By Brian Wingfield – May 20, 2013 9:03 PM GMT+0200 on Bloomberg
The European Union’s top trade negotiator said he opposes excluding or carving out categories of goods from an agreement now being negotiated that would create the world’s largest trading region.
“I’m against carve-outs because I believe that when you aim at a comprehensive agreement it should be possible to discuss about everything,” Karel De Gucht, trade commissioner for the 27-nation European Union, said today during an interview for “Bloomberg TV’s MoneyMoves with Deirdre Bolton.”
If concluded, a U.S.-EU accord would create a trading area that would account for almost half of the world’s economic output, according to the U.S. Trade Representative’s office. Officials from each side have said they plan to complete negotiations by the end of 2014.
De Gucht in a separate interview said “you would easily lose six months” if the talks aren’t complete by the time the next European Commission takes office in November 2014. “Let’s not speculate about it, because it’s not giving us a lot today,” he said.
Negotiators plan for the bilateral accord to lower tariffs on trade between the partners, which would reduce costs for U.S. exporters including Dow Chemical Co. (DOW) and Boeing Co. (BA) by about $6.4 billion a year, according to a Nov. 2 study from Bloomberg Government. President Barack Obama, EU President Herman Van Rompuy and European Commission President Jose Barroso on Feb. 13 pledged to pursue a trade agreement.
“If we manage to have an agreement, I’m sure that it would give an important boost to our economies, also to the world economy,” De Gucht said. “I think we would be able to establish, in a lot of domains, norms and standards that become the benchmark worldwide.”
The pact would cover so-called 21st century issues including Internet data-flows, financial services and smaller companies’ access to international markets. The transatlantic trading partners in the past have disagreed over issues including farm subsidies, health and safety rules and regulatory standards that pose a challenge to completing the talks within 18 months.
Disagreements over agricultural trade that have weighed on previous bilateral efforts may bog down discussions, said James Grueff, a former negotiator for the U.S. Department of Agriculture.
Issues including health and farm- and food-safety standards “are not going to be resolved between July of this year and December of 2014,” he said said May 17 at Washington International Trade Association event. “There is a certain disconnect” in saying that these issues are open to negotiation and expecting them to be resolved within the next 18 months, he said.
De Gucht said he isn’t daunted by the scope of the talks.
“Whether it’s too big to succeed, I don’t think so,” De Gucht said. “But it’s certainly too big to fail.”
Chevron calls for strong investor rights chapter in US-EU trade deal; will be able to use CETA to challenge EU policy in meantime
Stuart Trew, Tuesday, May 14th, 2013
U.S. energy giant Chevron (profits $26.2 billion USD) is encouraging the United States to pursue a strong NAFTA-like investment chapter and investor-state dispute settlement process in the proposed Transatlantic Trade and Investment Partnership (TTIP) with the European Union. The company, which attracted global outrage for using these kinds of rules to try to avoid paying an Ecuadorian court-ordered $18-billion penalty for horrific contamination of the Amazonian rainforest, is now calling for “the strongest possible protection” from government measures in Europe that might interfere with its investments.
Chevron makes the comments in a submission to a United States Trade Representative consultation on the proposed TTIP which, if negotiations begin as expected in June, will look much like the Canada-EU Comprehensive Economic and Trade Agreement (CETA), now in its fourth year of negotiations. The Canada-EU deal will also include an investor-state dispute process that will threaten environmental and public health policies related to big resource projects on both sides of the Atlantic.
This month, the Council of Canadians, Corporate Europe Observatory and Transnational Institute released a report–The Right to say No–on how the investor “rights” chapter in CETA threatens bans or strong regulations on shale gas extraction (fracking) in Europe. The Chevron submission to the USTR justifies our concerns and will likely strengthen European resolve against including these investor protections in either the US or Canadian agreements.
“A strong investment protection regime within the TTIP would allow us and other U.S. businesses to better mitigate the risks associated with large-scale, capital intensive, and long-term projects overseas,” writes Chevron VP Edward Scott in a letter to USTR dated May 7, 2013. “Robust investment protections enable Chevron, and companies like us, to put our capital at risk in order to provide the energy required to fuel economic growth and energy security.”
