Cecilia Malmström answers press questions about the EU-US trade deal earlier this month
One year ago, Karel de Gucht, the EU’s trade commissioner, asked people to write in and voice their concerns about the most contentious part of a landmark trade deal with the US.
It is his successor, Cecilia Malmström, who will have to take the results of this public consultation squarely on the chin on Tuesday. It’s going to be a big (and possibly bruising) day for EU trade policy.
All the furore hinges on clauses of the US-EU accord that would allow foreign investors to sue governments in international tribunals, bypassing national courts.
This is technically known as Investor State Dispute Settlement, or ISDS, and has caused a huge international stink. It is probably the single biggest political obstacle to the EU-US deal, known as the Transatlantic Trade and Investment Partnership, which is potentially the world’s biggest trade deal. Reservations about ISDS are particularly strong in Germany and Austria.
So what will this consultation show on Tuesday? As far as we know, more than 150,000 people have written in. The vast majority are unhappy. To give a scale of the feverish interest in this topic, the trade commission has never held a public consultation that garnered more than 1,000 responses before. Read more
Juncker addresses the European Parliament before the vote approving his new Commission
It started out as an internecine turf war within the incoming regime of Jean-Claude Juncker. But it is quickly metastasising into what could be one of the first international policy fights of the Juncker Commission.
The dispute centres on a previously obscure trade arbitration system that allows companies that believe they can’t get a fair hearing in front of national courts to appeal to an international dispute resolution panel known as ISDS, for investor-state dispute settlement.
The systems have become relatively commonplace in international investment treaties, but they suddenly – and to the surprise of many advocates – have become the single biggest bone of contention among opponents of the world’s biggest trade deal, the pact currently being negotiated between the US and EU.
Opposition from social democrats in Germany, the country where ISDS was ironically invented, has put ISDS on the front-burner politically, and Juncker – urged on, officials say, by his powerful chief of staff, German lawyer Martin Selmayr – has clearly sided with the sceptics. The stance has led to an open confrontation with Cecilia Malmström, his incoming trade commissioner who supported a similar ISDS system in the just-completed EU trade deal with Canada.
But as we reported in today’s dead-tree edition of the FT, free-trading countries are fighting back. A letter signed by ministers from 14 member states – including Britain, Spain, Portugal, Sweden and the Czech Republic – pointedly reminds Juncker that ISDS was included in the negotiating mandate that all 27 member states gave to the Commission last year. We’ve posted a copy of the letter here. Read more
Malmstrom makes a point during her unexpectedly contentious hearing on Monday
It is rare that an obscure bit of international trade arcana turns into a major political kafuffle, but that’s just what appears to have happened on Monday over a relatively obscure arbitration system proposed for a new EU-US trade pact.
Although there is much substance behind the dispute, what really has Brussels insiders buzzing is the role played by Martin Selmayr, the increasingly powerful head of Jean-Claude Juncker’s transition team.
According to several EU officials, Selmayr – a workaholic German lawyer who is expected to become Juncker’s chief of staff when the Luxembourger assumes the European Commission presidency – changed the written testimony of Cecilia Malmström, the incoming trade commissioner, before it was submitted to the European parliament without her knowledge.
Dutch Liberal Marietje Schaake, a rising star within the European parliament, first made the accusation publicly during Malmström’s confirmation hearing on Monday afternoon (a video of her revelation can be seen here).
Schaake’s allegation is supported by a copy of the commissioner’s final testimony obtained by Brussels Blog and posted here. The document shows dozens of edits made by Selmayr that were recorded by the word processing programme’s track changes at 8:38am on Sunday. MEPs say the testimony landed in their in-box less than 20 minutes later. Read more
What has become an increasingly touchy EU-Russia trade relationship took another tit-for-tat turn on Thursday when Brussels escalated a WTO case against Moscow over vehicle recycling fees.
The EU believes a recycling fee Russia charges on imported cars is less about good environmental policy and more a way to squelch foreign competition. The fee does not apply to cars built in Russia or its closest trading partners,Kazakhstan and Belarus.
Brussels complained to the WTO about the levy in July, marking the first case against Russia since it joined the global trade body with much fanfare in 2012 – 19 years after its initial application. On Thursday, the EU asked for a panel to rule on the matter after – to little surprise – settlement talks with Moscow proved fruitless. A result could take months.
“We’ve used all the possible avenues to find with Russia a mutually acceptable solution,” said Karel De Gucht, the EU trade commissioner. “As the fee continues to severely hamper exports of a sector that is key for Europe’s economy, we are left with no choice but to ask for a WTO ruling.” Read more
Brussels and Beijing appear to be nearing a settlement in a trade fight over solar panels that is the EU’s biggest ever anti-dumping case – based on the more than €20bn in Chinese-made solar products shipped to the bloc in 2011. Sometime on Friday afternoon, EU officials are expecting to learn whether or not their counterparts in Beijing have taken their latest offer.
