Fernanda G. Nicola is Professor of Law at the American University, Washington College of Law and Director of the Program on International Organizations, Law and Diplomacy

On both sides of the Atlantic, EU and US negotiators have continuously strived to achieve greater transparency in the Transatlantic Trade and Investment Partnership (TTIP) negotiation, to increase the legitimacy of a trade negotiation process suffering from a democratic deficit. On the one hand USTR Michael Froman stated that «Transparency, participation, accountability — these are core to the U.S. regulatory system, but they are not uniquely American principles» while its counterpart EU Trade Commissioner Cecilia Malmström claimed recently «I have transparency in my DNA, and I hope I can inject it also in TTIP negotiations.» Even though at the declaratory level there seems to be convergence on the need for greater transparency in transatlantic negotiation through the greater involvement of the U.S. Congress or the European Parliament on each side, in the specific realm of regulatory cooperation its operationalization shows increasing divergence and ambiguity on the meaning of transparency in the regulatory processes.

Transparency claims by trade representatives and negotiators reflect the respective legislative, administrative and legal cultures in the US and EU, in which transparency and participation in decision-making take place at different stages and involve different sets of private and public constituencies. One of the central puzzles in the TTIP negotiation is to address the divergences arising between the US and EU regulatory framework that create obstacles to trade through divergent regulatory standards and administrative practices. Therefore, at the descriptive level and in the best case scenario, transparency is incorporated in the US by secondary regulation through the “notice-and-comment” rulemaking procedure under the Administrative Procedure Act (APA) enacted in 1946 and initiated by agencies implementing secondary rules. In contrast, transparency is relevant much earlier in the EU legislative process, when the EU Commission enables consultation with public and private constituencies to propose primary legislation through Green papers stimulating a discussion on a specific topic at European level and its White Papers including proposals for EU action in a specific field.

At the normative level, the US approach to transparency in the legislative and regulatory process reflects a reactive view to regulate the economy only in the case of market failure. The EU takes a more pro-active approach to regulate and intervenes in its social-market economy (see Whitman). As a result, EU economic legislation has revolved around the conflicts between producer groups as well as labor law, while the US focus has historically been on consumers, as members of a universal class sharing a common interest in buying things that were “cheap” and “good”.

Each transparency “package” in the TTIP negotiation bestowed to the general public by the trade representatives on each side of the Atlantic has in reality created more confusion as to which groups have been effectively empowered. By exploring which groups internally or transnationally are influenced through «transnational feed-back or reactive sequencing» (see Bach and Newman) what emerges is that transparency is a bargaining tool that paradoxically legitimates a setting, a secret trade negotiation, in which the norm remains «closure» (see Glenn).

Regulatory Cooperation and Comparative Administrative Law at Work in TTIP

The TTIP negotiation crystallized important but not completely “new” efforts in trade liberalization that have been in place in the US and the EU since the 1990s as a way to overcome the fears of US industries being unable to penetrate the standards set by what businesses and regulators called at the time “Fortress Europe”. This costly negotiation, undertaken by the US Trade Law Representative (USTR) Michael Froman on the one hand and the EU Commission on the other, was justified by politicians and diplomats for its potential benefits such as triggering economic growth, creating new job opportunities and eliminating unnecessary and burdensome regulation irrespective of its redistributive effects. Similarly, trade and administrative lawyers have promoted International Regulatory Cooperation (IRC) as one of TTIP’s main objectives, so as to enhance global administrative principles and experimental governance irrespective of its normative backdrop. Since its launch, one of IRC’s main goals has been to remove arbitrary differences in domestic administrative approaches. The debate over improving regulatory convergence revolves around “better” regulatory approaches that negotiators have characterized generally as transparency, openness and participation. These broad principles, however, mean different institutional arrangements as well as changes in substantive regulatory principles across the Atlantic (see Ala’i and Vaughn). What I call the mainstream approach to international regulatory cooperation often promoted by legal studies financed by EU and US institutions focuses on finding new convergence towards “best” administrative practices, or an “experimental learning” approach to regulatory divergence.