What he means, of course, is that Chevron doesn’t want to take any risk when it invests in fracking or controversial offshore energy projects in Europe. Providing for the world’s fossil fuel needs (or perpetuating our reliance on dirty oil and gas, depending on your perspective) is a public service, according to the VP. If a community, including countries that are banning fracking for environmental or public health reasons, wants to get in the way of Chevron’s projects, it should have to pay the company for lost business opportunities.
Chevron calls on USTR to make sure the TTIP’s investment provisions:
– “Oblige” the Parties (U.S. and EU, including member states) to “accord fair and equitable treatment to covered investments,” including an obligation “to refrain from undermining legitimate investment-backed expectations.” Translation: if the company’s hopes are dashed–e.g. a future government wants to stop fracking–it should be able to claim it has been treated unfairly under the treaty.
– “Oblige the Parties to accord full protection and security to covered investments,” which European and U.S. legal systems already do (you generally can’t invade a mine or refinery and expect to get away with it). But tribunals have expanded the definition of full security beyond situations where physical property or people are harmed or threatened. For example, in the Biwater vs. Tanzania case related to a water concession, the tribunal said the term “full” protection “implies a State’s guarantee of stability in a secure environment, both physical, commercial and legal,” and that, “It would … be unduly artificial to confine the notion of ‘full security’ only to one aspect of security, particularly in light of the use of this term in a [bilateral investment treaty], directed at the protection of commercial and financial investments.” (Quoted in an International Institute for Sustainable Development report.) Like the fair and equitable treatment rules, this clause includes the “right” to a stable business environment, or for policies to never change over the course of the investment.
– Provide rules on expropriation and the requirement to promptly pay the company when it happens, presumably not just for actual seizure of property or investments but when environmental or other laws or policies have the effect of lowering profit expectations (indirect expropriation), even if the policies are legitimate protection measures that do not discriminate against Chevron.
– Define a covered investment in the treaty “as including both existing and future investments,” which Chevron says “is critical to sectors, such as energy, with a long investment timeline and enormous existing investments.” In other words, the company’s plans down the road should be treated as if they must happen unless the company decides to change them itself. Depending on how the TTIP, or Canada-EU deal for that matter, are worded, this could apply to investments Chevron simply wants to make in Europe but which may be blocked by an EU or member state decision related to what kind of investment it is (e.g. fracking in an environmentally sensitive area).
Chevron concludes its submission on the importance of a strong investor-state dispute process, which it admits “is being challenged by some governments today as an unwarranted infringement on their sovereignty.” Those governments include Australia and a group of Latin American countries who are cooperating to mitigate, reform and possibly replace the current investor-biased model with something that recognizes a community’s right to set policies without fear of multi-billion dollar corporate lawsuits.
With its substantial investments in Canada, Chevron will be able to use any investor-state dispute process in CETA to challenge European fracking bans and other policies that it feels violate the rights mentioned above. It’s one of the reasons more than 70 European, Canadian and Quebec organizations signed a declaration against including these excessive investor “rights” in CETA. The statement concludes:
We will vigorously oppose any transatlantic agreement that compromises our democracies, human and Indigenous rights, and our right to protect our health and the planet. We urge the EU and Canadian governments to follow the lead of the Australian government by stopping the practice of including ISDS in their trade and investment agreements, and to open the door to a broad re-writing of trade and investment policy to balance out corporate interests against the greater public interest.
If CETA does give Chevron and companies like it everything they’re looking for, the U.S. will be under pressure to adopt the CETA investment model in their own TTIP. Though the United States has never lost an investor-state dispute, probably for fear that it would create a backlash against the process, investment arbitrators might be less hesitant when it’s a European firm making the challenge.
To read more about the increasing use of investor-state dispute resolution, and why reform is overdue, see Corporate Europe Observatory and TNI’s recent report, Profiting from Injustice: How law firms, arbitrators and financiers are fuelling an investment arbitration boom.
