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In early March, De Gucht will publish a proposed EU text for the investment part of the talks which will include sections on investment protection and on investor-to-state dispute settlement (ISDS). This draft text will be accompanied by clear explanations for the non-expert. People across the EU will then have three months to comment.
EU Trade Commissioner Karel De Gucht said: "Governments must always be free to regulate so they can protect people and the environment. But they must also find the right balance and treat investors fairly, so they can attract investment. International investment agreements like TTIP should ensure they do both. But some existing arrangements have caused problems in practice, allowing companies to exploit loopholes where the legal text has been vague. I know some people in Europe have genuine concerns about this part of the EU-US deal. Now I want them to have their say."
The Commission wants to use the opportunity to improve investment provisions already in place to protect investments by EU-based companies in the US, and vice versa. In practice this would mean referring explicitly in the deal to states' right to regulate in the public's interest. It would also see new and improved rules, including a code of conduct, to ensure arbitrators are chosen fairly and act impartially, and to open up their proceedings to the public. No other part of the negotiations is affected by this public consultation and the TTIP negotiations will continue as planned.
The EU-US negotiations for the Transatlantic Trade and Investment Partnership (TTIP) started in July 2013 and aim at removing trade barriers in a wide range of economic sectors to make it easier to buy and sell goods and services between the EU and the US. The third round of negotiations took place in Washington DC in December 2013 and the next round is scheduled for March 2014.
In a further speech on 22 January on the "hottest topics in the current TTIP debate", Commissioner de Gucht discussed four core points:
"In terms of regulation, we want to find solutions that are in the interest of both sides, without compromising our values and without lowering the level of protection. A lot of the barriers our companies are confronted with take the form of unnecessary costs that spring from the differences in regulations, standards and conformity assessments that Americans and Europeans have worked out each in their own corner, in isolation. There is a lot to be gained from regulatory cooperation.
The second big area of debate is on investment rules and in particular the way disputes would be resolved between a foreign investor and the host government. I have been tasked by all EU Member States to work on improving the system to stop potential legal loopholes being used for frivolous claims against the state whilst preserving fair and balanced investment protection for companies – including, very importantly, SMEs.
That is what we seek to achieve. However, public interest is intense and I yesterday announced my decision to launch a public consultation on investment protection in these negotiations.
We get guidance and input from all stakeholders in a number of different ways: The first and most important is through the European Union's institutions – the European Parliament and the Council – which is where Germany sits, alongside all the other Member States. On top of this close scrutiny, the Commission also takes in the opinions of the public directly; before we ever started this negotiation we held three official public consultations on what should be in the deal.
The reason why we're doing all this is simple – to strengthen the European economy, so that European people are better off and have more employment opportunities."
On 27.1.14, the Commission published a non-paper clarifying its objectives for financial services in the negotiations for a Transatlantic Trade and Investment Partnership (TTIP). The EU proposes to establish, within the TTIP framework, a transparent and accountable process which would allow the two parties to work together towards strengthening financial stability. The objective is not to define (or re-define) the substance of international standards for financial regulation or to negotiate prudential rules. The objective is to create a workable platform for EU and US regulators to ensure that the EU and US rules work together. As the global nature of financial services allows for transmission of risk, irrespective of national borders, the EU believes that this is the only way to ensure viable, sound and resilient financial markets in the future. This will also benefit financial operators thanks to greater interoperability of rules this avoiding market fragmentation and creating a more level playing field. The EU proposal offers the opportunity to lay the long-term foundations of an integrated and stable transatlantic financial market. The publication of this non-paper underlines the Commission's policy to strive for a maximum level of transparency in the TTIP negotiation process. It is the latest example of a number of position papers that the Commission has already made available to the broader public on its website. Further information: TTIP-and Financial Services.
See also: Expert group to advise European Commission on EU-US trade talks, 27.1.14
Chris Cummings, Chief Executive of TheCityUK commented: “The European Commission has decided that it should launch a public consultation on a very specific part of the TTIP negotiating agenda relating to investor-state dispute settlement. We urge the Commission to complete this consultation with due vigour.
This move need not delay any other part of the negotiations. It should not impact the desire to conclude an ambitious and comprehensive agreement that brings significant benefits to the transatlantic economy, while respecting the parties' well-established right to regulate. TheCityUK urges EU & US negotiators to continue their work to make meaningful progress across the portfolio of issues. The political stocktake at the end of February will be an important signal that the negotiations are on course to deliver the huge potential in both market access & regulatory coherence.”
Further reporting by the BBC and Süddeutsche Zeitung
The S&D Group in the European Parliamen issued a press release stating that they will oppose the introduction of an investor-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated by the EU and the United States.
S&D spokesperson on trade, MEP Bernd Lange, said: "EU Trade Commissioner Karel De Gucht today announced a public consultation on the ISDS. We welcome that the Commission is now finally taking the public criticism towards ISDS seriously. We believe that this mechanism is unnecessary in an agreement between two countries that fully respect the rule of law. Accepting the ISDS would mean opening the door for big corporations to enforce their interests against EU legislation. This would deprive states of crucial policy space in important fields such as health or environment."
"We don't want the Commission to improve investor-state dispute settlement in the TTIP negotiations, but we request that the Commission drops ISDS within TTIP altogether."
Similarly, Green trade spokesperson Yannick Jadot said: "The investor-state dispute settlement mechanism (ISDS) is a massive Trojan horse, which could be used by multinational corporations to whittle away EU standards and regulations across a range of policies from the environment to food safety to social protection. This announcement by the European Commission is an important development in the ongoing battle against the controversial EU-US trade negotiations. However, it is only a first step.
"The Greens believe there is overwhelming evidence from around the world on the risks this opaque ISDS procedure poses to long-standing EU standards and regulations through frivolous or disruptive investor claims. As such, ISDS should form no part of the EU's trade policy and the European Commission should not be concluding agreements with non-EU countries including such provisions. Today's announcement provides some initial vindication but we must remain vigilant to ensure ISDS is truly excluded."
The next EU-US summit will be held in Brussels on Wednesday 26 March 2014, following an invitation by European Council President Herman Van Rompuy and European Commission President José Manuel Barroso to the President of the United States Barack Obama. This will be President Obama's first visit to Brussels and to the EU institutions.