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TWN Info Service on WTO and Trade Issues (Jul15/10)
14 July 2015
Third World Network

 
US market access, reformed ISDS conditions for TTIP, say MEPs
Published in SUNS #8060 dated 10 July 2015
 
Geneva, 9 Jul (Kanaga Raja) -- Members of the European Parliament (MEPs) on Wednesday approved a set of recommendations to the European Union negotiators of the Transatlantic Trade and Investment Partnership (TTIP) with the United States, calling for an "ambitious" and "balanced" deal, to open up US markets for EU goods and services, and a new justice system to replace the existing investor-State dispute settlement (ISDS) provisions.
 
The new justice system for settling investor-State disputes must be run by publicly-appointed judges, subject to scrutiny and transparency rules, said the MEPs.
 
These and other parameters, setting the mandate for the EU Commission for the TTIP negotiations, were in a resolution, adopted by a vote of 436 in favour, 241 against and 32 abstentions.
 
[Any deal negotiated by the EU Commission needs final approval of the European Parliament and the EU Council of Ministers to come into force. The debate and recommendations on the issue were contentious in the EU Parliament, echoing the increasing public disquiet and controversy within the EU members.
 
[Reflecting this, even personalities and "Conservative" groups, normally supportive of "liberal" or "Free Trade" principles, have voiced their protests publicly, using columns of popular press outlets. For e. g. in Britain, Ben Goldsmith, a financier and chairman of the Conservative Environment Network, and supporter of a recently launched group "Artists Against TTIP", in an opinion piece in the London Evening Standard (30 June), has said: "TTIP is not a fringe issue but would mean seismic changes for the UK ... It is profoundly hypocritical of our current government to highlight threats to UK sovereignty while also promoting TTIP within Europe. Rather than trying to hide the deal from the British public, ministers should facilitate a fuller debate - and, if such a debate demands it, include the suspension of TTIP in the package of reforms and opt-outs being demanded from the EU." - SUNS]
 
An EU Parliament press release quoted Parliament Rapporteur Bernd Lange as saying: "Unprecedented globalisation is under way and our citizens and businesses are right in the middle of it. As parliamentarians, it is our democratic duty to shape this process. If it is to work for the benefit of the people, then it cannot be left in the hands of the negotiators alone. That is why we have drafted this resolution and spelt out the principles for the kind of trade agreement we want the Commission to conclude."
 
"We demand a more transparent process, robust workers' rights and protection for personal data and public services. We insist that the right of lawmakers on both sides of the Atlantic to legislate must not be undermined by private arbitration courts or other bodies," he said.
 
Lange added, "we have given clear guidance for the Commission on what kind of deal we want. And if, at the end of the day, the agreement is bad, we will reject it. If it's good, we will vote in favour."
 
In the resolution adopted Wednesday, the MEPs urged the need to ensure that transparent TTIP negotiations lead to "an ambitious, comprehensive and balanced trade and investment agreement" of a high standard that would promote sustainable growth with shared benefits across Member States, with mutual and reciprocal benefits between the partners, increase international competitiveness and open up new opportunities for EU companies, in particular SMEs (small and medium-sized enterprises), support the creation of high-quality jobs for European citizens, and directly benefit European consumers.
 
They underlined that the content and the implementation of the agreement are more important than the speed of the negotiations.
 
The MEPs emphasised that while the TTIP negotiations consist of negotiations on three main areas - ambitiously improving reciprocal market access (for goods, services, investment and public procurement at all levels of government), reducing NTBs (non-tariff barriers) and enhancing the compatibility of regulatory regimes, and developing common rules to address shared global trade challenges and opportunities - all these areas are equally important and need to be included in a comprehensive package.
 
They also said that the TTIP should be ambitious and binding on all levels of government on both sides of the Atlantic, should lead to lasting genuine market openness on a reciprocal basis and trade facilitation on the ground, and should pay particular attention to structural measures to achieve greater transatlantic cooperation while upholding regulatory standards and consumer protection and preventing social, fiscal and environmental dumping.
 
There is need to ensure that the agreement guarantees full respect for EU fundamental rights standards through the inclusion of a legally binding and suspensive human rights clause as a standard part of EU trade agreements with third countries.
 
On market access, the MEPs highlighted the need to aim at the elimination of all tariff duties while respecting a number of sensitive agricultural and industrial products on both sides for which exhaustive lists will have to be agreed upon during the negotiation process.
 
The resolution asked the EC negotiators to foresee for the most sensitive products appropriate transitional periods and quotas and in a few cases their exclusion, taking into account the fact that in many cases those products have higher production costs in the EU owing to EU rules.
 
The MEPs also stressed a safeguard clause be incorporated into the agreement, as is clearly set out in the negotiating mandate, which would be invoked where a rise in imports of a particular product threatened to cause serious harm to domestic production, with specific reference to food production and to the energy-intensive, carbon-leakage, chemicals, raw materials and steel sectors in the EU.
 
The Commission negotiators should keep in mind that as the EU is the largest trading bloc worldwide, there are important offensive interests for the EU in the highly specialised services sector, for instance, in the area of engineering and other professional services, telecommunication, financial or transport services.
 
