Yes to a Europe-US Treaty, but Not at Any Cost

Europe and the U.S. have been engaged in negotiations about a free trade and investment agreement since July 2013. The project has an obvious strategic dimension. It aims to bring together two great entities, which single-handedly represent more than 45 percent of the global gross domestic product and nearly a third of all trade. This rapprochement is in the service of one essential outcome: turning Europe and the U.S. into the leading center for defining global trade standards against the rise of emerging economies, especially China. A priori, this task falls on the shoulders of the World Trade Organization. However, under its jurisdiction, Europe and the U.S. are not allowed to satisfactorily impose high standards in highly delicate areas, like intellectual property, access to services, subsidies for public companies and access to public markets.

From where stems the interest of the two trans-Atlantic parties in coming together against the growing competition from emerging economies?

Behind the idea of the trans-Atlantic treaty lies the sentiment that what brings Americans and Europeans together is more important than what separates them — particularly in the regulatory plan. We cannot worry about China’s rise and all the while refuse getting closer with the U.S. Sure, no choice comes without risk, but non-choices are always riskier. Therefore, the government’s decision to go ahead with this negotiation is well-justified.

Nevertheless, the importance and reality of this factor could not make us lose sight of the persistence of real regulatory divergences between Europe and the U.S. on multiple factors, such as a highly differentiated relationship to food industry risk. However, beyond the traditional question on genetically modified organisms, we can feel rising in Europe, especially with the coming elections, a real debate about whether or not to introduce a clause named “the investor state.”

What is it all about? Fundamentally, it’s about establishing a legal framework that allows for protecting companies from potential spoliations. Yet, if protecting investors is absolutely vital, then we must legitimately ask whether a specific clause deserves to be introduced. What causes a lot of concern in Europe, especially in Germany, where the debate on this topic has progressed more than in France, would be seeing American companies use this provision to challenge the establishment of new public policies on health and the environment, professing that these measures would infringe on their hopes for profit.

Therefore, this clause could inhibit the establishment of new public policies. It’s the reason why a country like Australia, despite being very much all about free trade, categorically refused to introduce a similar clause in its bilateral agreement with the U.S.

Therefore, one cannot see why Europe would give the U.S. what even Australia refused to concede, including, it seems, as part of the TPP (Trans-Pacific Partnership) between the U.S. and Asia. Perfectly extensible to Europe, the Australian argument consists in placing at the forefront the robustness of the legal systems in Europe and the U.S. in arbitrating future conflicts. For example, we can note that neither France nor Germany are connected to the U.S. through a treaty governing investment.

Because of concerns, the commission will undertake a public hearing on the subject. However, that will not be enough, especially because this same commission seems to have accepted a similar clause in the bilateral treaty with Canada. The European governments and commission must refuse clearly the incorporation of such a mechanism in the treaty, which risks raising public concern without offering additional legal guarantees to companies. In the coming European campaigns, the question of the trans-Atlantic treaty will be at the heart of the debate.