TTIP negotiations have been used by negotiators, lawyers and multinational corporations on both sides of the Atlantic to push for particular regulatory and procedural reforms justified by transparency arguments. Despite a common ordo-liberal economic background, EU and US administrative cultures have fundamentally different approaches that focus, as James Whitman has shown in his article on «Consumerism versus Producerism», cited above, on the role of producers in Europe and consumers in the US. In anti-trust law, this divergence is shown where US regulators seek to avoid behavior that would undermine individual interests, while EU law protects business interests by preventing distortion by a dominant interest. It can be argued that the EU’s social market model is therefore dominated by institutional participants, compared to individual business participation in the US as a result of different histories, legal developments and political economies.

Administrative law scholars across the Atlantic have demonstrated a fundamental divergence in administrative law rules in comparing primary legislation that encompasses bills and legislation, and secondary legislation that encompasses the regulatory process «by columns» (see Parker and Alemanno). Such divergence exists insofar as the EU primary legislation is the result of broad consultation of stakeholders and institutional actors representing institutional market actors through White and Green Papers. In contrast, on the US side, secondary regulation includes broad input from individual stakeholders via the notice and comment procedure established to ensure that interested individuals can participate in rule making. In addition, administrative agencies adopting secondary legislation though informal rulemaking procedures need to offer the public a chance to provide comments to the proposed regulations. Agencies respond to individual comments by stakeholders according to their internal statutes.

In the EU, stakeholder input comes much earlier in the process, and the institutional stakeholders are largely involved and offer input at the primary legislation stage. Alternatively, US individual stakeholders play an important role ex-post through the notice and comment process in regulatory law making. This divergence in administrative processes reflects how transparency claims enable the reorganization of domestic economic interests in different industry sectors (medical devices, pharmaceuticals, automobiles) seeking greater involvement to gain power in transatlantic regulatory processes (see Bach and Newman).

Reactive Responses to Transparency across the Atlantic

An example of the powerful rhetoric used by Michael Froman is the argument about Brussels not being as transparent, open and participatory as Washington in its administrative process. The USTR has claimed that Brussels lacks transparency in its administrative and legislative process, while the EU Commission has proposed increasing the Agency-to-Agency model of cooperation since the mid-1990s.

The recent claims towards greater transparency in the EU are the result of pressures by businesses not being able to access initial drafts of legislation made by the EU Commission and presented to the Parliament and Council under the primary legislative procedure. In addition, US industry argued they were unable to make comments on secondary regulation, and received individual feedback through obscure regulatory processes in Brussels. More interestingly, this participatory limitation has been portrayed as a lack of transparency rather than an attempt to limit the influence of lobbies in Brussels. Another iteration of the same argument based on transparency has been the USTR’s attempt to push for the adoption of a central regulatory body, similar to the Office of Information and Regulatory Affairs in the Office of Management and Budget (OIRA) in the regulatory coherence chapter of the Trans Pacific Partnership (TPP). In contrast, as said above, the EU Commission has continued to propose an Agency-to-Agency model of cooperation and the establishment of a permanent Regulatory Cooperation Council that, like in the recently published Canada-EU free trade agreement (CETA), would promote IRC.

In 2014, as a result of various pressures from civil society and industries alike, Mr. Froman announced the creation of an innovative forum, namely a public interest trade advisory committee (PITAC) for academics and NGOs, as part of the trade advisory committee structure. One of the paradoxical provisions of the PITAC was, however, that every participant was obliged to sign a non-disclosure agreement so that civil society participants could not openly discuss, or promote publicly some of the information they gained during the TACs meetings. Some have criticized this institution as adding opacity rather than transparency to the whole process (see Sutton).

