On Friday night, after 12 hours of wrangling in Luxembourg, the European Union delivered a fudge that successfully found a way around a threatened French veto in order to begin formal negotiations with the United States on a highly ambitious free-trade pact.
The French have insisted from the beginning that any such deal cannot include the audio-visual sector since their culture and language deserve protection from the juggernauts of Hollywood. Many other Europeans feel the same way.
The European Parliament passed a -- non-binding -- measure backing the French position. It was the Dutch-German film director Wim Wenders who claimed that giving up Europe's cultural exception would be like "burning our books, closing our museums, sacrificing our first-born, rebuilding the Berlin Wall."
This isn't just a matter of Hollywood movies but it also reflects European concern at America's online dominance. The French complain there is no possibility of having a level playing field for French or European companies in the world of GAFAM -- French slang for new corporate titans Google, Amazon, Facebook, Apple and Microsoft.
The latest leaks and controversy about the extent to which the U.S. National Security Agency can monitor phone and online communications has given the issue a sharper edge.
Still, despite the French veto threat the free-trade negotiations are going ahead. The European Union has given its commission a formal mandate to open talks with the United States on the Trans-Atlantic Trade and Investment Partnership and the commission claims nothing has been ruled out from the talks and they can negotiate freely with the Americans on anything.
At the same time, the French say they have won their point and that audio-visual affairs are specifically excluded and they point to Paragraph 21 of the mandate.
"We are satisfied but I don't want to call it a victory," French Trade Minister Nicole Bricq said. The cultural exception had been saved, "written clearly in black and white."
Oddly enough, the commission and the French are both right. Paragraph 21 of the negotiating mandate excludes audio-visual matters but a new paragraph opens the way to modifying the mandate. It says the commission "may make recommendations to the council on possible additional negotiating directives on any issue, with the same procedures for adoption, including voting rules, as for this mandate."
The commission, which is Europe's civil service, runs all trade negotiations. But it has to get its mandate from the Council of Ministers, which is the body where Europe's 27 national governments meet.
The fudge that was reached Friday night means that somewhere along the line, when almost everything else about the TTIP has been settled, the cultural exception will clamber out of its coffin like Dracula and lay its icy grip on what could be the most important Euro-American agreement since the founding of NATO more than 60 years ago.
Logic might suggest the Europeans, with their economies flat or shrinking, would leap at the chance of a trade deal that would benefit them to the tune of $150 billion a year or more, boost their automobile exports to the United States by 150 percent and provide Europe and the United States a big, secure market to help them withstand the challenge of China and other emerging economies.
Moreover, it should allow the United States and European Union, which remain by far the world's biggest economic blocks with about half of global output, to continue to set the rules for global trade and investment, in services as well as goods. Most previous free-trade deals have been about goods alone; this one specifically includes services.
London's Center for Economic Policy Research, in an independent analysis, reckoned the European Union's economy could benefit by $160 billion a year -- equivalent to $750 for an average EU household -- and the United States by $125 billion a year.
"The TTIP will be a trade agreement fit for the 21st century -- the increased business will not only benefit multinationals but also small- and medium-sized firms, either through exporting directly or as suppliers to bigger companies," the EU Commission asserts.
European Trade Commissioner Karel de Gucht said of the fudge: "I can live with this. ... This is not a carve out. ... It will be discussed with the U.S. ... and if need be, we will come back to the council for a mandate on this specific issue."
Sadly, the French fudge makes it easier for the Americans to put reservations on key issues, like financial services, procurement by public bodies (several states in the United States have "buy American" rules) and pharmaceutical standards.
This could weaken the overall TTIP deal, despite the evident benefits to both sides. Still, the talks will begin, the French save face and the real arguments can take place down the road. That's why they call it a fudge.
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