Thursday

27th Feb 2020

Analysis

Progress or groundhog day after two years of TTIP?

EU trade officials marked the second anniversary of trade talks with the US last week, but for observers it was more a case of ‘groundhog’ day.

Once again, investor protection rules were the main topic of discussion at Friday’s (17 July) press conference marking the end of the tenth round of talks in Brussels.

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“We would be aiming to put forward a proposal to the United States that is different from the existing ISDS [investor-state dispute settlement] regime,” Ignacio Garcia Bercero, the EU’s chief negotiator, told reporters.

If this all sounds wearily familiar it is because it feels as though the discussions have barely moved on in the last eighteen months, since the European Commission suspended talks on investor protection rules and opened a public consultation on the matter in spring 2014.

The Commission is keen to make clear that investor protection rules offer no guarantees to businesses that the legal regime in which they invested will remain the same, while trade commissioner Cecilia Malmstrom has pledged to “replace the ISDS-system with a new system for resolving disputes between investors and states". It also wants to include an article in TTIP stating that governments are free to pursue public policy objectives without fear of being sued.

Meanwhile, it also wants the arbitration panels which decide on disputes between firms and governments to be more like the traditional court system, with permanent litigators and tenured judges ruling on cases.

"We believe of course that it will be very important to have in TTIP strong protections to investors, while fully guaranteeing the right to regulate," Garcia Bercero told reporters.

However, as Mullaney hinted on Friday, the EU’s proposal is highly unlikely to be accepted by the US.

The US ISDS system had already been changed in ways “that we think address some of the same concerns that have been raised here: impartiality and the right of regulators to regulate in the public interest,” he added.

The sheen of optimism and excitement surrounding TTIP wore off long ago. Public scepticism on both sides of the Atlantic goes beyond the technicalities of what companies can do if they feel short-changed by governments.

Meanwhile, the US lead negotiator promised to seal an agreement before the end of Barack Obama’s presidency.

"We have an opportunity to conclude TTIP negotiations during President Obama's presidency, but this will require us to take advantage of every month and of every day available," said the US lead negotiator, Dan Mullaney.

At an EU summit last December, leaders gave negotiators until the end of 2015 to seal a draft agreement, but this deadline is almost certain to be missed. The US presidential race to succeed Obama - which will officially kick-off in the autumn and conclude in November 2016 - has always been viewed as the main deadline for a deal to be struck.

On the positive side of the ledger, the procedural path for TTIP is now more straightforward than it could have been.

The US Congress granted President Obama the power to negotiate trade deals without opening them up to amendment by US lawmakers when they endorsed the White House’s Trade Promotion Authority bill at the second attempt in a vote in June.

This means that, like MEPs, Congressmen will only take a single vote on whether to ratify or veto TTIP when it finally comes before them. There will be none of the filibustering or procedural gymnastics that US legislators have become famous for.

Officials stated that progress was made this week on harmonising regulatory standards and in the pharmaceuticals sector.

However, the main stumbling blocks that have bedevilled the negotiations remain unresolved, while lawmakers on both sides of the Atlantic have voiced scepticism about the merits of an EU-US trade accord.

The European Parliament endorsed the continuation of talks earlier this month, but only after a painstakingly agreed compromise, personally brokered by the assembly’s president Martin Schulz, stated that the existing ISDS arbitration system would have to replaced in favour of a public court, while making clear that “private interests cannot undermine public policy objectives”.

It seems like a long time ago that the EU leaders enthusiastically gave the European Commission the green light to open talks, seduced by research suggesting that TTIP would be worth an extra €100 billion to the bloc's struggling economy – equivalent to 0.5 percent of GDP - and create the largest single free trade zone in the world.

For their part, a large number of Congressmen, particularly Democrats in the House of Representatives mindful of a voter backlash when they have to defend their districts next autumn, are hostile to the prospect of agreeing free trade deals, be it an accord with the Europeans or with Japan, South Korea and the Pacific basin.

TTIP was always likely to be vulnerable to the latent anti-Americanism that still exists in many EU countries and parts of the media. Before ISDS became the focal point of controversy there were scare stories about the prospect of US chlorine-treated chicken and hormone-treated beef flooding European supermarkets.

But the longer the talks go on, the more likely it is that there will be just as many political roadblocks in Washington DC as in Brussels.

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