The European Parliament’s Committee on International Trade has given its go-ahead to the European Commission on the EU-US trade agreement, conceding that a controversial arbitration clause, albeit reformed, needs to remain part of the deal.
At the end of fierce horse-trading between political parties, the non-binding resolution negotiated through late into the night passed on Thursday (28 May) with 28 votes, 13 against and no abstentions.
MEPs urged negotiators to make sure the Transatlantic Trade and Investment Partnership (TTIP) would not undermine EU standards or governments’ right to regulate in the public interest, but also find a way to include a reformed Investor-State Dispute Settlement (ISDS).
“We have pushed very hard for this resolution to come to life, to send the strong message that the European Parliament will not simply accept any deal they are presented with. On the contrary, we have clear cut demands and red lines when it comes to the content of the agreement,” said the author of the parliamentary report and chairman of the Parliament’s International Trade Committee, Bernd Lange (S&D).
Despite the red lines and the call for a reformed ISDS, the response has been mixed.
The vote was hailed as a “victory for free trade” by the EPP’s spokesman on the committee, Christofer Fjellner. But it was criticised by German MEP Ska Keller (Greens) who said it was unclear whether the resolution excluded an ISDS or a reformed ISDS.
“This has been one of the hardest fought votes in the recent history of the European Parliament. It sends a strong signal that the European Parliament and citizens are keeping a close eye on the negotiations,” said Monique Goyens, director-general of the European Consumer Organisation (BEUC), which has been one of the most vocal critics of TTIP negotiations.
“Deplorably, the European Parliament took a very ambiguous stance on the infamous ISDS system. We have yet to see any facts justifying its inclusion in an EU-US trade deal,” she said.
Currently, the ISDS system allows investors to take governments to international arbitration tribunals rather than to domestic courts.
Even though the US has insisted that ISDS be included in the landmark free trade agreement, the Commission proposed to reform the system following widespread protests across Europe.
The Commission proposed steps that can be taken to transform ISDS into a system which functions more like traditional courts. That involves the appointment of permanent arbitrators, with similar qualifications to those of national judges, and the introduction of a bilateral appeal system.
In parallel, the EU wants to work towards the establishment of a permanent multilateral investment court with tenured judges, who would replace the bilateral mechanism over time.
Even though MEPs seemed unimpressed with the Commission’s proposal, they did in the end give it qualified support. However, the resolution is due to be put to a full plenary vote in the European Parliament in June.
“This resolution is the beginning of the end for ISDS, a development which is long overdue,” said Lange.
MEPs have also urged negotiators to safeguard EU safety standards in areas where US regulation is “very different”, such as authorising chemicals, cloning or endocrine-disrupting chemicals. The EU “precautionary” principle must be respected, they insisted.
Lawmakers have also insisted on eliminating excessive procedures for vetting imports on food and plant health grounds, favouring mutual recognition of equivalent standards.
On the long-contentious agriculture sector, MEPs have also underlined the need to eliminate all customs tariffs, drawing up an ‘exhaustive list’ of “sensitive agriculture and industrial products” which would either be exempted from trade liberalisation, or subject to a longer transitional period.
MEPs asked EU negotiators to make every effort to insert a “safeguard clause”, reserving the right to close markets for specific products in the event of import surges that threaten to cause serious harm to domestic food production.
They also asked for the US to lift its ban on EU beef imports and include strong protection for the EU’s geographical indications system.
Liberal MEP Marietje Schaake commented, “High European standards for products that protect consumers or the environment cannot be affected by a trade agreement. Public services such as education and drinking water, certainly do not belong in this agreement.”
EU-US partners have gone through nine rounds of negotiations since summer 2013 and are aiming for December 2015 to agree on a draft text. But officials close to the negotiating table consider mid-2016 as more realistic. The next round of talks will take place in July.
“We need the EU and the US to work together to set higher standards worldwide when it comes to food safety, the environment, health or labour. That is essential in a rapidly changing world with emerging economies that do not share our values and rules-based approach,” added Schaake.