EU Temporarily Suspends Investment Part of US Trade Talks
In a surprise announcement on Tuesday, the European Commission confirmed that it has put the investment component of its trade negotiations with the US temporarily on hold. Brussels will use that time to allow the European people to provide their input on the subject, in light of the "unprecedented public interest" in the talks.
"I know some people in Europe have genuine concerns about this part of the EU-US deal," EU Trade Commissioner Karel De Gucht said. "Now I want them to have their say."
The Transatlantic Trade and Investment Partnership, or TTIP, has been promoted as having major potential for creating new jobs and spurring growth for both sides, with some estimates placing the annual gains at €120 billion for Europe and at over €90 billion for the US.
However, the possibility of including an investor-to-state dispute settlement (ISDS) mechanism in the agreement has rankled many consumer and environmental groups on both sides on the Atlantic, who have warned that such provisions give foreign corporations too much room to challenge domestic policies that are in the public interest.
The Commission will therefore publish in March a proposed EU text for the investment part of TTIP, which will be followed by a three-month public comment period.
US officials had not publicly commented on the Commission's move as Bridges went to press on Thursday morning.
Public interest policies
Under ISDS provisions, foreign investors may file a case against a host country in front of an international tribunal if the company finds that one of its key protections - such as against expropriation or discrimination - has been violated.
Proponents say that dispute settlement mechanisms and other investment protections are essential for ensuring that a company's investments are safe abroad, and to avoid cases where foreign companies exploit loopholes in domestic laws.
Critics, for their part, say that these provisions could open the door to lawsuits that tackle key environmental and health policies.
"Particularly because of the significant of cross-registered companies in the United States and the EU, the number of ISDS attacks on public interest policies would likely increase dramatically if TTIP includes ISDS," said a joint letter filed in December by several US and EU civil society groups. "Governments must have the flexibility to put in place public interest policies without fear of trade litigation launched by corporations."
European officials have already sought in recent months to assuage civil society concerns on this subject, with EU Trade Spokesman John Clancy releasing a statement in December stressing that "investment protection does not give multinationals unlimited rights to challenge any legislation."
"Legitimate policy measures taken by public authorities to protect the environment or public health and which apply to all firms in the same way - foreign or national - cannot be successfully challenged under these provisions under the guise of investment protection," Clancy added.
The EU is the world's largest foreign direct investor, and the biggest recipient of such investment. To date, EU members have approximately 1400 bilateral investment deals with non-EU countries, including the US.
De Gucht: No delay in TTIP timeframe
The news comes just a month ahead of a planned "political review" of the talks to date by the EU trade chief and his American counterpart, US Trade Representative Michael Froman, and De Gucht was quick to insist that the TTIP talks would go on as planned. Negotiators are set to meet for their fourth round of negotiations in March.
The US-EU initiative was launched in June of last year, and officials have said that they hope to reach a deal within a short timeframe. (See Bridges Weekly, 20 June 2013) The talks already experienced a brief delay last autumn due to the partial US federal government shutdown, though officials say that this did not affect the overall schedule. (See Bridges Weekly, 21 November 2013)