The Transatlantic Trade and Investment Partnership - European Union Committee Contents


Chapter 3: CONTENT OF THE TTIP

83.  In this chapter, we turn to the content of a prospective Transatlantic Trade and Investment Partnership. It would not have been possible to explore, let alone do justice, to the full range of issues that are under negotiation, and so we focus on two areas: the UK's top priorities in goods and services, respectively, and the issues that have been drawn to our attention as potentially critical to securing and ratifying and overall agreement.

UK Priorities

84.  The UK Government have identified the automotive sector and the financial services sector as their top two priorities in the negotiations. We recognise that these are but the tip of the iceberg insofar as UK priorities are concerned, and do not wish to imply by omission that other priorities would not merit similar analysis and attention—indeed we hope that, by raising the profile of the TTIP negotiations, our report will help to achieve just that.

85.  We also recognise that the UK's priorities will evolve. As the UK Government explained in their written evidence, they expect to get a clearer sense of which objectives will be relatively easy to deliver and which are proving more challenging as the talks proceed, and expect their priorities to evolve accordingly.[102]

Automotive Sector

86.  The automotive sector is highlighted in the CEPR studies produced for the European Commission and the UK Government as the sector that potentially stands to gain the most from a TTIP agreement. The UK Government told us that the UK's exports of motor vehicles could increase by as much as 15 per cent in the ambitious scenarios modelled, and that the sector was correspondingly "well organised and strongly in support of greater liberalisation, with mutual recognition of environmental and safety standards being the top priority … followed by cooperation and harmonisation of future regulation and full tariff elimination."[103]

OBJECTIVES

87.  Although there are "non-trivial" tariffs applied to trade in this sector, the industry explained that they wanted to see the emphasis placed on non-tariff barriers. Ford of Europe, for example, told us that "the vast majority" of the potential benefit from the agreement would lie in removing non-tariff barriers, which would allow them to reduce their production costs because they would be able to build vehicles to one standard rather than two.[104]

88.  Representatives of the UK industry told us they were seeking mutual recognition of existing "brownfield" regulations that produce equivalent outcomes, and were also looking to the TTIP to produce a quicker, more streamlined system for agreeing a harmonised approach to new "greenfield" regulation. Jaguar Land Rover told us that that the US and EU regulatory regimes "ostensibly seek to address exactly the same principles and requirements: to make sure that vehicles are safe and cause least harm to the environment." They had, however, grown up separately over 50 to 60 years, and thus diverged, with good reason, including in the systems used to demonstrate compliance with each regulatory regime.[105]

89.  In respect of existing regulation, Ford of Europe emphasised that "this is not about harmonising, it is about mutually recognising two different sets of standards and assessing them as equivalent overall in terms of the outcome".[106] To illustrate, Jaguar Land Rover explained that the illuminated symbol indicating that a car's handbrake is on is different in the United States: the instrument cluster must put up the word "Park". "If we had mutual recognition of that particular element of the regulations that allowed us to use what we design for Europe in the United States, we would not have to design a solution that had the word "Park" for America and a symbol for everybody else."[107]

90.  Asked about the top areas where they were looking for mutual recognition of existing regulation, the Society of Motor Manufacturers and Traders (SMMT) identified first, a "long list" of safety regulations; second, environmental regulations; and third, "Small-Series Type Approval"—an EU mechanism that allows low volume producers to sell their products Europe-wide with technical and administrative requirements that are more adapted to smaller businesses.[108]

91.  In regard to the third of these priorities, the SMMT suggested that it was very difficult for small, low-volume manufacturers to access the American market in a way that is cost-efficient, given the level of regulation that needed to be adhered to.[109] McLaren Automotive Ltd concurred, explaining that as a small manufacturer they would seek to build a common technical specification as far as possible for all the different markets that they sold in around the world, but that even with a common specification, they might be forced to retest a vehicle multiple times in order to demonstrate compliance for different markets. They identified the US as "perhaps one of the most demanding in that respect", and concluded that for very small companies, this could represent a barrier to being able to enter the market at all, because it was largely a fixed cost for certifying a model for that market, almost regardless of the volume the producer then goes on to sell.[110]