Soon after the transparency critics of the TTIP negotiation raised their voices in the EU side led by the European Parliament (EP) that after the entry in force of the Lisbon Treaty has demanded closer involvement in the negotiation in international agreements threatening not to give consent if its opinions were not taken into consideration. This threat ended with the successful agreement with the US on the exchange of financial information signed in 2010. The EP and the Commission have concluded an inter-institutional agreement pursuant to article 259 TFEU, concluding that the Commission will fully inform the EP of its intention to start the negotiations, present the draft negotiation directives to the EP and regularly and promptly inform the competent members of the EP (MEPs) on the conduct of the negotiation. In this respect it is important to stress that Paragraph 25 of the agreement states that the Commission shall facilitate the inclusion of a delegation of MEPs at international conferences. This agreement has been under attack by the Council claiming that it undermined the principle of institutional balance and the limits on the powers of institutions under TFEU art. 13(2).

Not surprisingly the EP’s worries resonated with the European Ombudsman who worried that the TTIP negotiation was disproportionately favoring some corporate groups at the expense of other civil society ones. In 2014, the German Minister for Agriculture, Christian Schmidt, claimed that the trust of citizens is essential in order to reach this important agreement, and called for more transparency in negotiations for a sweeping trade pact between the EU and the US. The Commission’s reaction to the US position and its growing internal critiques didn’t take too long and in 2014, with the newly elected Juncker Commission, the wind has changed. The Transparency package put forward by Trade Commissioner Cecilia Malmström has proven at least at the declaratory level to be a strong response to Froman’s attacks. The first proposal in the Malmström’s transparency package has been to fully inform the EP, rather than just the MEPs on the international trade committee about the next steps of the TTIP negotiation. The second proposal by Malmström, that has put the Commission back on the front seat of the transatlantic transparency game is a very innovative set of publications informing the general public on the EU position in the eighth round of the TTIP negotiation in Brussels. Even though the Commission’s negotiating position appears to be a clear and informative blueprint of the EU legal position vis à vis the USTR that has received important media attention, this cannot possibly reveal the tradeoffs and the political choices that EU trade negotiators will bargain for with their counterparts in secret.

Reconciling Transparency and Opacity: A call for new legal scholarship on TTIP

Even though there are obvious types of democratic deficits in secret trade negotiations, transparency claims in TTIP are empowering different interest groups to make the process more legitimate and democratic. In reality, transparency allows interest groups with different constituencies across the Atlantic to create transnational alliances and dominate the negotiating process by creating more opacity. From industry to consumer groups, in particular those industries affected by some key sectors in TTIP such as automobiles, pharmaceuticals and medical devices are very active in stating their position, sponsoring new research and providing money for academic studies to influence the negotiators’ views and creating more knowledge production around TTIP.

Even though some academics are not foregrounding the political stakes beyond the claims for transparency in the TTIP negotiation and portray regulatory cooperation as an experimentalist and neutral process (see Wiener and Alemanno), other commentators have raised critical substantive issues especially with respect to the high stakes for the pharmaceutical industry in both TPP (Trans-Pacific Partnership) and TTIP (see Stiglitz). Among the underlying political stakes in TTIP that taint the choices of the negotiators are, on the one hand, the respect of democratic decisions by governments about regulating markets without a race to the bottom scenario driven only by private interests instead of sustainable groth. On the other hand, the opposite ideological position stems from the fact that trade liberalization offers gains in terms of economic benefits and improved transatlantic cooperation in setting global standards. These two ideological poles tend to influence the way in which trade representatives and their negotiators ought to balance claims about transparency in regulatory cooperation for each side of the administration.

Commitment to transparency allows interest groups capture where the democratic and regulatory process is constrained to prevent it. So, ideologically transparency claims make the negotiation seem more democratic when in fact they enable interest group across the Atlantic to capture the front end of the process. Because of the transparency paradox the role of independent scholarship is crucial to ensure the production of new and critical knowledge about the TTIP negotiation. Legal scholars ought therefore to foreground what are the political stakes – often portrayed as neutral — beyond the claims that one regulatory process is more transparent than another one.