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Spotlight: Stumbling blocks may drag U.S.-EU trade talks beyond Obama administration

2015-October-23       Source: Xinhuanet.com

Negotiations on a landmark U.S.-EU free trade deal could drag beyond the end of the Obama administration in January 2017, with contentious issues ranging from investment protections.

Negotiations on a landmark U.S.-EU free trade deal could drag beyond the end of the Obama administration in January 2017, with contentious issues ranging from investment protections, data flows to regulatory coherence unlikely to be worked out before the U.S. presidential campaign heats up next year, experts said.

U.S. government officials had intended to conclude negotiations on the Transatlantic Trade and Investment Partnership (TTIP) with the EU on "only one tank of gas," which means "just going to the gas station only once," said Joaquin Roy, Jean Monnet professor and director of the European Union Center at the University of Miami, referring to a metaphor used by U.S. officials to indicate to get the TTIP done within President Barack Obama's term of office.

"This didn't happen yet. You will need possibly three or four trips to the gas station," Roy told Xinhua on the sidelines of the 11th round of the Atlantic free trade talks, which runs from Monday to Friday in Miami, Florida.

The U.S. and EU leaders had initially set a timetable for completing an agreement for TTIP by late 2014. But the negotiations moved very slowly amid rising political and public resistance to the deal on both sides.

The Business Coalition for Transatlantic Trade (BCTT), a group spearheaded by U.S. business associations to promote the TTIP negotiations, has expressed frustration at the trade talks so far.

"Yet, two years on, repeated expressions of political support for an ambitious outcome are not translating into progress at the negotiating table," the coalition said in a letter to U.S. Trade Representative Michael Froman and the EU's Trade Commissioner Cecilia Malmstrom last month.

"Too many red lines are being drawn, and political decisions needed to break impasses at the negotiating table have not been forth coming," the coalition said, urging negotiators to "halt the drift" in the talks by "insisting on substantial progress on all issues" from both sides during the current negotiating round in Miami.

Some trade experts said one of the reasons the TTIP talks have not made much progress is because the Obama administration has made concluding the Trans-Pacific Partnership (TPP) negotiations as top priority.

Trade ministers from the United States and 11 other Pacific Rim countries reached a final deal on the TPP earlier this month after over five years of marathon talks. It still needs to be ratified by 12 member countries.

"Certainly it's true there are issues negotiators discussed in TPP will also be considered in TTIP. So it's understandable, on the one hand, European negotiators would want to wait and see the outcome of TPP," Marjorie Chorlins, vice president for European Affairs at the U.S. Chamber of Commerce, told Xinhua Wednesday after giving a stakeholder presentation regarding the TTIP talks to negotiators and reporters here.

"But practically speaking, that's not really an excuse for making greater progress now," Chorlins said. "We think more progress can be made if both sides redouble their efforts."

Roy, the professor from the University of Miami, however, believed it's natural for the Atlantic talks to move slowly as it's a very complicated and important trade agreement between the U.S. and the EU, and officials on both sides face great public pressures to improve the transparency of ongoing trade negotiations.

"There are issues subject to controversy and checks and balances. It's not going to be easy. It's not going to be fast," Roy said, pointing out areas of cultural, linguistic issues, the process of food, mutual recognition of regulations and labor provisions as potential stumbling blocks in the TTIP talks.

The investor protection mechanism known as investor-state dispute settlement (ISDS), which allows foreign investors to take governments to court if they feel that they are being discriminated against, in particular, has drawn widespread public concern on both sides.

The EU last month introduced an updated dispute-resolving system, dubbed "the Investment Court System," to establish a global arbitration court to replace the existing ISDS mechanism that U.S. negotiators want to be included in the TTIP trade deal.

There are "fundamental" changes compared with the old ISDS system which operated on an ad-hoc basis with arbitrators chosen by disputing parties, said the European Commission, the EU's executive arm, adding the changes represented "a new era" in the settlement of investment disputes.

But U.S. business representatives hit back at the EU's plan, calling it deeply flawed. "The Commission has faced tremendous public outcry in response to, frankly what I would argue is, a misguided and misinformed debate about what the ISDS does and doesn't do," Chorlins said. "Our business view is that it doesn't necessary meet the level of requirement of protections that investors should realistically expect when they are investing in a country. That's why we said the proposal as the Commission put forward is not acceptable to our members. It has to be considered at best as a starting point of conversation between negotiators."

"The fundamental concern that we and many other legal experts, government officials and civil organizations have raised is that the ISDS empowers one class of investors, foreign investors, to have a special court system that is not available for citizens and domestic businesses," said Melinda St. Louis, director of International Campaigns with Public Citizen, a consumer advocacy organization in Washington D.C..

"That fundamental concern is not addressed" by either the U.S. or the EU proposal, St. Louis told Xinhua after giving a stakeholder presentation against the investor protection regime here.

The recent ruling by the European Court of Justice (ECJ) that a crucial transatlantic data-sharing deal, which allows American tech companies such as Facebook to transfer users' data from the EU to the United States, is invalid will also cast a shadow over the trade talks.

That could be one of the most sensitive issues to "slow down the process" of the TTIP negotiations, Roy, the University of Miami professor, said, adding that some European interest groups distrust the U.S. policies and systems about sharing the sensitive data.

The U.S. and EU may have to reach a full agreement on TTIP before April 2016 if they want to conclude the trade talks under the Obama administration. After that, it will not be "the right time" to have real negotiations on the TTIP because of U.S. presidential campaigns, Roy said.

Roy believed the TTIP talks are more likely to drag beyond the end of the Obama administration as officials and negotiators in Europe next year will also have to prepare for a referendum on whether the UK should remain in the EU, in addition to upcoming national elections in Germany and France.

"I think it's very difficult to assess what is the likely frame for completing these negotiations ... we're dealing with some very very difficult issues," said Chorlins, vice president for European Affairs with the U.S. Chamber of Commerce. "But we also think there's a path forward to conclude a good agreement in a timely fashion."

Editor: Yishan

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