92.  Representatives of the UK industry explained that they were hoping that mutual recognition between the US and EU would serve as a platform for similar agreements with other countries. Ford of Europe, for example, anticipated that developing a set of mutually recognised standards between the US and EU "would help to create some critical mass to take those to other parts of the world."[111] Jaguar Land Rover also suggested that TTIP would give them "a bit more leverage to say that mutual recognition is a way forward to one common understanding of regulations which are demonstrated differently, with the ambition of having it recognised globally."[112]

93.  In respect of future regulation, witnesses explained that there was an existing process at the multilateral level for developing Global Technical Regulations (GTRs) under the auspices of the United Nations, but that it had thus far been "a very slow journey".[113] Since the agreement launching the process was signed in 1998, seven Global Technical Regulations had been published, and a further four were in development. Jaguar Land Rover suggested that "over 15 years, to have 11 [GTRs] is a little glacial in pace perhaps, and one of the benefits of TTIP is to give fresh political impetus from the EU and the United States."[114] Ford of Europe concurred, and clarified that they were not looking for new institutions or processes to be set up as part of the TTIP: the GTR process and the existing institutions were in their view "exactly the right forum, with the political will to make it work faster."[115]

94.  With these aims in mind, the European industry and the US industry had come together to develop a joint set of proposals, which had been put to the negotiators and the regulators on both sides of the Atlantic.[116] The Society of Motor Manufacturers and Traders confirmed that they were confident they had the support of the regulators on the European side.[117]

IMPACT ON INVESTMENT, JOBS AND CONSUMERS

95.  Professor Evenett suggested to us that there had been "signals from European manufacturers that they would expand their investments in the United States should this deal [TTIP] go through, with the intention of exporting back to Europe from the lower-cost southern US states.[118] He added that one of the reasons why the automobile sector was in his view so keen on investing in the United States was because they expected energy costs to be much lower there.[119]

96.  In contrast, the SMMT told us that European manufacturers already had facilities in the US and were exporting some models back to Europe, but suggested that those companies had invested in the US because it was close to the main market for those particular models, adding that "we do not see a tremendous change in that".[120] They noted that decision-making around production investment took into account a number of factors, one of the primary ones being transport and logistics costs, meaning that it made sense to reduce those costs by producing close to each market. They also emphasised that small and low-volume manufacturers generally produce from one site, meaning there was "less likelihood of them upping sticks from one particular location to base themselves in the US."[121]

97.  McLaren Automotive Ltd confirmed that they had no ambition to start making vehicles outside the UK.[122] They pointed out that small manufacturers' supply chains were predominantly European-based, and that small manufacturers added up to quite a large number of companies overall who would not be looking to relocate to the US, because being in the UK and Europe was an important part of what they and their vehicles were about.[123]

98.  The UK Government noted that many of the major automotive producers had manufacturing facilities on both sides of the Atlantic, and that sometimes part of the reason for that was the different regulatory and other non-tariff barriers that exist. They acknowledged that over time, therefore, TTIP might lead to a redisposition of investment, but nonetheless anticipated that TTIP could deliver "a significant gain, particularly for the British automotive sector, because it is more at a premium end." [124]

99.  We also asked our witnesses whether regulatory convergence in this area might lead to lower levels of protection for consumers as a result of regulatory cooperation on car safety standards, for example. Ford of Europe insisted that what they had in mind was "absolutely not about reducing levels of protection because we are not generating new standards. We are mutually accepting standards that we assess to be equivalent."[125]

100.  As regards benefits for consumers, our witnesses were more confident that TTIP might lead to more jobs than that it would lead to price reductions. Ford of Europe noted that they were expecting reductions in cost from being able to build to one standard instead of two, but judged that it was "too early to say how that will materialise." They were, however, confident that there would be "an overall benefit for consumers as citizens in that we will see economic growth and we will see more jobs through this agreement."[126] McLaren Automotive Ltd anticipated "a benefit for the size of the company here … in terms of our own staff and employees from the growth in an important market." They also expected that the removal of barriers to entry for small low-volume manufacturers to the US market would provide more choice for US consumers.[127]

