EU-US Transatlantic Trade and Investment Partnership – Update

The latest round of negotiations between the European Union (the EU) and the United States (the US) on a Transatlantic Trade and Investment Partnership (TTIP) took place in Washington DC and Miami between 14 and 23 October 2015.

This briefing summarizes achievements in the last round, as well as the European Commission’s (the Commission’s) proposal for investment protection and an Investment Court System for TTIP, which the Commission recently finalised and transmitted to the United States.

On 9 November 2015, the Commission published a detailed report on the outcome of the latest round of negotiations. According to this report, the EU-US talks covered the full range of areas under negotiation, with the exception of investment protection and an Investment Court System.

Market access

EU and U.S. negotiators exchanged second offers on tariffs, covering 97% of tariff lines. Both sides also exchanged proposals for product-specific rules of origin, excluding certain chemicals, textiles or clothing. The parties examined the differences in structure and content, in particular the practice of determining a product’s origin based on the value of its constituent parts.

Discussions also took place on texts on agricultural market access. Inter alia, the EU stressed the need to properly address specific non-tariff issues that EU agricultural products are facing in the US market (such as the prohibition of direct shipping of EU wine to final customers, US duty-drawback rules on wine, US inspection requirements on table olives, discriminatory tax break schemes for US small wine and beer producers, etc.). The EU supported the inclusion in TTIP of specific rules on wines and spirits, including the protection of EU and US wine and spirit names, winemaking practices, labelling rules and certification.

On public procurement, negotiators engaged in technical discussions ahead of an exchange of offers scheduled for February 2016.

On services, negotiators examined the offers exchanged in July and reached a better understanding of each other’s positions. In particular, they discussed the scope of the chapter on telecommunications and had a first discussion on the EU and US proposal on e-commerce.

Regulatory cluster

All regulatory issues were discussed, including regulatory cooperation, technical barriers to trade (inter alia, conformity assessment of products and how to improve recognition of certificates carried out in the territory of the other party) and sanitary and phytosanitary issues.

Furthermore, technical progress was made on the 9 industry sectors under consideration. In particular, the following matters were, inter alia, covered for each of these sectors:

• Pharmaceuticals: update on assessing the equivalence of good manufacturing practice (GMP) inspections, biosimilars, authorisation of generics, and exchange of confidential information between regulators.
• Medical devices: Single Audit Pilot Project for manufacturers’ quality management systems, Unique Device Identification system to facilitate the monitoring of devices on the market.
• Cosmetics: cooperation on risk assessment methods for cosmetics ingredients, UV filters and Sun Protection Factor, labelling, alternative test methods to animal testing.
• Textiles: fibre names (labelling), silk flammability, care labelling (FTC rule) and CPSC certificate for compliance rule and standards (ISO/EN and ASTM).
• Cars: equivalence, procedural aspects of expedited harmonisation and research projects of joint interest.
• Information & Communication Technology (ICT): radio equipment, product labelling, safety and compliance, and E-accessibility.
• Engineering: regulatory cooperation focused on very specific sectors or subsectors.
• Chemicals: pilot projects on priority chemicals and classification and labelling of substances; it was also agreed that the EU’s draft outline for possible chemicals provisions in TTIP will be discussed at the 12th TTIP round.
• Pesticides: synergies on pesticide residue assessment (e.g., sharing of data, extrapolation of data from one geographic zone or one crop to another one), trade facilitation for olive oil and fruit juice concentrates.

Rules

During the 11th round, the EU presented its first legal textual proposal for a chapter on trade and sustainable development, which covers matters such as rules on workers’ rights and environmental governance, sustainable management of key natural resources (such as wildlife, forestry, fisheries), environmentally sound management of chemicals and waste, etc.

With regard to trade in energy and raw materials, the EU reiterated its position in favour of a standalone chapter dedicated to this topic. The EU and US also discussed issues related to trade and investment in renewable energy and energy efficiency.

On intellectual property rights (IPRs), discussions covered, inter alia, patents, copyright and trade secrets, certain aspects of regulatory test data protection, trademarks, shared principles and cooperation. With regard to geographical indications (GIs), the EU recalled that the protection of GIs constitutes a key priority in TTIP. The EU wishes the US to engage in protecting an agreed list of GIs, with rules to stop other producers misusing them.

On competition, the EU and US identified a number of areas (such as general principles, reference to the EU and US legal frameworks and cooperation), where they have made significant progress.

On 12 November 2015, the Commission announced that it had finalised its new and reformed approach on investment protection and investment dispute resolution for TTIP. This follows extensive consultations with the Council and the European Parliament. The proposal for the Investment Court System has been now formally transmitted to the United States. Negotiations in this area have been on hold since March 2014, when the Commission launched a public consultation on ISDS in the TTIP. The proposal is indeed based on the contributions received from the European Parliament, Member States, national parliaments and stakeholders through the consultation. The Commission had previously presented its proposal for consultation to the Council and the European Parliament on 16 September 2015.

The key principles of the Commission’s proposal are safeguarding the right to regulate and create a court-like system with an appeal mechanism based on clearly defined rules, with qualified judges and transparent proceedings. The proposal also includes additional improvements on access to the new system by small and medium sized companies.

The new system would replace the existing ad hoc investor-to-state dispute settlement (ISDS) mechanism, but it would also serve as a model for all ongoing and future EU investment negotiations.

The EU will now resume negotiations with the US on the subject of investment protection, resolution of investment disputes, and the Investment Court System.

The next round of TTIP negotiations is expected to be held in Brussels at the beginning of 2016. Both sides are hoping to finalise TTIP negotiations during President Obama’s presidency, as confirmed by US chief negotiator Dan Mullaney at the end of the round.

As mentioned above, it is expected that both sides will exchange their respective offers on public procurement in February 2016. Further progress is also expected to be achieved on regulatory cooperation and, in particular, on defining the key objectives in each sector and agreeing on how to achieve them. For instance, the EU’s outline on possible provisions on chemicals will be discussed on the 12th round of talks.

Following its trend to improve transparency and efficiency as shown in the context of TTIP negotiations, on 14 October 2015, the Commission published a Communication which announced a new EU trade and investment strategy. The new EU strategy intends to extend the use of the principles of effectiveness, transparency and values, already claimed to form the basis of TTIP negotiations, to future trade negotiations with third countries.