Transatlantic Trade and Investment Partnership (T.T.I.P)

After the Second World War, Europe was divided into zones of influence of the US and the Soviet Union. Two decades after the Cold War, the transatlantic relations are completely changed, based on pragmatism.

During the Cold War, which lasted more than 40 years, the United States counsel was towards Europe, which was left outside the sphere of Russian influence. To support economic reconstruction of Europe and halt the advance of the Communist bloc to the West, the United States initiated the Marshall Plan, the US Congress being convinced that economic cooperation is the prerequisite for a lasting peace.

The financial support from the United States was offered to the European countries with one condition: the initiation of cross-border reconstruction plans and Economic Cooperation between the European countries, which led to the creation in 1948 of the European Organization for Economic Cooperation. One year later, most West European states and Canada joined to form the North Atlantic Organization (NATO) military alliance to oppose the Soviet bloc in the East.

In the late 80s, when the communist bloc disintegrated, transatlantic relations have gained a new dimension and cooperation between the US and the EC was formalized at the end of 1990 through the adoption of the Transatlantic Declaration. A further step was the adoption in December 1995 of the New Transatlantic Agenda, the base of the relationship between the US and the European Union.

Transatlantic Declaration established the institutional framework for consultation between the two powers, strengthening and intensifying cooperation on both sides of Atlantic. The meetings began to take place between Presidents, the President of the European Council and European Commission, and the US President. The New Transatlantic Agenda established the Framework for Action to achieve four major objectives through transatlantic cooperation: promoting peace and stability, democracy and development worldwide; tackling global issues; expansion of world trade and strengthening economic relations globally; transatlantic relationship for businesses, for scientists and academics.

Currently, the European Union and the United States are the largest bilateral trade partnership. In order to contribute to the strengthening and the competitiveness of the two economies, tens of billions of euro are allocated annually for research and development by European companies in the US and vice versa. The bilateral volume of transactions and finding optimal solutions for strengthening relations between the two powers diminish or even erase occasional disagreements between the US and the EU, which appeared over time in commerce, such as the issue of subsidies for agriculture or for aeronautics. Cooperation between the US and the EU reached a new level due to the involvement of the European Union in securing the world’s conflict zones. Although the methods of ensuring security offered by the EU (peacekeeping missions, humanitarian aid, measures to prevent or resolve conflicts, post-conflict reconstruction and security) are somewhat different from the US armed forces, lately the European Union emerged as an important entity in the world able to provide security, complementing US efforts.

The relations between the two parties are not confined to the commercial sector; equally important are the political and military relations. As two superpowers that dominated the international scene, they cannot remain indifferent to problems that arise in different regions or states. Cooperation in international affairs between the US and the EU is vital, since very often problems are too complex to be solved by only one of them.

It is well known that the two powers have different opinions regarding a number of important issues, such as the International Criminal Court, the Kyoto treaty, production and storage of landmines, capital punishment. However, it is undeniable that what separates them is far less important than what unites them: the values and objectives they share and aim to be globally achieved through cooperation – respect for the rule of law, human and minority rights, democracy, fight crime and terrorism.

Since mid-2013, the US government and the European Commission have been negotiating future Transatlantic Trade and Investment Partnership (TTIP), but the advancement of their discussions is harder than they originally believed. The most sensitive topic is related to the investor protection ISDS clause – which would require companies’ members to resolve disputes in independent arbitration courts.

The dispute about ISDS started badly in the first place. ISDS is a system that allows an investor to initiate proceedings against the authorities of the host country before an international tribunal. That can only happen if the investor can support that one of the four fundamental safeguards was violated: 1) protection against discrimination (most favored nation treatment and national treatment); 2) protection against seizure that is not of public interest purposes and which is not fairly compensated; 3) protection against unfair treatment – for example, denial of basic procedural fairness; 4) protection of the possibility of transferring capital. Disputes will be judged by the international commission composed of three arbitrators – a private system of justice created twenty years ago and which tends to become increasingly influential. According to a report published in 2012 by Corporate Europe Observatory and the Transnational Institute, these arbitrators tend to be an “elite group of lawyers”, which was characterized as “a closed circle or even a mafia arbitration”.

However, the US has made great improvements in this area. The Obama administration has adopted in 2012 a set of standard criteria for ISDS clauses negotiated by the US. These conditions affirm the right of the States to regulate in the interest of citizens (in other words, legislation affecting an investor cannot be a pretext for starting a case). Moreover, the US administration states that trade treaties signed by the US would require partners to effectively apply environmental legislation and working conditions. In parallel, the European Commission established a number of new conditions. We are actually witnessing a Euro-American settlement of the ISDS clauses that will become a global standard once TTIP takes effect.

The last issue where the US and EU got stuck on represents GMOs (genetically modified organisms) and protection of European traditional products with geographical indications. GMOs and geographical indications protected by European products on the market are two important issues that were discussed by US negotiators with the Europeans during the eighth round of negotiations, but no agreement has been concluded. Americans insisted once again to eliminate the European system of geographical indications, protection of traditional European brands on the market, but the EU refused to quit the system. Americans admitted that US-based biotech products must comply with EU procedures in order to penetrate the European market, but US negotiators insist that no restriction should be imposed without scientific basis.

Another burning issue is related to energy, where Europeans demand the establishment of a separate chapter in the future TTIP, to regulate the possibility of EU countries to import energy from the US. Europeans will thus be able to buy the American liquefied petroleum gas, inexpensive, to reduce energy dependence on Russia. Once again, the American negotiators did not agree on this new plan.

Nevertheless, one thing is certain: In negotiations with the US, the Commission would guarantee investors a high level of protection, maintaining at the same time, the right to regulate in order to meet public welfare objectives of the EU and member states.

Consulted work

http://www.tni.org/sites/www.tni.org/files/download/profitingfrominjustice.pdf
http://democracyctr.org/wp/wpcontent/uploads/2013/05/Under_The_Radar_English_Final.pdf
http://unctad.org/en/PublicationsLibrary/webdiaepcb2013d3_en.pdf

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