OTHER MEMBER STATES' VIEWS

101.  We canvassed other member states' views on whether the motor vehicles sector featured among their priorities for the TTIP. The Czech and German governments indicated that they and their industries were supportive of the proposals that the European car industry association ACEA had put forward. The German government told us that the contents of those papers reflected "the German view" and were quite important to them.[128] Czech industry was also "very satisfied" with the proposals, according to the Czech government.[129] The French government, on the other hand, attached less importance to this sector, because their industry was "not invested" in the US.[130]

Conclusions and Recommendations

102.  We were warned that, when going from the objectives of the TTIP at 36,000 feet to the nuts and bolts, we would see a gap.[131] We detect no such gap in the automotive sector. Consistent with projections that the sector may have most to gain from a TTIP agreement, the industry on both sides of the Atlantic is organised and vocal. The most striking aspect of this observation, in our view, is that other sectors appear to be considerably less mobilised, and that this sector may therefore be unrepresentative of the business community at large in terms of its engagement and advocacy of the initiative.

103.  Although we therefore see scope for other sectors to learn from the motor industry's approach to the TTIP negotiations, we anticipate that the sector will need to articulate more clearly the possible benefits for consumers from attainment of their objectives, and explain why they expect to see jobs added, rather than lost or reshuffled, if they are to build public and political support for their goals. We judge that for the largest companies with production facilities on both sides of the Atlantic those goals are primarily about reducing production costs and acquiring more flexibility on where to locate production. The extent to which this will increase trade between the EU and US will depend on a host of consequential decisions to be taken by the companies about how best to further their commercial interests.

104.  We note that the industry views TTIP as a platform from which to inject momentum into the existing multilateral process for developing Global Technical Regulations and are encouraged by this approach, which is consistent with our view that the TTIP should serve to catalyse multilateral negotiations, and not substitute for them.

105.  We recognise that there is merit in pursuing mutual recognition of environmental and safety standards for motor vehicles where they are assessed as producing equivalent outcomes. We nonetheless urge the UK Government and the European Commission to ensure that this only occurs where EU and US standards are genuinely equivalent, so that existing environmental and safety standards are not compromised.

Financial Services

106.  The financial services sector contributes almost half of the UK's total trade surplus in services, so that according to the UK Government "further liberalisation of all elements of the financial services market between the EU and the US is likely to be a significant win for the UK, more so than for any other EU member state."[132] Their priority is to establish greater coherence and cooperation in transatlantic financial regulation, with a view to reversing what they see as the fragmentation of financial services regulation that has taken place during the process of regulatory reform following the [financial] crisis.[133]

107.  The Government accept that "nothing that gets signed between here and, let us say, the spring or summer of 2015 is going to eliminate regulatory discrepancies between the two sides of the Atlantic on financial services".[134] They emphasised that they were not seeking to align the Dodd-Frank Act[135] passed by the US Congress with equivalent EU legislation such as the CRD IV package (composed of the Capital Requirements Regulation and the Capital Requirements Directive, and covering prudential rules for banks, building societies and investment firms). "That would be neither possible nor wise", Lord Green of Hurstpierpoint, then UK Minister for Trade and Investment, told us.[136]

108.  The Minister did, however, suggest that for prudential reasons it would be a good idea for the two major economies in the world, the EU and US, to have a broadly similar approach. The Government's concerns were twofold: first, that there "cannot be more than one basic right way of regulating banks"; and second, that depending on how different regulatory treatments affect the ability of banks to do business on the opposite side of the Atlantic, there might not be a level playing field (that is, it might be easier for US banks to do business in the EU than for EU banks to do business in the US).[137] TTIP Chief Negotiator Ignacio Garcia-Bercero confirmed that the issues across the Atlantic on financial services did not have to do with classic market-access restrictions, as financial services markets were already quite open, but were instead about a "potential clash" between the two regulatory regimes. The aim would be to try to ensure that, "to the largest feasible extent, regulations of both sides do not conflict."[138]

