The Transatlantic Trade and Investment Partnership (TTIP) … · 2013-10-03 · The Transatlantic...

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The Transatlantic Trade and Investment Partnership (TTIP)Impact on businesses and regulations on both sides of the Atlantic

ERA annual conference on EU trade law

1 October 2013

Brussels

Yves Melin

Avocat/attorney-at-law

McGuireWoods LLP

McGuireWoods LLP | 2CONFIDENTIAL

The TTIP in a nutshell

• The mother of all FTAs: bigger and more comprehensive than any other FTA negotiated before– Because of the size of the parties: EU-US account for 40% of global

economic output

– Because of the parties’ ambitious objectives: Removal of most or all remaining tariff, harmonization of most or all regulations and standards

• More difficult maybe than other FTAs. The two economies are largely integrated already so that most of the remaining barriers:– either protect powerful vested interests, or

– will require changing entrenched administrative practices.

McGuireWoods LLP | 3CONFIDENTIAL

This morning’s presentation

• Brief overview of the history of FTA negotiations in the EU and of the US’s FTAs

• Objectives of the TTIP

• Who negotiates? Who decides? Who approves?

• Time frame

• Regulatory convergence: presentation, analysis and thoughts

McGuireWoods LLP | 4CONFIDENTIAL

Brief overview of the history of FTA negotiations in the EU

The US’s FTAs

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Brief overview of the history of FTA negotiations in the EU

• Mexico – concluded in 1997, entered into force in October 2000

• South Africa – concluded in 1999, entered into force in May 2004

• Mercosur (Argentina, Brazil, Paraguay, Uruguay, and Venezuela) – negotiations started in 2000, stalled

• ACP countries – negotiations started in 2002, conclusion with Caribbean CARIFORUM countries (16), Papua New Guinea, Zimbabwe, Mauritius, Madagascar, Seychelles; negotiations on-going with remainder of the ACP countries

• Chile – concluded in 2002, entered into force in February 2003

McGuireWoods LLP | 6CONFIDENTIAL

Brief overview of the history of FTAs negotiations in the EU (continued)

• Peru – negotiations started in April 2007, provisionally applied since 1 March 2013

• Honduras, Nicaragua, Panama – negotiations started in April 2007, provisionally applied since 1 August 2013

• Columbia – negotiations started in April 2007, provisionally applied since 1 August 2013

• India – started in 2007, on-going

• Korea – negotiations started in May 2007, concluded in October 2009. Agreement entered into force on 1 July 2011

• Ukraine – negotiations started in 2008, concluded in December 2011, not yet in force

• Canada – negotiations started in May 2009, on-going

• Singapore – started in March 2010, concluded in December 2012

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Brief overview of the history of FTAs negotiations in the EU (continued)

• Malaysia – started in September 2010, on-going

• Moldova, Armenia, Georgia – started in February 2012, concluded in July 2013, to be initialled in November 2013

• Vietnam – started in June 2012, on-going

• Morocco – started in 1 March 2013, on-going

• Thailand – started in March 2013, on-going

• Japan – started in April 2013, on-going

• Then EEA, EFTA, Euromed, Balkans

McGuireWoods LLP | 8CONFIDENTIAL

The US’s FTAs

• FTAs with 20 countries: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore

• Since November 2011: negotiating the Trans-Pacific Partnership (TTP) with Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam

– The other big FTA negotiated by the US

– Quite different from the TTIP: many countries, of varying development levels

– Discussions look more “classical” than TTIP: tariff reduction, IP protection, etc.

McGuireWoods LLP | 9CONFIDENTIAL

Objectives of the TTIP

McGuireWoods LLP | 10CONFIDENTIAL

Objectives of the TTIP

• Karel De Gucht, 30 September 2013:

“Both sides agree that TTIP is more than a traditional trade agreement. Our main ambition - beyond simply reducing tariffs across the board - is to make the EU and the US regulatory systems more compatible and to help shape global rules in trade since this is where the economic and political benefits of a deal lie.”

McGuireWoods LLP | 11CONFIDENTIAL

Objectives of the TTIP (continued)

Main objective: facilitate trade and investments between the EU and the US, by:

• Lowering borders tariffs. The easy part. Under 3% tariff on average. Some higher tariffs for certain products (e.g., food and agricultural products, textiles)

• Regulatory cooperation, convergence and harmonization in all sectors– Horizontal, cross-cutting discipline on regulatory coherence and

transparency

– Institutional provisions for future regulatory cooperation and progress

– Sectoral annexes where enhanced convergence is agreed: automotive, chemicals, pharmaceuticals, ICT, financial services, etc.

– Special attention to Sanitary and Phytosanitary (SPS) measures, and Technical Barrier to Trade (TBT), already regulated at WTO level

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Objectives of the TTIP (continued)

Main objective: facilitate trade and investments between the EU and the US, by (continued):

• Liberalising trade in services and bilateral investments

• Giving access to each other’s government procurement contracts

• Improving protection of intellectual property rights

• Customs/trade facilitation

Ancillary objective: set rules that will become global standards in future bilateral and multilateral negotiations

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Who negotiates? Who decides? Who approves?

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Who negotiates? Who decides? Who approves?

