The one big obstacle that has brought the TTIP deal negotiations to a stand-still

14/05/2015

TTIP Trade Deal Obstacle

TTIP Trade Deal Obstacle

Ongoing TTIP trade deal negotiations between Washington and Brussels may not be reached in 2015 as originally anticipated, EU officials admitted in late March.

“We have to do our best to get an agreement but we don’t want to reach an agreement just for the sake of it,” Latvian Foreign Minister Edgars Rinkevics stated on March 25. Latvia currently holds the EU presidency.

[quote type=center]We are aiming to conclude this under the Obama administration…but I cannot give you a date.[/sws_blockquote_endquote]
Obama’s term will end in January 2017.

Negotiations have been in progress since June 2013, and were originally expected to be completed in 2014. The deadline was pushed to 2015 when it became clear that issues would not be resolved before then; the European Commission froze trade talks in January 2014.

What’s holding up the deal?

The biggest obstacle to locking down a deal is investor-state dispute settlements (ISDS). This portion of the proposed deal is causing an uproar throughout the EU, as it will allow corporations to take governments to international arbitration tribunals, instead of local courts, to resolve investment disputes.

Germany – which is arguably the economic driver of the EU – has come out vociferously against the measure, followed by Austria and France.

Germany’s deputy chancellor, Social Democrat Sigmar Gabriel, stated in late March that he is resolutely against the ISDS measure, fearing its impact on the EU’s stringent regulatory laws.

[quote type =”center”]We won’t lower any social, environment, or consumer production standards,[/sws_blockquote_endquote]

Gabriel told Sueddeutsche Zeitung. “And we will not – I am completely sure of this – see any privatization of arbitration.”

Opposition to the measure has pushed the European Commission to launch a permanent court, which will oversee and decide cases between foreign corporations and governments

However, EU Commissioner for Trade Cecilia Malmström is committed to creating a court which will not only have the power to adjudicate on TTIP matters, but also future trade agreements; she argues that a multilateral court would be a better use of resources and will be more legitimate.

The biggest concern opponents have about the current ISDS clause is whether or not international corporations would be able to sue governments for altering environmental or regulatory measures post-investment.

Malmström told members of the European Parliament that she sees other alternatives for dealing with this issue,

Our idea is a clause that says investment protection rules offer no guarantee for investors that the legal regime under which they have invested will stay the same

She also suggests limiting the amount of appeals that corporations will be able to make against the findings of national courts, by either forcing them to choose to work with national courts or the ISDS framework, or to cease suits launched in national courts once ISDS arbitration begins.

Decreasing appetite for trade deal

When the EU-US trade deal idea was born in 2011, the EU was reeling from a debt crisis which led many to question whether the economic arrangement could be maintained. Trade with major players was seen as an elixir to restore the continent to economic health.

But now that economies have rebounded sufficiently, state governments are bristling at conceding too much to potential trade partners.

The overall estimation of how much the EU stands to benefit from the signing of the trade deal has also changed. German industry federation BDI initially said the EU could expect to generate 100 billion euros per year as a result of the deal.

BDI was roundly criticized for the numbers, while the Center for Economic Policy Research for the European Commission published its own, more conservative number: EU GDP is expected to grow 0.5% in 10 years as a result of the deal, or 119 billion euros by 2027.

With growing opposition and a less-rosy picture of what the EU may gain from the accord, negotiators are facing serious challenges in bringing the deal to fruition.

Should the EU create a separate court to handle ISDS cases?

 Disclaimer: The opinions expressed in this article are those of the contributing author, and do not necessarily reflect those of the Forum for International Trade Training.

About the author

Author: Jacqueline Côté

I am a working journalist, with experience as SNL Financial’s Canadian correspondent for its Mining and Metals vertical. I also served as the Managing Editor for Central Asia Newswire – covering daily economic and investment news in the region – as well as Features Editor for the Washington-based Magharebia.com, which covers developments in the North Africa region. I have been published in The Montreal Gazette, The Guardian (UK), The New Statesman (UK), Red Pepper (UK), Geopolitical Monitor and CNN.com.

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