trade treaty Support With Strings Attached

The European Parliament will try to give its blessing to talks for a trans-Atlantic free trade deal, on the condition that the biggest sticking point so far — how to resolve disputes between companies and states — is reworked to protect European laws and standards.
The TTIP drama continues inside.

In a vote on Wednesday, the European Parliament is expected to pass a resolution supporting the trans-Atlantic free trade deal, on the condition that any agreement prohibits private arbitration that could allow U.S. multinationals to challenge European food and environmental laws.

Lawmakers in the 751-seat assembly want the planned international arbitration courts to be replaced by a transparent system consisting of publicly appointed, independent judges resolving disputes in public hearings.

This is one of the most contentious issues and has so far been the main obstacle in talks: the so-called investor-to-state dispute settlement (ISDS) mechanism that large companies are calling for, which would allow them to appeal to international arbitration courts against regulations or laws that hurt their profits.

Three weeks ago, the president of the European Parliament, Martin Schulz, suspended a vote on the Transatlantic Trade and Investment Partnership (TTIP) because the differences between the two main political groups in the assembly, the conservatives and the center-left Social Democrats, were too great.

“He can’t afford to do that a second time,” said one member of parliament. He probably won’t need to. The two political camps have already agreed on the wording.

There has been massive opposition to the arbitration tribunals, especially in Germany, France and Austria.

However, the majority in Wednesday’s vote could be slim because about one in three Social Democrats remains skeptical about TTIP.

Every E.U. trade deal must be approved by the European Parliament, so any red lines marked out by the assembly will be an important signal for the negotiators on both sides of the Atlantic in the tenth round of talks due to start this month.

The talks started two years ago over the deal which would lower barriers between the world’s two largest economic blocs. The European Commission estimates that by 2027, the E.U.'s economy could be around €120 billion, or $133 billion, bigger and the U.S. economy €95 billion larger than they would be without TTIP.

But there has been massive opposition to the arbitration tribunals, especially in Germany, France and Austria, where critics branded them as a parallel justice system that would allow firms to water down consumer protection and environmental standards. A rise in anti-American sentiment hasn’t helped. It has been fueled this year by revelations of U.S. economic espionage in Germany.

“We don’t want TTIP at any price,” Gianni Pittella, head of the Social Democratic bloc in the European Parliament, told Handelsblatt. “We want a progressive TTIP with clear commitments to international standards in labor law, the exclusion of public services like water and health services as well as higher environmental and food standards. And private arbitration courts must be replaced, without any wiggle room for interpretation, by a new system to protect investments.”

At the end of June, the U.S. Congress strengthened President Barack Obama’s hand in trade talks. That, together with a clear 'yes' from the European Parliament on Wednesday, could ensure progress in the talks. Negotiators had hoped for a TTIP deal this year but even the European Trade Commissioner, Cecilia Malmström, has admitted that won’t happen. The aim now is to reach a framework agreement next year.

Trans-Atlantic Trade Talks1-01 TTIP

But the opponents of the deal remain vocal and numerous, and they have no intention of giving up. The pan-European “Stop TTIP” alliance, which consists of 480 organizations and has so far gathered 2.3 million signatures, urged E.U. members of parliament to vote "no" on Wednesday.

In an open letter, it said: “We now appeal to all Members of the European Parliament to take into account the declared will of 2.3 million citizens when considering their position and thus pass a strong resolution that calls for a stop to TTIP negotiations on the basis of the current negotiation mandate.”

“I can’t say if we will end up with an agreement,” Mr. Pitella said. “It doesn’t just depend on us but in particular on the Commission and the United States. But I am confident that we will in future organize our trade with the U.S. via TTIP. But it’s also clear that we will only agree to a deal that contains our most important demands.”

Business leaders, meanwhile, are banging the drum for TTIP. Fifty-three small and medium-sized business from the German chemicals sector last week passed a memorandum saying they were convinced the deal would guarantee deregulation, open markets and jobs in their sector.


Thomas Ludwig is a Handelsblatt correspondent in Brussels. To contact the author: [email protected]