The MEPs also urged the need to increase market access for services according to a "hybrid list approach", using for market access "positive lists", whereby services that are to be opened up to foreign companies are explicitly mentioned and new services are excluded while ensuring that possible stand-still and ratchet clauses only apply to non-discrimination provisions and allow for enough flexibility to bring services of general economic interest back into public control as well as to take into account the emergence of new and innovative services and using "negative list approach" for national treatment.
 
The negotiations should meaningfully address and remove the current US restrictions on maritime and air transport services owned by European businesses as a result of US legislation such as the Jones Act, Foreign Dredging Act, the Federal Aviation Act and the US Air Cabotage law and in relation to capital restrictions on foreign ownership of airlines, which seriously hinder market access for EU companies as well as innovation in the US itself.
 
The MEPs called on the Commission to build on the joint statement reflecting the negotiators' clear commitment to exclude current and future Services of General Interest as well as Services of General Economic Interest (including but not limited to water, health, social services, social security systems and education) from the scope of application of TTIP, to ensure that national and, if applicable, local authorities retain the full right to introduce, adopt, maintain or repeal any measures with regards to the commissioning, organisation, funding and provision of public services as provided in the Treaties as well as in the EU's negotiating mandate.
 
This exclusion should apply irrespective of how the services are provided and funded, the MEPs said.
 
They also urged the need to combine market access negotiations on financial services with convergence in financial regulation at the highest level, in order to support the introduction and compatibility of necessary regulation, to reinforce financial stability, to ensure adequate protection for consumers of financial goods and services and support ongoing cooperation efforts in other international forums, such as the Basel Committee on Banking Supervision and the Financial Stability Board.
 
Also, to ensure that these cooperation efforts do not limit the EU and member states regulatory and supervisory sovereignty, including their ability to ban certain financial products and activities.
 
The Commission negotiators were also called upon to ensure that the EU acquis on data privacy is not compromised through the liberalisation of data flows, in particular in the area of e-commerce and financial services, while recognizing the relevance of data flows as a backbone of transatlantic trade and the digital economy.
 
The Commission was mandated as well to incorporate, as a key point, a comprehensive and unambiguous horizontal self-standing provision, based on Article XIV of the General Agreement on Trade in Services (GATS), that fully exempts the existing and future EU legal framework for the protection of personal data from the agreement without any condition that it must be consistent with other parts of the TTIP, and to negotiate provisions which touch upon the flow of personal data only if the full application of data protection rules on both sides of the Atlantic are guaranteed and respected to cooperate with the US in order to encourage third countries to adopt similar high data protection standards around the world.
 
The MEPs highlighted the need to ensure that the US states are included in the negotiation process in order to achieve meaningful results in opening up US public procurement contracts to EU companies.
 
Also, to recognise that, where the EU and the US have very different rules, there will be no agreement, such as on public healthcare services, GMOs, the use of hormones in the bovine sector, REACH (Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals) and its implementation, and the cloning of animals for farming purposes, and therefore not to negotiate on these issues.
 
The MEPs also called on the Commission negotiators to encourage the US side to lift the ban on beef imports from the EU.
 
On investment, the MEPs stressed the need to ensure that TTIP contains a comprehensive chapter on investment including provisions on both market access and investment protection, recognising that access to capital can stimulate jobs and growth.
 
The investment chapter should aim at ensuring non-discriminatory treatment for the establishment of European and US companies in each other's territory, while taking account of the sensitive nature of some specific sectors.
 
The MEPs said that these should look to enhance Europe as a destination for investment, increase confidence for EU investment in the US and also address investors' obligations and responsibilities by referring, inter alia, to the OECD principles for multinational enterprises and to the UN principles on Business and human rights as benchmarks.
 
There is also need to ensure that investment protection provisions are limited to post-establishment provisions and focus on national treatment, most-favoured nation, fair and equitable treatment and protection against direct and indirect expropriation, including the right to prompt, adequate and effective compensation.
 
Standards of protection and definitions of investor and investment should be drawn up in a precise legal manner protecting the right to regulate in the public interest, clarifying the meaning of indirect expropriation and preventing unfounded or frivolous claims, and that free transfer of capital should be in line with the EU treaty provisions and should include a prudential carve-out not limited in time in the case of financial crises.
 
The MEPs urged the Commission to ensure that foreign investors are treated in a non-discriminatory fashion, while benefiting from no greater rights than domestic investors.
 
They called for replacing the ISDS system with a new system for resolving disputes between investors and states which is subject to democratic principles and scrutiny, where potential cases are treated in a transparent manner by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism, where consistency of judicial decisions is ensured, the jurisdiction of courts of the EU and of the Member States is respected, and where private interests cannot undermine public policy objectives.
 
There is also need to ensure that TTIP includes an ambitious, balanced and modern chapter on and precisely defined areas of intellectual property rights, including recognition and enhanced protection of geographical indications and reflects a fair and efficient level of protection, without impeding the EU's need to reform its copyright system and while ensuring a fair balance of IPRs and the public interest, in particular the need to preserve access to affordable medicines by continuing to support the TRIPS flexibilities.
 
The Commission was also called upon to secure full recognition and strong legal protection of EU geographical indications and measures to deal with improper use and misleading information and practices, and to guarantee the labelling, traceability and genuine origin of these products for consumers and the protection of the know-how of producers as an essential part of a balanced agreement. +

 


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