109.  The UK Government also emphasised that their priorities in this area were not just about banks, but also "very importantly about insurance". Recent changes to Solvency II—the capital adequacy regime for the European insurance industry—had opened up the possibility for a useful dialogue on insurance. There could be a very considerable gain for British, French and other European insurance companies if they were able to compete more seamlessly across the United States.[139]

OBJECTIVES

110.  The EU and US are already engaged in various dialogues on financial services regulatory matters, at both the multilateral level and the bilateral level.[140] Most of our witnesses—with the notable exception of the US Administration—took the view that those dialogues were not working as well as they should. The intention on the part of the UK and EU, as well as among proponents in the industry, would therefore be to use the TTIP to "upgrade" the existing EU-US dialogue on financial services regulation—which principally takes place through the Financial Markets Regulatory Dialogue (FMRD)—into a more formal process, with a view to improving the quality of the dialogue and making more progress.[141]

111.  TheCityUK, for example, told us that the FMRD "does not work as it was intended to work", and that they were therefore looking to the TTIP to "define the issues, to scope them out, and to put them into a process that can lead to the progress the industry seeks."[142] Lloyd's described the EU-US insurance dialogue, which they had been following through the FMRD, as "a very unsatisfactory process" which had not led to particularly impressive progress to date. They regarded the dialogue as "very opaque", suggesting that they were dependent on the European Commission choosing to tell them what had been discussed; that it was not clear what the concrete steps emerging from the dialogue were despite assurances from the Commission that good progress was being made; and that only recently had there for the first time been an opportunity for stakeholders to input and comment.[143] They were therefore looking for the TTIP to provide "a more formal political overlay that clearly specifies what is expected of the parties and in which they are held accountable." Specifically, they would favour more transparency in the process, a formal commitment to consultation with stakeholders, timelines for achieving objectives, a forward agenda, and a joint body to review the progress being made.[144]

112.  The UK's Financial Conduct Authority noted that three features would be useful in any future EU-US dialogue on financial services under the TTIP. First, a recognition of the broader global dimension of financial services, including the Asian markets. Second, that the right people should be gathered around the table—one of the weaknesses of the FMRD in their view being that it only engages the European Commission and "does not engage any of the relevant technocrats." Third, that the basis of the conversation should be clear, for example, whether the dialogue would be about generating greater understanding or a "harder-edged decision-making process." If the latter, it might require a mechanism for resolving differences and disagreements.[145]

113.  The European Commission has said that the EU is proposing to establish, within the TTIP framework, "a transparent, accountable and rule-based process which would commit the two parties to work together towards strengthening financial stability." The goal would be to create an institutional framework for cooperation between EU and US regulators.[146]

US RESPONSE

114.  The proposal has, however, thus far been received frostily by the US Administration. Ambassador Miriam Sapiro, Deputy US Trade Representative, told us that they saw the existing mechanisms for working on financial services regulatory issues as "very sound" and thus did not see the "value added" of introducing another channel when the FMRD, various G20 initiatives, the Financial Stability Board and other groups were already in place. She acknowledged that both sides had an interest in making sure those processes were working well, but stressed that they did not see the need to move processes that are in their view "already working" into a new agreement that "isn't even written yet."[147]

115.  Several witnesses suggested that behind this resistance lay a reluctance to re-open discussion on the Dodd-Frank Act, and concerns that an EU-US dialogue might be used to water down its provisions, bearing in mind that the equivalent EU provisions are viewed by some in the US as less stringent. This was certainly the view of the AFL-CIO, who told us that, although they would strongly support a robust common floor between the US and EU on financial services regulation, and saw it as critical to achieving the purpose of the Dodd-Frank Act, they had "no reason to believe" that the TTIP would produce a financial regulatory framework that they would support, and indeed felt certain that it would lead to "a weakening, a least-common-denominator agenda." They argued that they had had to fight very hard to protect the regulatory framework for derivatives that came out of Dodd-Frank against pressure from European financial services institutions and from transatlantic financial services institutions working through the EU, who had in their view sought to weaken it and make it possible for US institutions to use European platforms to avoid US derivatives regulation. "That sort of experience colours our view of what is possible in the TTIP framework", and they were consequently supporting "[US Treasury] Secretary [Jack] Lew's position that financial regulation should not be in the TTIP."[148]

