Merkel Wins German Labor Backing on EU-U.S. Trade Talks

German Chancellor Angela Merkel’s government has won labor-union backing to help advance a U.S.- European trade agreement that may boost economic growth and create jobs on both sides of the Atlantic.

The DGB labor-union umbrella organization and the Economy Ministry asked the European Commission in a joint document to continue talks on the Transatlantic Trade and Investment Partnership, keeping labor and consumer interests in mind. The DGB urged suspending talks with the U.S. as recently as May.

The talks are a chance to strengthen trade relations and make them “fair and sustainable,” according to the position paper published on the ministry’s website today. Goals include spreading more wealth “to broad parts of the population, to improve economic, social and environmental standards as well as to create fair competition and working conditions.”

Backing by organized labor may make it easier for Merkel to broaden public support for an accord that could revive a stalling euro-region economy. Some opposition parties and non-governmental organizations say TTIP will weaken European consumer and environmental standards.

The Economy Ministry and DGB both oppose investor protection clauses and investor-state arbitration, according to the document. The ministry is headed by Sigmar Gabriel of the Social Democratic Party, Merkel’s junior coalition partner.

The DGB and the ministry support TTIP provided it doesn’t undermine Germany’s system of labor relations, which reserves board seats for worker delegates, and collective bargaining, according to the paper.

Investor Protection

“Investment protection provisions are generally not required in an agreement between the U.S. and the EU and shouldn’t be introduced with TTIP,” the paper says. “In any case, investor-state arbitration and unclear definitions of legal terms such as ‘fair and just treatment’ or ‘indirect expropriation’ must be rejected.”

The EU and the U.S. together account for almost half of global output and around a third of world trade, according to Michael Huether, head of the business-sponsored IW economic institute. More than 8 percent of German exports, worth almost 90 billion euros ($116 billion), go to the U.S. and about 600,000 jobs depend on those sales, Huether said in a speech prepared for delivery today in Berlin.

A comprehensive free-trade agreement between the EU and the U.S., in which duties are completely abolished and non-tariff trade barriers reduced on average by more than 25 percent would raise the annual income of an average EU household by more than 500 euros in the long run, Huether said, citing a study by London-based Centre for Economic Policy Research.

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