especially in neighboring Germany and Britain. But having adopted a cautionary approach to TTIP very early on, the French government should now take a leading role in reassuring Europeans of the strategic benefits of a stronger transatlantic partnership, and work with the European Commission toward a more transparent and mutually beneficial deal.

As negotiators head into the second half of 2015, the French government finds itself in a critical and unexpected position with regard to TTIP. With most of the spotlight on Berlin and on the German public’s expressed opposition to the agreement, France is emerging as a potentially strong advocate for a reasonable and balanced agreement. While officially it does not expect any final agreement on TTIP to be reached in 2015,47 the French government could use the rest of the year to constructively address concerns over the agreement, as it has done on ISDS. As TTIP ultimately has to be approved by all member states and be ratified by the European Parliament and national parliaments, delivering on such an agreement requires European capitals to step up to the plate. In such a context, much remains to be done domestically to dissipate lingering fears and concerns about the deal.

In this regard, the French government could:

47 Matthias Fekl, “Partenariat transatlantique - Audition de M. Matthias Fekl, secrétaire d’État chargé du Commerce extérieur, de la Promotion du tourisme et des Français de l’étranger, devant la commission des Affaires économiques du Sénat,” November 12, 2014, (author’s translation), http://basedoc.diplomatie.gouv.fr/vues/Kiosque/FranceDiplomatie/kiosque.php?fichier=bafr2014-11-17.html#Chapitre10

1. increase its engagement in the public debate in France to promote fact-based accounts of the intended trade and investment partnership between the EU and United States, especially on topics of concern such as ISDS and standards (particularly on food and agricultural products);

2. clearly express its position on respective chapters, especially those of concern for European citizens, by limiting differences of views between the government and administration services;

3. look beyond hurdles in regulatory harmonization and mutual recognition of standards by encouraging stronger collaboration between European and U.S. regulators, and by supporting compatibility of processes whenever possible;

4. propose creative alternatives to areas of concern (as it did with ISDS) and wherever the acquis and fundamental EU principles might be perceived as being threatened;

5. embrace TTIP’s strategic dimension as a powerful tool for France’s economic diplomacy, while actively addressing negative perceptions from third countries; and

6. engage EU institutions on how to better attract and protect inward foreign investments, especially in strategic industries, starting within the framework of EU-U.S. investment relations.

Such measures could contribute to solidifying an agreement that would be politically acceptable within both member states and the European Parliament. By further engaging in the public debate, the French government can show its commitment to a deal, regardless of the form it will ultimately take, as well as contribute directly to its success — whatever success means at the end of the process. By not doing anything, France would miss an opportunity to reap additional diplomatic,

With most of the spotlight on Berlin and on the German public’s expressed opposition to the agreement, France is emerging as a potentially strong advocate for a reasonable and balanced agreement.

The German Marshall Fund of the United States16

political, and economic benefits in Europe and globally.

O F F I C E SWashington • Berlin • Paris • Brussels

Belgrade • Ankara • Bucharest • Warsaw

www.gmfus.org