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In a rare move, the European Commission has decided to freeze talks with the United States on the investment provisions of the Transatlantic Trade and Investment Partnership (TTIP) for three months while it conducts a public consultation on how the deal should approach investment, according to an EU official.
The commission announced today (Jan. 21) that it plans to publicly release its draft proposal on investor protections in TTIP in March, after which it will open up a three-month public comment period. The EU official said the talks on the investment portion of the TTIP will be on "pause" until this review period is concluded, which would likely be late May or June.
The EU official said the freeze on investment talks "will not upset the timeline in any way in our view" of the overall TTIP negotiations. A spokeswoman for the Office of the U.S. Trade Representative did not immediately respond for a request to comment on the new EU plan.
EU Trade Commissioner Karel De Gucht said in a statement that he was launching the public consultation in order to give Europeans "their say" on how to strike a balance between protecting EU investors and upholding governments' right to regulate in the public interest. He pointed to "unprecedented" levels of interest in the TTIP negotiations in explaining the rationale for opening up the investment proposal to public comment.
But the announcement was met with skepticism from critics in EU civil society groups and the European Parliament, who want the commission to exclude an investor-state dispute settlement (ISDS) mechanism from the TTIP altogether.
De Gucht's statement does not say whether the commission is willing to fundamentally reassess whether to include an ISDS mechanism in any future TTIP investment chapter, or is simply asking for input on how the legal language for such a mechanism should be crafted.
The EU official declined to elaborate on this point, noting that "the political decision to take this step has only just been made." In the statement, De Gucht noted that he was given the authority to negotiate a deal that includes ISDS through a mandate approved by EU member state ministers last June (Inside U.S. Trade, June 21, 2013).
But the negotiating mandate makes the inclusion of investor protection and ISDS in TTIP conditional on whether a "satisfactory solution" can be reached on a series of investment objectives laid out by member states. Their inclusion should also be considered "in view of the final balance of the agreement," the mandate states.
In the TTIP talks, the commission has already put forth some initial text on investment provisions, but thus far nothing on ISDS (Inside U.S. Trade, Nov. 8, 2013). However, the EU has already agreed to ISDS in a trade deal with Canada, which one investment expert said makes it difficult for the EU not to do the same in TTIP.
In addition to De Gucht's public statement, the commission also announced its plans for the public consultation in an identical letter sent to the presidency of the EU Council, currently held by Greece, and to member state trade ministers, according to European officials.
In the letter, De Gucht issued a call for all EU trade ministers to reach out to their public and stakeholders to better inform them about TTIP and the investment issues and bring their input into the public debate, one EU official said.
The letter said one reason why the commission opted to launch the public comment process was to respond to attacks against the idea of including ISDS in the TTIP deal from non-governmental organizations (NGOs) and members of the European Parliament, according to an EU source.
The announcement comes amid a push by the commission to put forward a coordinated, positive message about the goals of TTIP (Inside U.S. Trade, Dec. 13, 2013). Many see that effort as aimed at avoiding the pitfalls that led to the demise of the Anti-Counterfeiting Trade Agreement, which was rejected by the European Parliament.
The lack of clarity from the commission on whether inclusion of ISDS mechanism is still up for debate was assailed by activists opposed to ISDS and the commission's current approach toward investment. Some saw the plan to open the investment proposal for public comment as a move designed to blunt criticisms that the TTIP negotiations have been non-transparent, rather than a signal that the commission is willing to seriously rethink its strategy.
Pia Eberhardt, a trade researcher and campaigner at Corporate Europe Observatory who has focused on investment issues, said her group welcomed the announcement, but noted that it leaves many questions unanswered. She also lamented that the commission was not willing to have a broader debate on other controversial aspects of the TTIP negotiations, such as its aim of making U.S. and EU regulations more compatible.
"Our experience with consultations with the EU in general is they are very much used by business to push their agenda, and the commission is willing to take [that agenda] on board," Eberhardt said. She added that the announcement could also "be a clever move to take the wind out of the sails" of those opposed to ISDS by trying to broadcast the image of the commission being open to all voices, when it may well have already made up its mind.
Marc Maes, trade policy officer at the Belgian Development NGO Coalition 11-11-11, was even more critical in his assessment. In an interview, he speculated that what the commission would really do is "take a three-month pause to convince the European public that what they're doing is good."
Both Maes and Eberhardt suggested that, unless the commission is willing to throw out ISDS altogether, many civil society groups would not be satisfied with the results of the public comment process.
Similarly, the European Parliament's second-largest political party, the Socialists and Democrats, responded to the commission's announcement by demanding the full exclusion of any ISDS measures from TTIP.
"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," the party said in a Jan. 21 statement reacting to the announcement by De Gucht.
"The European Parliament will have the final vote on whether to approve or reject the whole agreement. So the sooner we address the shortcomings, the better. We want to have a good agreement with the U.S., but we won't accept just any agreement," it added.
The commission also faces opposition to including ISDS in a TTIP deal from EU member states, especially those countries with whom the U.S. does not already have a bilateral investment treaty.
An EU official last fall also clearly indicated that the commission views the inclusion of an ISDS mechanism in TTIP as an opportunity to set the standard for future agreements (Inside U.S. Trade, Oct. 18, 2013). Both the U.S. and the EU are currently negotiating bilateral investment treaties with China.