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article imageGerman stumbling block to transatlantic trade talks

By AFP     Mar 27, 2014 in Business

German Economy Minister Sigmar Gabriel has warned the EU Commission in Brussels that Berlin may withhold its approval of landmark EU-US trade talks over a contentious arbitration mechanism.

In a letter addressed to EU Trade Commissioner Karel de Gucht, Gabriel insisted that the new provision -- known as the investor-state dispute settlement (ISDS) -- be excluded from the proposed Transatlantic Trade and Investment Partnership (TTIP), because current legislation is sufficient.

"From the perspective of the (German) federal government, the United States and Germany already have sufficient legal protection in the national courts," Gabriel wrote.

A copy of Gabriel's letter, dated March 26, was obtained by AFP.

The ISDS provision will allow private investors to sue governments if they felt local laws threatened their investments.

In Uruguay, for example, cigarette maker Philip Morris has sued the government for ordering that the health warnings be larger on cigarette packets.

Gabriel said the German government "has already made clear its position that specific dispute settlement provisions are not necessary in the EU-US trade deal."

Earlier this year, the European Commission suspended negotiations over the ISDS clause to allow for public consultation in a bid to defuse some of the opposition and explain why an arbitration mechanism is needed.

But opposition has only grown since then.

Gabriel insisted it was of imperative that laws aimed at protecting the general public cannot be undermined or circumvented and that a company should not be able to sue for access to a particular market.

"My assessment of the current debate is that the investment protection is a sensitive point, which might finally decide whether Germany agrees to the transatlantic trade deal," Gabriel warned.

The EU and United States -- who between them make up 40 percent of global economic output -- have held talks for the past year on creating what would be the world's biggest free trade area, hoping to boost growth and jobs on both sides.

Under an ambitious timetable, they aim to sign the Transatlantic Trade and Investment Partnership (TTIP) by the end of the year.

Before then they will have to hammer out common rules and regulations on everything from auto safety to banking regulations.

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