TAFTA/TTIP – EU, US say hard to imagine trade deal without investor protection

A trade deal between the United States and Europe is hard to imagine without strong investor protection, US Trade Representative Michael Froman said on Thursday (30 October), hours after outgoing Commissioner Karel De Gucht said the US may break off talks unless Europeans show a firmer willingness to include investment-protection provisions in any deal.

Negotiations on the so-called Investor-State Dispute Settlement or ISDS have been frozen after criticism in Europe and the European Commission is digesting the results of a public consultation before deciding how to go ahead.

The clause would allow foreign investors to use arbitration panels instead of domestic courts to make claims against a national government when an investment is harmed, for example through expropriation. Some politicians in the EU oppose the clause because of the potential limits it places on governments’ ability to regulate in the public interest.

Froman said including investor-state dispute settlement provisions would not impinge on a government’s ability to regulate in the public interest.

« It’s hard to imagine a high standard agreement … that does not have a high standard of investor protections as well, » he said at the Washington Ideas Forum.

EU lawmakers have said they will reject any Transatlantic Trade and Investment Partnership (TTIP) agreement that contains investor protections and Germany, the bloc’s biggest economy, also opposes such provisions.

But US.business groups are adamant the TTIP must include ISDS, or risk setting a bad precedent for investment negotiations with other countries, such as China.

It would be hard to line up American support for a deal which did not include ISDS, said US Council for International Business vice president for investment and financial services, Shaun Donnelly.

The Commission expects to make a decision on ISDS by the end of the year with the new Commissioner Cecilia Malmström of Sweden in the driving seat. In her confirmation hearing last month, Malmström flagged the possibility of designing « a new system that addressed all people’s concerns. »