The trade ministers of the European Union's member states are expected to give the European Commission a strong mandate next week to negotiate a far-reaching trade deal with the United States.
However, France is holding out against accepting a request from the Commission to be allowed to open discussions on rules governing audiovisual products, for fear of endangering legislation that allows EU countries to subsidise, protect and impose quotas for products of national cultural value.
When the trade ministers meet on Friday next week (14 June), France will be demanding that the “cultural exception” is excluded from the Commission's negotiating mandate. ,
“If I were a betting man, I would put my money on an exclusion,” a diplomat said.
The Commission wants to start talks with no broad policy areas explicitly excluded from talks, so as to give itself maximum room for negotiating manoeuvre.
The strong political call for a deal issued by the European Council when government leaders met on 7 February is likely to ensure that a mandate is approved next week.
“That is largely because of the enormity of the prize, the sophistication of the partner and the vocal support of business,” a diplomat said, adding that: “It would be foolish for any government to look at a €65 billion annual injection [into the European economy] and walk away.” However, with eight days of internal talks remaining, member states are struggling over whether to include two issues in the mandate.
It is the ‘cultural exception' that is likely to remain contentious up to the last minute. In mid-May, 13 of the member states' culture ministers signed a letter broadly aligning themselves with France's attempt to bar discussion of the audiovisual chapter, which includes television and radio, the policy areas traditionally affected by the cultural exception.
Support has since ebbed away, leaving France alone. However, President François Hollande himself has ruled out discussion of the audiovisual chapter, “so it is not easy to bring them down from the tree”, a diplomat said.
Speaking on 28 May, Karel De Gucht, the European commissioner for trade, described the cultural exception as a symbol. He said: “You always have to take care with symbols. They are important to guide you but after some time they are hollow. And I think that this is what is happening with the exception culturelle.”
A greater concern further down the line for the member states is the possibility of an investment-protection chapter in the transatlantic trade and investment partnership (TTIP), as the potential deal is termed. “Americans are litigious,” a diplomat said, and “this could be about serious money”.
This is viewed as an “offensive interest” of the US, he said, and EU member states would demand a big trade-off before accepting it. He did not say what those might be, but issues of particular anxiety to the US stakeholders surfaced last week in a two-day hearing organised by the US trade representative. These included food safety, financial services and electronic data flows.
The US's ambassador to the EU, William Kennard, said on Tuesday that “thus far there is fairly broad bipartisan support for this agreement and, beyond that, support from a wide range of constituencies”.
The expectation within the EU is that US negotiators will start talks this summer with a free hand. The negotiations, which the Commission hopes can be completed before the current college of commissioners disbands in late 2014, may hit tricky areas quickly, such as agriculture, and to reveal what one diplomat described as “sacred cows” on the US side. These include the Jones Act, which dates from 1920 and allows only US-built and US-owned merchant ships to carry goods between US ports.
The EU's mandate will include the concept of a ‘living agreement', a mechanism through which both sides could address issues that remain unresolved when the free-trade agreement is signed. There has been little debate about this, with the presumption being that experience from the negotiations would shape the living agreement.