• The European Commission’s DG for Trade negotiates on behalf of the EU and its 28 Member States

• Follows guidelines agreed by the Council of the EU

• Other departments of the Commission are closely involved in the negotiations

• At the end of the process, the Council and the European Parliament will decide whether to adopt the agreement negotiated with the US. The Council and the EP will be consulted throughout the negotiations

• Public consultations, and involvement of trade associations

• For the US, the United States Trade Representative (USTR) will be the main negotiator. Fast track authority to be granted by Congress. Congress will vote on the finally agreed text.

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Time frame

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Time frame

• 2011: Joint working group of government experts: defining the scope of a possible agreement on the liberalization of trade and investment between the EU and the US

• February 2013: Report of the group of experts, recommending comprehensive negotiations covering all sectors

• 14 June 2003: Mandate given to the Commission by the Council of the EU (and the European Parliament) to initiate comprehensive trade and investment negotiations with the US

• July 2013: First round of negotiations in Washington between teams of experts. Preliminary exchange: agree on the methodology.

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Time frame (continued)

• 7-11 October 2013: Second round of negotiations in Brussels. Expected to cover the identification of difficulties, and agreement of how negotiations are to be carried out in practice

• December 2013: Third round of negotiations in Washington

• January 2014: Stock taking by U.S. Trade Representative Michael Froman and EU Trade Commissioner Karel De Gucht

• Objective is to complete negotiations by end of 2014

McGuireWoods LLP | 18CONFIDENTIAL

Regulatory convergence

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Regulatory convergence: the big chunk

• What regulations are we talking about? “Regulatory action to achieve policy objectives, including the protection of safety, public health, the environment, consumers and investor” --> pretty much everything

• Very ambitious: “the ultimate goal would be a more integrated transatlantic market where goods produced and services originating in one party in accordance with its regulatory requirements could be marketed in the other without adaptations or requirements” An EU-US single market.

• Convergence and harmonization, but no compromise on policy objectives: “reduce unnecessary costs and administrative delays stemming from regulation, while achieving the levels of health, safety and environmental protection that each side deems appropriate” Different rules are possible.

McGuireWoods LLP | 20CONFIDENTIAL

Regulatory convergence: the big chunk (continued)

• How: regulators will be closely involved in the negotiations– Keep the best regulatory practices

– Based on science and international standards

• Different scenarios: – Mutual recognition of those existing regulatory schemes that are

equivalent

– Gradual harmonization of existing schemes that are currently not equivalent

– Future regulatory schemes to be harmonized from the outset

McGuireWoods LLP | 21CONFIDENTIAL

Regulatory convergence: the big chunk (continued)

• On-going process: – What cannot be harmonized now could be harmonized gradually, for

instance each time an existing scheme is being reviewed

– Consultation of the other party’s regulators when new regulatory schemes are tabled or old ones are reformed

– At all times, compatible regulatory schemes to be promoted

• Setting up cooperation mechanisms going forward:– effective bilateral cooperation/consultation mechanism

– improved feedback mechanism

– cooperation in collecting evidence and data

– exchange of data/information

McGuireWoods LLP | 22CONFIDENTIAL

Regulatory convergence: analysis and thoughts

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Regulatory convergence – analysis and thoughts

• Incompatibility between the stated objectives? Is it possible to have goods, services and investments move freely when substantive rules are different?

• The TTIP negotiations will be an exercise not only of administrative convergence, but of convergence on substance as well. And substance is often a prerogative of the legislator, not administrative bodies or negotiators.

• The Commission sees as essential in order to facilitate regulatory convergence to set up “a streamlined procedure to amend the sectoral annexes of TTIP or to add new ones, through a simplified mechanism not entailing domestic ratification procedures” careful

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Regulatory convergence – analysis and thoughts

• There may be disagreement on policy objectives:– Ex1: Are geographical indications worthy of any protection at all?

– Ex2: Should CO2 emissions be reduced at the expense of industrial output and development?

• There may be disagreements on how to reach common policy objectives– Ex1: Non-pasteurized cheese

– Ex2: GMOs

• Then, the EU and US have entrenched administrative practices: even if there is an agreement on the policy objective and how to reach them, agreeing on whose practices should be preferred will be painful

• Harmonization can be UP, or DOWN– Ex: REACH

McGuireWoods LLP | 25CONFIDENTIAL

Regulatory convergence – analysis and thoughts

• The EU’s single market is not perfect. And the situation in the US is probably even more fragmented: there exist plenty of barriers to trade within the US.

• These issues aside, the rest should be easier to agree upon– Ex1: Automotive sector

– Ex2: Medical devices

McGuireWoods LLP | 26CONFIDENTIAL

Regulatory convergence – analysis and thoughts

TWO MAIN ENGINES BEHIND NEGOTIATIONS

• Priority will be given to sectors where there is an industrydemand for harmonization in both the EU and the US

• Importance for the industry and negotiators to convince civil society, consumer groups, NGOs, and ultimately the legislators, that the current level of regulatory protection will not be eroded– The US’s Congress

– The Council of the EU and the European Parliament

McGuireWoods LLP | 27CONFIDENTIAL

Questions or Comments?

Yves Melinymelin@mcguirewoods.com

www.mcguirewoods.com

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