In theory, the two sides have until August 6th to haggle over a deal. After that date, provisional duties imposed by the EU will jump from about 11 per cent to an average of 47 per cent. The reality is that they have probably already missed that deadline, according to diplomats, given the amount of legwork that Brussels must do to translate an agreement and circulate it among national governments. Hence, the next few days are crucial. Read more
A few weeks ago, the EU agreed an historic overhaul of its troubled common fisheries policy, setting binding deadlines to end decades of over-fishing that have depleted stocks from the Mediterranean to the North Sea.
But just when it seemed safe to go back in the water, the European parliament’s fisheries committee threatened to take a bite out of the reform on Wednesday. By a 12 to 11 margin, the committee approved an amendment allowing the use of up to €1.6bn in EU funds to help build new fishing boats.
The subsidies fly in the face of the conventional wisdom that the EU’s 83,000-vessel fleet is already far too large, and in need of a drastic cut – some say by half – in order to allow stocks to recover.
“For anyone with a brain this is completely outrageous and very difficult to understand,” said Markus Knigge, a fisheries advisor to the Pew Charitable Trust, citing estimates that the money could result in 19,000 new boats. Read more
Actor Brad Pitt is interviewed at last week's Paris premiere of his new film "World War Z"
When EU and US officials launched new talks on a transatlantic trade deal earlier this year – an issue of such import that President Barack Obama announced it in his February State of the Union address – many thought the most contentious issues would be agricultural, like US exports of beef with synthetic hormones.
But even before the talks have formally begun, an altogether different issue has threatened to derail the deal: France’s insistence that the so-called “cultural exception” – the ability of European governments to establish quotas and subsidise their home-grown film and music industries – be completely off the table.
The US has insisted on no “carve outs” before the talks even begin, and EU officials worry that if cultural issues are put aside pre-emptively, it will give the Obama administration fodder to respond in kind with an issue that may be sensitive for a wider number of countries – like agriculture.
In an effort to bridge the gap, the Irish presidency last week circulated a new draft of the mandate that will be given to the European Commission in the trade talks which contains new language assuring France that, while audiovisual issues will not be excluded, there will be clear red lines in the EU’s negotiating position. Brussels Blog got its hands on the 12-page document, which is marked “trade-sensitive” across every page and “EU restricted” at top, and posted it here. Read more
EU trade chief Karel De Gucht speaks at a press conference in Beijing in 2011
While almost everyone in Brussels was asleep last night – except EU foreign ministers fighting about Syria– the Chinese delegation to the EU put out what can only be described as its toughest response yet to the burgeoning trade dispute between Brussels and Beijing.
The statement, which we’ve posted in its entirety here, came after China’s trade representative Zhong Shan met in Brussels yesterday with the EU’s trade chief, Karel De Gucht, in a last-ditch attempt to head off two trade cases that are among the biggest and most politically radioactive the European Commission has ever attempted: punitive tariffs against Chinese solar panel imports and an anti-dumping investigation of Chinese telecommunications equipment.
In the statement, the Chinese delegation is pretty blunt: If De Gucht moves forward with the cases, there will be retaliation – and that retaliation could lead to a full-blown trade war:
If the EU were to impose provisional anti-dumping duties on Chinese solar panels and to initiate an ex-officio case on Chinese wireless communications networks, the Chinese government would not sit on the sideline but would rather take necessary steps to defend its national interest. Despite the heightened risk of the China-EU bilateral trade dispute widening and escalating, the Chinese government would nevertheless make a best effort for hope of reaching a consensus and avoiding a trade war, but this would require restraint and cooperation on the EU’s part.
Someone may well have been drinking absinthe when they decided it would be a good idea to pack up an entire parliament once a month and shuttle its members and their assorted aides and documents to a second home 400 kilometers away.
On Wednesday, members of the European parliament, meeting in their Strasbourg quarters, will have the opportunity to acquaint themselves with absinthe, the spirit renowned for its green tint and supposedly psychedelic properties. Specifically, they will be voting to determine just what absinthe is.
Their decision could escalate a brewing fight between northern and southern European makers of the spirit, which gained fame in the late 19th and early 20th centuries as a favoured drink for bohemians and artists including Rimbaud, Degas, Hemingway and Toulouse-Lautrec. Read more
Hamburger anyone? Getty Images
There is never a good time for a food chain scandal in which people across a continent are suddenly informed that what they thought was beef lasagne was actually horsemeat of unknown provenance.
But there is an added wrinkle of awkwardness to the EU’s horsemeat scandal, since it coincides with the launch of free-trade negotiations with the US in which food safety standards will be central.
The EU-US effort to forge a trans-Atlantic free-trade agreement was announced with great fanfare on Wednesday afternoon in Brussels by José Manuel Barroso, the European commission president, and Karel De Gucht, the bloc’s trade commissioner. The press conference was the culmination of more than a year of diplomatic spadework between the two sides and decades of dreaming by free-traders, business groups and Atlanticists. Read more
China’s solar panel manufacturers are facing an uphill battle in their legal fight against the EU, which last week targeted them as it launched the bloc’s biggest-ever an anti-dumping investigation. The case involves Chinese exports of solar panels, wafers and other products that totalled some €21bn last year.
