EU Parliament Ctte Approves Draft TTIP Recommendations

4 June 2015

Members of the European Parliament’s international trade committee (INTA) signed off last week on a series of draft recommendations for what it would like to see in a planned trade deal with the US, including a highly-anticipated position on the investment protection component of the talks.

While the recommendations approved by the committee on 28 May are not binding, it does give an indication of what EU parliamentarians could potentially deem acceptable in a final trade deal. The 751-member chamber will need to approve the terms of the agreement – known as the Transatlantic Trade and Investment Partnership (TTIP) – when one is reached, with lawmakers stating repeatedly that their input must be taken into account for them to consider a final EU-US trade pact.

Furthermore, the recommendations agreed in the INTA committee last week still need the approval of the full European Parliament. That vote is currently set for next week, with amendments to the recommendations possible during the plenary process.

Two years in

The TTIP agreement at issue is now entering its third year of negotiations. The deal, which some estimates predict could add over €200 billion to the economies of the US and EU, has also fuelled controversy on both sides of the Atlantic, bringing to the fore long-standing differences in their regulatory approaches, among other areas.

Amid reports that the negotiations have been lagging, TTIP officials have deemed this year an opportunity to give a “fresh start” to the talks. The most recent negotiating round was held in April, with the next meeting scheduled for July. A joint political review is then expected to be held after the summer, and officials have said they aim to make as much substantial progress as possible in 2015, while now acknowledging that the talks will likely go into 2016. (See Bridges Weekly, 30 April 2015)

Given the slow pace of the talks, various analysts have noted that the Parliament’s stance on TTIP could help spur the negotiations forward. A similar process is underway in Washington, with Congressional lawmakers in the process of debating legislation that sets the US’ negotiating objectives in trade deals, while also setting the terms for how the US legislature approves such agreements. (For more on the Washington discussions, see related story, this edition)

ISDS

The talks on investor protections and ISDS within the TTIP context have been suspended for nearly 18 months, a decision made by Brussels in order for the 28-nation EU to hold a public consultation on these provisions and how they could be improved. (See Bridges Weekly, 23 January 2014)

The results of those public consultations were released earlier this year, and last month EU Trade Commissioner Cecilia Malmström presented to the INTA committee a concept paper that outlined a series of suggested reforms to the investor-state dispute settlement (ISDS) mechanism which, she said, aimed to take into account the feedback received. (See Bridges Weekly, 15 January 2015 and 7 May 2015, respectively)

These suggestions included, among others, a call to create in the medium-term a permanent multilateral court and appellate mechanism to arbitrate investment disputes, as well as outlining reforms in the areas of the right to regulate; improving the establishment and functioning of arbitral tribunals; including an appellate mechanism in TTIP; and addressing the relationship between ISDS and domestic courts.

INTA members said last week that the investment protection provisions of TTIP should be based on Malmström’s paper, together with the results of ongoing talks with EU trade ministers. The approved amendment was reportedly a compromise reached between the Socialists & Democrats and the European People’s Party, the two largest groups in the Parliament.

“This resolution is the beginning of the end for ISDS, a development which is long overdue,” said Bernd Lange, a member of the Socialists and Democrats (S&D) group who chairs the INTA committee.

“We have pushed very hard for this resolution to come to life, to send the strong message that the S&D Group and the European Parliament as a whole will not simply accept any deal they are presented with. On the contrary, we have clear cut demands and red lines when it comes to the content of the agreement which are laid out in this resolution,” Lange added.

The ISDS resolution has drawn criticism from both consumer and environmental groups, with Transport & Environment, a Brussels-based coalition, suggesting that including ISDS would indicate a lack of trust in European judicial system.

“Not only do they not trust our courts, they are also willing to have Europeans pay for the private risks of big business, and tie the hands of future EU lawmakers by providing an implicit deterrent to public interest regulation,” said Cécile Toubeau, a sustainable trade officer for the group.

Business groups such as BUSINESSEUROPE, for their part, have welcomed the result of the vote on the draft INTA report, with Director-General Markus Breyer remarking that “we have come a long way and positive dynamics are back.”

Breyer added that, while BUSINESSEUROPE is “are glad to see investors’ rights are acknowledged, however we need to make sure efficient instruments to enforce them are put in place.”

Tariff elimination, with sensitivities

The TTIP talks involve three areas where the two sides are aiming to improve market access: tariffs, services, and government procurement. To date, the two sides have exchanged one set of offers on goods tariffs, which are still under discussion, and are preparing to exchange revised offers on services ahead of the July round.

While welcoming the effort at full tariff elimination, INTA parliamentarians indicated that they would like to see an “exhaustive list” to address sensitivities in agricultural and industrial goods to either face longer transitional periods or be exempt from liberalisation entirely.

Other recommendations by the committee’s lawmakers involved the inclusion of a “safeguard clause” for temporarily restricting entry of specific food products in the case of an increase in imports that could hurt domestic production, as well as asking that for strong protection of the EU’s geographical indications (GI) system.

GIs are used to denominate products with a specific geographical origin and which possess qualities, reputation, or characteristics that are essentially attributable to that same place, with common examples including Feta cheese or Parma ham.

Energy chapter

Another unresolved issue in the TTIP negotiations will be how exactly to deal with the issue of energy. While the EU has been pushing for a dedicated energy chapter in the agreement text, the US has indicated that these provisions could also be dealt with across other chapters.

INTA parliamentarians last week called for including an energy chapter, as well as the abolishment on any “existing restrictions or impediments” on fuel exports, such as crude oil and liquefied natural gas (LNG).

EU Trade Commissioner Cecilia Malmstrom reaffirmed on Wednesday that this is indeed one of the objectives being pursued by Brussels in the negotiations.

“Today, US gas exports are subject to cumbersome licencing procedures and oil exports are essentially banned. These limits can be removed in the agreement. To do this, the EU believes that TTIP should include a legally binding commitment by both sides not to restrict exports of oil and gas to the other partner,” the EU trade chief said at a conference on TTIP organised by the Alliance for Liberals and Democrats in Europe (ALDE) group in the European Parliament.

ICTSD reporting; “MEPs give passing vote to TTIP,” EURACTIV, 29 May 2015; “TTIP wins key panel vote,” POLITICO, 29 May 2015.

This article is published under
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