Will Brexit Stall TTIP’s Promise for Procurement?

BrexitA previous post suggested that the Transatlantic Trade and Investment Partnership (TTIP) might offer a way to fill some of the gaps left by Brexit, Britain’s prospective departure from the European Union.  This post flips that proposition, and asks whether TTIP’s goals for opening procurement markets might, in effect, be swallowed up by Brexit, as some in the trade community have suggested despite public support from the White House and the EU for moving forward with TTIP.  This means, in turn, that TTIP’s goals for procurement may need to be addressed in another forum, perhaps under the World Trade Organization’s Government Procurement Agreement (GPA).

The previous post used procurement as a case study.  The post pointed out that if the European Union agrees to the TTIP agreement before the UK departs (“Brexits”), the TTIP agreement probably will list UK procurements open to competition under TTIP, and will include guarantees of free access to those procurements.  After “Brexit,” Britain arguably could then “reenter” TTIP as an independent nation, and adopt those former obligations under the TTIP agreement, in return for reciprocal access to EU and U.S. markets.

This outcome — allowing Britain access to open markets in Europe under TTIP, without any concomitant obligation to allow free movement of persons — would be exactly what the British “Leave” campaigners want for the UK; a separate TTIP arrangement with an independent UK also enjoys support from senior U.S. Republicans.  This outcome is, however, exactly what the leaders of the European Union have announced they will not allow.  Hope for such a British “back door” to open markets is also, incidentally, what President Obama warned against before the referendum vote, when he said that an independent Britain would be at the “back of the queue” in the United States’ negotiations of trade deals.

Leave Campaign - STOP TTIP
Leave Campaign – STOP TTIP

In a raucous speech on the floor of the European Parliament on June 29, 2016, Nigel Farage, the UKIP leader in the “Leave” campaign (and a Member of the European Parliament), paused in a harangue of his fellow MEPs to call for “a sensible tariff-free deal” between the European Union and the UK.  (It should be noted that the “Leave” campaign formally opposes TTIP, largely because of the broader integrative measures that might be included in the agreement.)

On that same day, however, European leaders stated that the EU will not afford the UK a free trade arrangement unless the UK agrees to ensure the “four freedoms” at the heart of European integration, including the free movement of European workers — which is anathema to many in the “Leave” camp in Britain.  Specifically, the EU leaders stated:

In the future, we hope to have the UK as a close partner of the EU and we look forward to the UK stating its intentions in this respect. Any agreement, which will be concluded with the UK as a third country, will have to be based on a balance of rights and obligations. Access to the Single Market requires acceptance of all four freedoms.

(Emphasis added.)  Even if Britain could side-step this European opposition by using the “TTIP back door,” a TTIP agreement would not solve all of the United Kingdom’s trade problems.  Again using procurement as an example, trade agreements such as TTIP and the World Trade Organization’s Government Procurement Agreement (GPA) are really best understood as ambitious nondiscrimination arrangements.  Those trade agreements simply do not drive the same rigorous cross-border economic integration, in procurement or otherwise, that the European Union’s governance mechanisms provide.

In sum, although TTIP would hardly be a panacea, because TTIP might give Britain a “back door” to a free trade arrangement with Europe, European leaders may prove reluctant to press forward to conclude the TTIP agreement.

If TTIP does falter, what will this mean for procurement?  If TTIP stalls, it may mean that the goals held for TTIP will need to be addressed under other institutions, such as the WTO Government Procurement Agreement (GPA).  The GPA’s implementation is administered by the WTO Committee on Government Procurement, and logically the TTIP goals — goals which would address persistent structural obstacles to trade in procurement — could be taken up by the Committee, perhaps under the pending work programs to enhance the GPA.

The EU and U.S. negotiating goals for TTIP (at least as of the ninth round of negotiations, in April 2015) were made clearer as a result of a leak of internal European negotiating documents by Greenpeace Netherlands.  According to those leaked materials and the EU and U.S. published statements of position, those TTIP goals include, on the EU side, better access to (and information on) sub-central (state and local) procurements in the United States, and on the U.S. side, stronger commitments by all parties to fighting corruption in procurement.  To the extent Brexit derails those goals in TTIP, it may fall to the WTO to take them up as part of a broader effort to strengthen international procurement markets under the Government Procurement Agreement.

– Chris Yukins

Editor’s note:  On September 19, 2016, these Brexit developments will be discussed at our annual conference on transatlantic procurement at King’s College London; GWU Law School is a co-sponsor.  Attendance is free, and further information is available athttp://www.eventbrite.co.uk/e/opening-transatlantic-procurement-markets-tickets-25739851589 .

 

Author: Christopher Yukins

Professor Christopher Yukins teaches public procurement law at The George Washington University Law School in Washington, D.C.; he is co-director of the school's Government Procurement Law Program, which was founded in 1960.

Leave a Reply

Your email address will not be published. Required fields are marked *