The Transatlantic Trade and Investment Partnership (TTIP) is an international agreement which is being negotiated between the EU and the US: if concluded and ratified, TTIP will have a great impact on the economic, social and legal fabric of the parties. It is about establishing a free trade area representing half of the global GDP and a third of the world market. The negotiation of the Treaty is carried out by the EU: according to the provisions of the Lisbon Treaty, it has exclusive competence in the field of foreign investment. However, TTIP’s entry into force is subject to the ratification by all member states: for such reason, it is expected that TTIP would come into force progressively, chapter by chapter, in order to prevent that the block of one country on a single matter may affect the entry into force of the whole set of rules.
It is actually a very complex text, designed to regulate and modify many subjects of great public importance, and may have a strong impact on the laws, economy, society and culture of the parties involved. This is the first reason which leads me to qualify TTIP as a “new generation treaty”: it has an extraordinary and pervasive impact on the laws of the Contracting Parties.
The first object of the Treaty will be the complete removal of tariff barriers; the incidence of this measure, however, will not have dramatic effects, since these kinds of barriers today affect the price of goods by an amount of about 3% on average. Much more important for the US-EU trade will be the removal of non-tariff barriers, that is, all noneconomic measures that hinder trade between the parties: administrative authorizations, technical standards and regulations, and other requirements that are imposed on the companies wishing to offer their goods and services in the State of importation. In addition, non-tariff barriers represent one of the most difficult chapters of the negotiations for the TTIP, because of the strong impact it has on protection of public order, the environment, life and health, market stability, whose regulation is generally considered an absolute prerogative of domestic legislation.
TTIP shall concern many sectors and many standards: inter alia, the market for medical devices, involving the protection of public health, but also the issues of intellectual property and free enterprise; the IT sector, for which the TTIP is a great opportunity to allow for certain shared rules between the EU and the US on, for example, data protection; the market for audiovisual services, for which the defensive strategy of the EU (the negotiating mandate expressly provides for the exclusion of audio-visual services for the already mentioned reasons of public morals), contrasts with the US goal of opening a new market in Europe for the expansion of its strong domestic sector. Negotiations are also involving the disputed issues of environment, health and consumer protection. One of the main differences in public policies and legislation on these issues is the so-called “precautionary principle”. Europe applies this principle, as defined by Communication 1/2000 of the European Commission: the lack of scientific certainty on the non-harmfulness of a choice must lead to the non-implementation of the same.
The US approach is diametrically opposed, with significant consequences on some of the topics of the negotiations, such as the regulations on food and Genetically Modified Organisms. On this particular juncture, the US traditionally pushes for the removal of barriers with regard to the research and trade in Genetically Modified products. But on the food regulation we can see a very defensive position by the United States regarding the designation of origin and the protection of traditional products: the EU’s objective on this point will be that of extending the recognition of the characteristics of “protected” food products , in order to increase the power of European producers and trademarks in the US market. The possibility of a chapter involving energy and raw materials remains still uncertain, while on public procurement the EU has demonstrated a “high level of ambition”, with the intention to convince the US to open its access to market in transport, infrastructure and environment for European companies.
The second element of innovation is given by the considerable public attention to the negotiations. The European Commission, receiving the mandate for negotiation by the Council, has opted for a certain level of transparency on the TTIP negotiations, which represents an exceptional circumstance in respect to the secrecy that usually characterizes the intergovernmental negotiations. The Commission has indeed decided to declassify the mandate received from the Council, which sets out guidelines and “poles” to be respected in the negotiations. In addition, the Commission opened a few stages of public consultations on the various issues considered in the TTIP, one of which covered, for example, the protection of investments and the investor-state dispute settlement (ISDS), the results of which were recently published.
The transparency adopted by the Commission is a good fact from the point of view of the democratization of a process that could have important effects on the lives of European citizens, but on the other hand is a bad fact for the negotiators, who will have to play a game of poker with their cards on the table. Nevertheless, the TTIP has already found many detractors in both shores of the Atlantic Ocean. The area of the anti-globalization movements is afraid that TTIP will increase even more the power of multinational corporations over the lives of citizens.
The major censures raised against the TTIP are related to regulation of investments. In this context a trend is taking place for the protection of foreign investors in the host country, which must nevertheless not affect the right of the host State to legislate in accordance with its public interest. On the other hand, we must be aware that greater protection of national sovereignty has the effect of discouraging foreign investors. Closely connected with the protection of foreign investments, is the provision of an arbitration mechanism for the settlement of international disputes on investments (investor-state dispute settlement), currently already provided for in the trade agreements with Singapore and Canada signed in October 2014. The model follows the one encoded by the Washington Convention of 1965 in relation to settlement of Investment Disputes between States and Nationals of Other States (ICSID), frequently referred to in over 1,400 bilateral agreements that the EU member states have contracted in the field of investments.
