BRUSSELS: The woman likely to become the EU’s new trade chief sought to reassure lawmakers yesterday that US companies will not be able to challenge Europe’s safety and environmental rules if Brussels and Washington agree the world’s biggest trade deal.
Sweden’s Cecilia Malmstrom (pictured) told the European Parliament she did not rule out removing contentious investment protection provisions from the pact if Europeans believed they would allow US firms to circumvent EU rules and standards.
She also said Russia would not be allowed to amend a planned free trade deal between the European Union and Ukraine, ratified last week, on which implementation has been delayed for 15 months to provide time to overcome differences with Moscow.
Russian President Vladimir Putin has threatened to take action against Ukrainian economic ties with Russia if the wide-ranging free trade accord is implemented.
Consumer groups, unions and some European governments fear US multinationals will gain too much power if the United States and the EU include an investor-to-state dispute settlement procedure that allows companies to bring claims against a country to an arbitration court.
“There are several problems with the investor-state dispute settlement mechanism as it exists today ... I don’t exclude it will be taken out,” Malmstrom said at a confirmation hearing for the powerful position of Europe’s chief trade negotiator. “We will not sacrifice the EU model for the benefit of free trade,” she said in a three-hour hearing dominated by the issue of investor protection in a proposed US accord.
However Malmstrom, a pro-free trade liberal, cautioned that such a move could have consequences because Washington and Brussels wanted their free-trade deal to serve as a global standard for China, India and others. “We need this mechanism in trade agreements with other countries,” she said.
The issue of how companies can challenge a country in a trade treaty has become one of the most contentious in EU-US trade talks, with Germany saying it cannot accept the dispute mechanism in the pact. But both the United States and outgoing EU Trade Commissioner Karel De Gucht have warned that Washington will not sign a trade deal without such investor protection provisions.
US and EU negotiators hold a seventh round of talks in Washington this week, seeking to keep up the momentum for a deal that could encompass half the world’s economic output and generate $100bn a year for both sides in economic gains.
The same issue of investor protection provisions also threatens to complicate the EU’s trade accord with Canada, which still needs to be ratified by the European Parliament. Reuters
