Anti-EU Surge Adds Obstacle to Trade Deal, U.S. Ambassador Says

Winning European support for a trade agreement with the U.S. will be more difficult after parties critical of the European Union gained ground in elections in May, the U.S. ambassador to Germany said.

John Emerson, whom President Barack Obama named to the post a year ago, urged government leaders to lobby for the Transatlantic Trade and Investment Partnership after the anti-EU groundswell in voting for the European Parliament.

“There is no question that the new parliament is somewhat less free-trade oriented than the current parliament,” Emerson said in an interview in Berlin on June 3. “That makes the job of obtaining ratification a little bit more challenging.”

Parties such as France’s National Front, which opposes the proposed accord, posted gains across the 28-member bloc as leaders including Chancellor Angela Merkel promote TTIP as a way to boost growth and jobs in Europe. Obama and Merkel also support the deal as a way to bind Europe and the U.S. together.

TTIP is a “legacy item” for Obama during the president’s second term, Emerson said. “He would like to leave office knowing that he has helped to negotiate and implement a comprehensive agreement.” The U.S.-EU talks began in July.

The ambassador bolstered U.S. calls for an investor-protection clause that critics in Europe say might trump national laws for the benefit of corporations. An investor-state dispute settlement, or ISDS, which Emerson called “a German invention,” shouldn’t prevent legislatures from protecting citizens, he said.

“What they should not be able to do is simply pass legislation that discriminates against one company or one class of companies in an industry,” Emerson said.

German Defense Minister Ursula von der Leyen, a deputy head of Merkel’s Christian Democratic Union party, rallied behind TTIP and suggested politicians are focusing too much on the benefits for business.

“This issue is highly complex and it’s being packaged politically in a totally wrong way,” von der Leyen told a group of U.S. and German journalists on June 4.

“If the debate kicks off, as it has been, with the line ‘the economy needs this,’ then we’re already lost,” von der Leyen said. The argument that an EU-U.S. trade agreement would be a “huge win” is difficult to explain, she said.

Before it's here, it's on the Bloomberg Terminal.