EU-US Transatlantic Trade and Investment Partnership – Update

This briefing summarizes recent developments relating to negotiations between the European Union (the EU) and the United States (the US) on a Transatlantic Trade and Investment Partnership (TTIP), in particular the last round of TTIP negotiations, which took place in Brussels from July 13 to 17, 2015.

This briefing also discusses the European Parliament’s recommendations to the European Commission (the Commission) in relation to TTIP; a Commission document summarizing the EU’s position regarding the protection of public services in EU trade agreements; and the Commission’s summary of a May 27, 2015 meeting on the EU position on health issues.

The next round of TTIP negotiations is expected to be held in Washington DC, in September 2015.

According to an official press release issued at the conclusion of the tenth round, EU and U.S. negotiators focused on consolidating their work in all three pillars of the negotiations, especially as regards: (i) market access; (ii) regulatory cooperation, covering both horizontal and sectoral elements; and (iii) rules. Special attention was dedicated to pharmaceuticals, competition, investor-to-state dispute settlement (ISDS) procedures and SMEs.

Market access

With regard to market access, EU and U.S. negotiators reached an important milestone when both sides exchanged revised services offers and the EU tabled a proposal for revised services chapters. Mr. García Bercero, the EU’s chief negotiator, confirmed that tariffs and public procurement remain essential elements of the negotiations, although they were not discussed in this last round.

Regulatory cluster

Mr. García Bercero reported that a lot of time was dedicated to the regulatory pillar, resulting in a significant convergence that comprise of five elements:

• Agreement on good regulatory practices;
• Ambitious chapters on technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures;
• A framework to facilitate regulatory cooperation in the future; and
• Greater regulatory compatibility in nine key sectors, including cars, medical devices and pharmaceuticals.

Mr. García Bercero provided an illustration of the work done in the pharmaceutical sector. Regulators have reviewed the work being conducted by both parties on assessing good manufacturing practices (GMP), which ensure that pharmaceuticals are available to consumers and are produced with the highest protection standards. Regulatory cooperation has led to compatible regulations permitting a single development programme for biosimilar medicines. This will avoid duplication in the generic medicine industry and could lead to greater availability of cheaper biosimilar medicines for patients.

Finally, Mr. García Bercero reiterated the principles on which the regulatory discussions are based:

• Nothing done in the regulatory area will reduce any standards of consumer, health, labour or environmental protection;
• Regulatory cooperation must be based on mutual interests and be led by the regulators from both sides; and
• Future decisions will be adopted according to the domestic regulatory frameworks of each side.

Rules

In the area of rules, discussions focused on competition, customs, trade facilitation, energy and raw materials and SMEs. Sustainable development was not discussed, because the EU is finalizing a proposal in this area for presentation to the U.S. in September.

On July 8, 2015, the European Parliament approved recommendations to the Commission’s TTIP negotiators – the so-called Lange Report. Once the TTIP negotiations are complete, the final text would need the Parliament’s backing. The vote was initially scheduled for June 10, but it was delayed due to controversy over an amendment relating to ISDS procedures. The European Parliament recommends replacing private arbitration tribunals with an international investment court.

Consistent with its practice of publishing summaries of its negotiating positions, the Commission published a summary of its approach to public services. The Commission notes that services considered to be public utilities may be subject to public monopolies or to exclusive rights granted to private operators. Furthermore, EU governments can regulate publicly-funded education, healthcare and social services, as well as the supply of water, in whatever way they choose. This can include the way they offer subsidies, choose contractors or decide who can operate or invest in their market. The TTIP will not change this system.

On July 17, 2015, the Commission published a summary of a May 27, 2015 meeting regarding health issues in the TTIP. The meeting dealt with cosmetics, medical devices and pharmaceuticals. The following highlights were provided:

• Cosmetics: all cosmetic products would need to comply with the EU legislation to enter into the EU market, so the list of prohibited substances would not change. Moreover, the ban on animal testing would continue to be applied;
• Medical devices: medical devices would likely continue to be placed on the EU market on the basis of the CE mark as set out in the EU Draft Regulation on medical devices. The idea of a product already authorised in one region being automatically authorised in the other one was not possible;
• Pharmaceuticals: the discussion mainly focused on
  • Health Services: it was established that there is no intention to create an internal market under the TTIP.
  • Intellectual Property Rights (IPR): since the US and the EU have equally sophisticated IPR infrastructures, there will not be major EU “offensive interests” to be put forward to the US. However, a limited number of specific IPR issues might be addressed in TTIP, such as geographical indications;
• Product Authorisation: the mutual recognition of product authorisations is not envisaged in the TTIP negotiations. On the other hand, the mutual recognition approach of GMP inspections of the production sites of medicinal product is a major EU objective; and
• Clinical trials data. The EU does not intend to negotiate provisions regarding disclosure of clinical trials data within TTIP, as the EU has recently adopted a regulation on clinical trials.