Posted Friday, May 10, 2013
Inside U.S. Trade – 05/10/2013
The United States and European Union have tentatively set the dates for the first three rounds of negotiations for a bilateral trade agreement — starting in the second week of July — as part of their ongoing preparatory work, according to informed sources.
The two sides have agreed to hold the first negotiating round in the week of July 8 in Brussels, followed by a mid-September round and a mid-December round, according to these sources. In a related development, the U.S. will also participate in a July round of the Trans-Pacific Partnership negotiations that may take place from July 15 to 25, sources said.
The timetable for the U.S.-EU talks is based on the assumption that each side can complete its domestic processes necessary to launch negotiations roughly by mid-June, sources said. This would set the stage for the launch of the negotiations shortly after the June 17-18 G-8 leaders summit chaired by British Prime Minister David Cameron. It is unclear at this time whether the launch will be accompanied by a political declaration of U.S. and EU leaders, business sources said.
Cameron has pledged to use the UK G-8 Presidency to help generate growth, jobs and prosperity for the long term by focusing on promoting free trade, tackling tax evasion and encouraging greater transparency and accountability, according to his agenda posted on the official UK G-8 website. He will meet with President Obama in Washington on May 13, when the two leaders will discuss “Syria, trade and economic cooperation, countering terrorism, and priorities for the upcoming G-8 Summit,” according to a May 8 White House press release.
In the U.S., there has been no organized opposition to any of the issues raised by the U.S.-EU deal, sources said. Members of Congress that are aware of the proposed negotiations generally view them positively, they said. However, if the EU sought significant carveouts from the negotiating agenda, it would cause an enormous problem for key members of Congress, sources said.
In a related development, the House Ways and Means trade subcommittee has scheduled a May 16 hearing on the U.S.-EU trade negotiations, according to a May 9 announcement from subcommittee Chairman Devin Nunes (R-CA). In the statement, he referred to the negotiations as “an opportunity for the United States to resolve long-standing regulatory barriers, and, in particular, regulatory barriers not based on sound science that block our agriculture exports.”
The notice does not announce who will appear as witnesses at the hearing.
The hearing falls within the 90-day notification period triggered by the Obama administration’s formal notification of Congress that it intends to enter into the negotiations. The administration notified Congress on March 20, which means the layover period ends after June 20.
EU member state representatives meeting in the Trade Policy Committee (TPC) last week began a discussion on a revised draft of the negotiating mandate provided by the European Commission, according to informed sources. Following the May 3 TPC discussion, Hans Straberg, the European Co-Chair of the TransAtlantic Business Dialogue, said this week he saw nothing to suggest that the EU could not meet its goal of having the mandate approved by a council of trade ministers in mid-June.
At this point, member states are still debating the extent to which the mandate should protect the audiovisual sector from foreign competition in line with existing EU rules. But EU sources said they believe if the EU seeks to carve out audiovisual services, it will lead to efforts by the U.S. to carve out sensitive sectors, such as air services. In that area, the EU is interested in seeking to liberalize the equity caps for foreign investment in U.S. airlines, business sources said.
The French government has exerted major political pressure on the commission to ensure a carveout for the audiovisual sector, but it is not the sole advocate on this issue, one source said.
According to this source, there is no unified front of member states against the French demands. For example, the German government does not yet have a unified position on this issue, though the German Economics Ministry opposes a carveout for the audiovisual sector, he said.
No other issue has gotten quite the degree of political attention from member states as the cultural exception, a U.S. business source said. For example, the German government has raised objections to the Commission’s proposed approach to investor protection, such as minimum standards of treatment (Inside U.S. Trade, April 5). But that opposition seems to have eased off somewhat, though Germany formally still maintains a reservation on this issue, one source said.
Spain’s minister for trade last week said that the coverage of audiovisual services is likely to be the only “serious difficulty” in crafting the final mandate, citing heavy opposition from both the French and Belgian delegations (Inside U.S. Trade, May 3). Sources last week said that there would likely be at least one more draft mandate before a final vote is held.
EU member states will likely approve the mandate unanimously, as opposed to taking a qualified majority vote, business sources said.
Inside U.S. Trade – 05/10/2013, Vol. 31, No. 19