More than half of such anti-dumping investigations result in tariffs being imposed, according to EU officials. Yet there are at least two technical factors at work in the solar dispute that could make the odds even worse for the Chinese. Read more
Barroso at EU-Russia summit
José Manuel Barroso, the European commission president, emerged from the latest EU-Russia summit with a conditional pledge from Moscow to lift a blanket ban on European vegetables imposed more than a week ago in the midst of a deadly E. coli outbreak.
Moscow’s concession may bring a conditional sigh of relief from European farmers, who have been devastated by the outbreak. But it underscores the simmering tension between the two trading partners when it comes to the health and sanitary standards that govern agricultural goods.
Russia has become the biggest market for EU exports of meat and vegetables. But if it is an important customer, it is also a hugely demanding one. The chief complaint among EU producers is that Moscow uses arbitrary health and sanitary standards to restrict their goods – be it German pork or Dutch apples. Read more
Pakistan looks set to snag a European Union perk it has long coveted: admission to the bloc’s GSP+ trade programme. But the death last week of Osama bin Laden in a compound just up the road from Islamabad may cast a shadow over the country’s entry.
The Generalised System of Preferences, or GSP, is an EU programme that aims to help developing countries by reducing tariffs on their exports to Europe. GSP+ is an even better bargain. For the poorest countries, it eliminates tariffs altogether, provided they commit to protecting human rights and good governance. Together, the programmes covered some €53.3bn in EU imports in 2009.
By a narrow margin, Pakistan has repeatedly missed out on GSP+ in the past. It seems its economy is a bit too dynamic, based on the numerical criteria cooked up by EU trade wonks. That should now change after Karel De Gucht, the trade commissioner, won commission support on Tuesday for a GSP revamp. Read more
It’s been something of a rough week for European relations with China after the Spanish government erroneously put out word that Beijing was preparing to invest €9bn in its struggling savings bank. Chalk it up to an over-eager translation of Chinese intentions. Read more
As we’ve been reporting for the last couple of days, many of the fiscal measures that we once thought had been agreed for the two-day summit are unravelling, thanks in part to Finland’s objections to finalising an increase in the eurozone’s €440bn bail-out fund and Germany’s sudden objection to the structure of the €500bn fund that will replace it in 2013. Read more
The European commission has asked member states to begin testing imported Japanese food for increased radiation levels, although officials believe that health risks for consumers are low.
That assessment is based on the fact that Japanese agricultural exports to the European Union are limited to begin with – particularly from the affected regions. Moreover, the disruption and devastation from the earthquake and tsunami are likely to reduce those exports even further. Read more
Catherine Ashton, the European Union’s foreign affairs chief, heads off for a tour of the Middle East and North Africa today – a trip that’s expected to include both Tunisia and Egypt – after coming under quite a bit of criticism for her handling of the upheaval in the region.
But the criticism has not all been in one direction. Ahead of her trip, a senior EU official briefed the Brussels press corps and laid some of the blame for the frequently discordant European reaction to recent events in the laps of national foreign ministers.
“One of the difficulties that we have is making sure that we not only speak with one voice but act with one voice,” the official said. “I mean, how many foreign ministers are in the Middle East now? It’s a bit complicated. The high representative wants to go, but can she go the same day or the day after when three foreign minsters have been? To do what? It’s a real problem.” Read more
It was buried amid the excitement of the European Union’s summit in Brussels, but I’d like to draw your attention to a revealing report published on Thursday on the subject of European access to strategic raw materials. Prepared under the supervision of the European Commission, the report names 14 critical materials that Europe risks not having enough of in the future – with potentially far-reaching implications for Europe’s economic development, not to mention its defence and security. Read more
The election of Dervis Eroglu as Turkish Cypriot president appears at first sight to deal a severe blow to the latest United Nations-sponsored efforts at solving the Cyprus problem. But appearances can be deceptive. There may, in fact, be an opportunity for a breakthrough. Crucially, however, it will require the involvement of the European Union.
Eroglu, 72, is usually dubbed a “hardline nationalist” in the international media on account of his long-standing commitment to Turkish Cypriot independence. This is to miss the point that the Turkish Cypriots are economically dependent on Turkey and Eroglu can hardly act in defiance of the government in Ankara. It is in the Turks’ wider diplomatic interests to bring about a Cyprus settlement. They have already made it plain to Eroglu that they expect him to behave constructively. Read more
Ask a minister in a European Union government what post their country hopes to get in the next European Commission, and the response is the same every time – something important to do with the economy. Well, you can’t blame people for not hurrying to step into the shoes of Leonard Orban, the Romanian commissioner for multilingualism.
On the other hand, there aren’t enough top economic jobs for Commission president José Manuel Barroso to satisfy everyone. Truth to tell, the Commission looks too big with 27 members. But that’s the way it is, and that’s the way it will stay under the EU’s Lisbon treaty. A guaranteed seat on the Commission seems a simple, visible way of making a country’s citizens feel connected to the EU. Read more