This new Baba Yaga of European populists has been making rounds lately, after the German Magistrate Association (DRB) delivered a blow to the European Commission by arguing that the special courts allowing U.S. companies to sue individual European governments lack legitimacy. “The DRB sees neither a legal basis nor a need for such a court,” the association decreed punishingly. Opponents of the deal rejoiced and the Commission went into damage control mode, defending the court system and claiming the DRB had gotten the entire scheme wrong — a rather fickle excuse meant to salvage a trade deal that has been attacked on both sides of the Atlantic for its ambitious scope.
The court system at the heart of this controversy has been a piñata of both American and European progressives. The official story is that the Investor State Dispute Settlement (ISDS) is a central element in all trade deals sealed since the heyday of the Cold War and is merely a tool that protects businesses from unlawful state intervention (such as asset dispossession, nationalizations, etc.) that would otherwise result in significant losses. However, the mechanism has come under fire for its opaque and non-democratic nature; in the U.S., Senator Elizabeth Warren has led the charge against the ISDS, while in the European Union that banner was held up by several trade associations, the Green Party and a motley group of nationalists and left-of-center politicians.
To its credit, the European Union acknowledged the imperfect nature of the ISDS and sought to use its clout to revamp the ailing system. The Investor Court System (ICS) was the answer, a marked advance from the atomized nature of the ISDS. Before the DRB’s verdict, Brussels’ hopes had already been scuttled last year by their American counterparts. Since the TTIP has to be signed by the Commission as well as by the national parliaments of all 28 member states, German opposition is sure to sound the death knell for any dreams of achieving a EU-US free trade area.
However, the ISDS is not the sole impediment to the successful conclusion of the TTIP. An even bitter shouting match has been unfolding behind closed doors over a most peculiar element: intellectual property rights in the food industry. As things stand now, Americans can freely sell American-made Parmesan or Gorgonzola cheese, in complete disregard for the almost sacrosanct European “geographical indications” that protect foodstuffs from being imitated by producers that are not based in the respective geographical areas. Under intense pressure from farmers and local producers, the European Union is trying to stop the US from being able to label its products with such names.
American resistance is equally fierce, as negotiators contend that their producers have been using these labels for decades and are perceived by consumer as the common names of food products. The American cheese industry that uses European-origin names is worth $21 billion per year. Even 55 US Senators jumped into the fray, sending a letter to the US Trade Representative threatening to kill the deal if the TTIP includes any restrictive measure on labeling.
Adding fuel to the fire, several countries in the European Union (such as Ireland, France, the UK) are on the verge of implementing plain packaging laws for tobacco products. While at first glance this might seem irrelevant in the greater TTIP equation, prominent European politicians have correctly pointed out that restrictive labeling for products deemed harmful could be extended to fast food, snacks and alcoholic drinks.
In a fiery tirade, former French President Nicholas Sarkozy quipped that “if we accept the neutral cigarette packet, in six months you will be offered a neutral bottle of wine, and this will be the end of our names; it will be the end of our land; it will be the end of our know-how.” Indeed, the Irish government has been toying recently with this very idea in the latest Health bill meant to tackle “alcohol misuse.” According to lawmakers, the labels of beverages could be forced to [i]include health warnings[/i], not that different from the ones currently placed on cigarette packs. While the proposal is still in the beginning stages, the labeling of both tobacco products and alcoholic beverages could quickly lead to the slippery slope of slapping intrusive warning labels on junk food too. Such an outcome would easily become a fresh point of contention in the TTIP, since US producers would have to respect rules set out by national health authorities.
With TTIP negotiations conducted in secret, it’s unclear whether the obstacles can be bridged. At this point, the official positions of both negotiating teams are irreconcilable, with both sides presenting their respective interests as non-negotiable. A new round of talks started today (February 22nd), but nobody is expecting to come to an agreement this year. Last week, a White House spokesman confirmed that, despite the teams’ best efforts, the deal would not be concluded during President Obama’s term in office.
Whatever the outcome, it’s going to be a bumpy 2016.
