Can trade negotiations be transparent and effective?

A recent appeal by ClientEarth, an environmental law NGO, to the Court of Justice of the European Union underlines the delicate balance to be struck between transparency and effectiveness in trade negotiations.

ClientEarth had sought public disclosure of internal legal advice by the Commission’s Legal Service to DG Trade, concerning the compatibility of the proposed investor court system with the EU’s legal system. The Commission decided that some (heavily redacted) documents could be disclosed but that access to others must be denied.

On appeal against this decision, competing arguments were heard by the Court. On the one hand, the Commission argued that disclosure would reduce its effectiveness in ongoing trade negotiations. On the other hand, ClientEarth contended that the public interest required their release. In the end, the Court sided with the Commission.

In weighing the two, the Court grappled with a familiar but tricky question: can trade negotiations be made transparent and, if so, to what extent?

Any answer must begin by considering the nature of current trade agreements. The race to conclude wide-ranging FTAs continues apace. The EU has twenty-one such agreements under negotiation with several close runners up that include Canada (15), Australia (9) and New Zealand (7). But it is not simply that there are more trade agreements. It is that the current crop of FTAs have evolved beyond their traditional focus of increased market access through tariff reduction. When this was the principal concern there were strong arguments for confidentiality during negotiations. Increasing market access for foreign competitors, facilitated by reduced tariffs, inevitably exposes some sectors of the economy to greater competition. In such instances, confidentiality gives negotiators greater leeway to make trade-offs between sectors domestically and conclude the agreement.

Today’s trade agreements now have the additional target of regulatory or so-called “behind the border measures” that, whilst not technically “market access” barriers, can also hinder trade. Such rules are often called “non-tariff barriers”, and are targeted through rules requiring that even non-discriminatory national regulation be proportionate to its objectives, and sometimes also by specifying detailed, and expensive, procedures. These newer rules, normally given legal bite through binding dispute settlement mechanisms, can affect domestic policy areas such as public health, labour rights and environmental protections. In the domestic arena, rules impacting these policy areas would be the subject of public scrutiny and debate. Consequently, it is considered by many to be anomalous for governments to negotiate such rules with little transparency or adequate public participation.

On a more pragmatic level, attempts to negotiate rules of this sort without transparency have hampered the successful conclusion of negotiations. An example is the now dormant Transatlantic Trade and Investment Partnership (“TTIP”). The lack of transparency of the original negotiations had several negative consequences. Firstly, it undermined the agreement’s legitimacy in the eyes of civil society from the outset with many perceiving it as serving corporate interests as opposed to those of the wider public. Secondly and as a direct consequence, concerned interest groups obtained sensitive policy documents and then leaked them. The largest leak was by Greenpeace who released 248 pages of classified TTIP documents in May 2015. In the internet era, leaked documents can be disseminated instantly making it impossible for governments to ensure that any truly sensitive information (for instance, relating to market access) is kept confidential. The episode reveals that an approach of total non-transparency may undermine the negotiation process. Arguably, negotiators are better served by a policy of increased transparency that builds trust, countering public scepticism by keeping them informed of developments and diminishing incentives for leaks. In this sense, transparency can actually support effectiveness.

In response to such arguments, the EU and the US have conceded that transparency is necessary in current trade negotiations. However, it remains true that complete disclosure is unworkable. The release of one party’s objectives and strategy will be to the advantage of its negotiating partner. As noted above, this is most obvious in the case of market access questions, but it can occasionally be true elsewhere. For instance, disclosure of the legal advice desired by ClientEarth would have made the EU’s trade partners aware of the Legal Service’s private view of the investor court system. At first glance, this appears harmless given that the difficulties the EU faces in accommodating its version of investor-state arbitration to its legal system are widely known. However, the reality is disclosure of the Legal Service’s private view may undermine strategic positions currently adopted by DG Trade, conflict with the expressed views of other EU institutions or run counter to the opinions of member states. Trading partners could use this knowledge to the detriment of the EU’s objectives by gaining leverage over its negotiating representatives or seeking to fracture its unified position. Accordingly, the release of such strategic information could come at heavy cost. It was this that ultimately led the Court to decide in favour of the Commission.

This all leaves unresolved the important question of when negotiators should provide transparency. It is possible that subjecting negotiations to continuous public scrutiny will impede their progression. The end-product of trade talks is a compromise between parties that follows a back and forth of detailed suggestions. If negotiators must continuously persuade the public as well as each other, it is unlikely that they will make it past the most contentious issues. The Greenpeace leak, which took place amid ongoing negotiations. Arguably, this was inevitable and warranted consequence of negotiators having until that point completely bypassed public debate. But from the perspective of a trade negotiator it added additional hurdles at a difficult and sensitive point in proceedings. To avoid a repeat scenario, transparency should be front-loaded at the developmental phase before negotiations have begun or, if this is not possible, at the ratification phase once they have concluded.

There is in fact a wide range of material that does not risk tipping the hand: negotiating mandates, lists of meetings, minutes from negotiation rounds and third-party correspondence. In contrast to strategy documents, the release of this information is unlikely to diminish a party’s negotiation strength while its disclosure will contribute to greater transparency. In accordance with its new approach to transparency, the EU has (if only to some degree) made this information publicly available.

With public concern about trade negotiations and agreements showing no signs of going away, we should hope that governments agree upon the disclosure of non-strategic information early in the negotiations process. Although no transparency policy is likely to satisfy everyone, this would go some way to striking the delicate balance between transparency and effectiveness.

Written by Luigi Pedreschi, PhD candidate at the European University Institute in Florence.

Edited by the Linklaters Trade Practice. The views and opinions expressed here are the personal opinions of the author(s) and do not necessarily represent the views and opinions of Linklaters.