On this issue, the Commission had to soften its position and is now considering some ways out of the impasse created by the opposition of the European Parliament, expressed in a highly critical report. Trade Commissioner Cecilia Malmström tried to convince MEPs that there are ways to keep the Investor-State Dispute Settlement in the Transatlantic Trade and Investment Partnership deal. The Members of the European Parliament observed that the proposal is a step in the right direction, but it still does not go far enough to restore public confidence on the issue. “We need reassurance that standing in court is a clear commitment and not merely part of a plan for the future. The Commission must take this into account, as well as the other demands we have outlined, if we are to support the agreement in the European Parliament” said S&D MEP Bernd Lange, who chairs the international trade committee in the European Parliament, and is also the author of the parliamentary report on TTIP.
“We need an investment protection chapter in TTIP, but not ISDS” said the MEPs. The Commission’s proposal supporting what has already been achieved in the EU-Canada Comprehensive Economic and Trade Agreement (CETA) was considered insufficient. The proposals to have a permanent investment court with full-time judges, and a clear appeal mechanism, is a possible option. A diplomatic source revealed that France is working on a proposal to reform ISDS, which will be soon unveiled and sent to the European Commission. France has pushed for a thorough reform of the system in the past, advocating the establishment of an international court.
The third element which makes TTIP a “new generation treaty” is the great economic importance of the agreement, which is likely to have a strong impact on the entire global market. Official sources estimate that TTIP will have a positive impact on the economy of the contracting parties, with an increase in the EU GDP of 120 billion Euro and the US GDP of 95 billion Euro. TTIP is also an attempt to give an answer to the growing need to govern globalization at the level of global economy, and to support technological innovation also through a stronger protection of investments and intellectual property rights in a common framework. Alongside the economic reasons for the conclusion of TTIP, there are the political ones: on the one hand, the decline of the US hegemony in the economy and international politics, and the ensuing need of the US to reassert itself as a trading power; on the other, the interest of the EU to strengthen trade and political relations with the US for a better management of the challenges posed by the relations with Russia, the crisis in Ukraine and Syria, and the fight against terrorism.
We must also consider that the TTIP, if it will enter into force, will be open to adherence by other countries. It will then become the legal background to which a country must adhere if it wants to enter with its companies the largest market in the world as an equal partner. This is one of the reasons that have led the debate on TTIP up to a world level. At the last round of negotiations in late April 2015, held in New York, protests were organized in over 700 cities around the world, from New Zealand to South America. In Germany alone, there were 200 events scheduled, and 40 in Italy. The Italian Prime Minister Matteo Renzi said: “2015 must be the year of change, not only because we know that with TTIP Italy has everything to gain from an economic point of view, but mainly because while the US is signing agreements with China and other actors, we, who have a strong historical collaboration with the US, have to do the same”.
The TTIP is thus a valuable opportunity for the revival of the European economy and the Atlantic alliance, as well as a strong instrument of international policy and a lever of integration with the North American region. If concluded, TTIP would be the world’s biggest trade deal, linking about 60 percent of the world’s economic output in a colossal market of 850 million consumers, creating a free-trade corridor from Hawaii to Lithuania.
On the other hand, we cannot ignore the voices of those who consider TTIP as a threat: Paul Krugman has bitterly contested the optimistic forecasts of the European institutions in an article in the New York Times, on December 12, 2013, and Joseph Stiglitz, who in an interview released on September 23, 2014, underlined the serious consequences to health standards, the environment, the security of European citizens. These risks are real, and the outcome of the negotiation will in great part depend on the ability of the European negotiators, in seeking a difficult balance between the urgent need to give a new impetus to the common market and the need to guarantee European citizens the high standards of protection enshrined in their constitutional principles, by the Lisbon Treaty and the Charter of Fundamental Rights of the European Union.
In conclusion, the TTIP represents an historical point of transition from an old way of thinking about international politics and the relations between states. It is destined to have a great impact on the legislation of the contracting parties, so as to look more like a program of internal reforms than a trade treaty. It is subject to extraordinary attention by public opinion, and has a level of transparency in the negotiations which, although perhaps not yet sufficient, particularly on the US side, is completely innovative in the panorama of intergovernmental negotiations. Finally, and this is the most important element, the TTIP today is negotiated between two non-state, but regional, entities representing a significant share of the world GDP and the largest market in the world; consequently, its impact is likely to expand over the whole world.
It thus represents a new form of international treaty, or rather a new generation treaty, which is part of a global scenario and of modern international politics. Will Europe be able to seal the treaty and avoid missing yet another train, and at the same time will it successfully protect the interests and rights of its 500 million citizens?
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