116.  TheCityUK emphasised that the US view was not "monolithic": parts of the Administration were much more sympathetic to the views of the business community in the US as well as the UK, and leading members of the Senate Finance Committee and the House Ways and Means Committee were also much more positive.[149] Republican Senator Orrin Hatch, Ranking Member of the Senate Finance Committee, confirmed that he wanted to see financial services included in the TTIP agreement.[150] The US Chamber of Commerce told us that both from a market access perspective and from a regulatory perspective, the Chamber's members believed there were "only upsides" to be had from including financial services in TTIP discussions. They insisted that it would not be about a race to the bottom in regulatory protection and the application of prudential measures, but rather an opportunity to ensure that regulators on both sides took the time—when looking forward in particular—to think about the impact of a new regulation on transatlantic capital markets. They pointed out that the US and Europe were still in the process of promulgating hundreds of measures to implement their approaches to the financial crisis, and that rather than rolling back Dodd-Frank, the intention was that those regulations should take into account the transatlantic impact as they are developed.[151]

117.  The European Commission's Chief Negotiator for the TTIP confirmed that the United States was still in a critical phase in the implementation of Dodd-Frank, and that a lot of implementing rules had not yet been adopted. There was consequently the perception or suspicion that, if those issues were to be discussed in the context of the TTIP, they could be traded off against other issues—a risk that US financial services regulators were keen to avoid.[152] Professor Evenett suggested that although the Dodd-Frank Act had put a framework in place, much of the detail had deliberately been left for the post-legislative phase, where all the action was taking place. He told us that, in his judgment, the US regulatory agencies "are not going to let us anywhere near that."[153] He went on to predict that unless there were a very strong presidential intervention, the regulators would prevail over the Office of the United States Trade Representative, deemed privately sympathetic.[154]

118.  In regard to the US Administration's view, the US Chamber of Commerce told us that "no-one really disagrees with relying on existing mechanisms provided that they are efficient and effective. There are many in the financial services sector who will tell you that the existing mechanisms, particularly at the bilateral level—the FMRD—is not as transparent or productive as they would like or as they think the situation calls for."[155] GE Capital pointed out that there were bilateral and multilateral regulatory cooperation efforts in many other domains, and yet those were not being carved out of TTIP as was being proposed for financial services.[156] The European Commission's Chief Negotiator for the TTIP took a similar view, insisting that it would be "inconceivable" to establish a transatlantic agreement that, to a large extent, was going to be about regulatory cooperation, without ensuring that there was close cooperation on regulatory regimes in this area.[157]

119.  The Financial Conduct Authority made the point to us that "simply setting up a dialogue should not lead to any presumption that regulatory standards would be driven downwards." Once a process was established, it could be used for "for a variety of things: you could go up, you could go down, you could stay the same, but that entirely depends what you use the process for."[158]

OTHER MEMBER STATES' VIEWS

120.  We canvassed other member states' views on the inclusion of financial services regulatory cooperation in TTIP. The UK Government acknowledged that financial services were "higher in the priorities of the French and the British than of other countries", and that although the French were "equally keen", they were focusing on it more from an insurance angle than from a banking angle.[159] The French government confirmed that financial services were "clearly an offensive interest" for them.[160]

121.  Elsewhere, however, we found lukewarm support. The German government, for example, told us that they were "quite cautious" about financial services: they did not want to exclude the sector, but neither were they a big offensive interest.[161] The government of the Czech Republic indicated that while they supported the inclusion of financial services in the agreement, it was "not a major interest" for them.[162] The Swedish government saw it as "one important sector" among others.[163]

Conclusions & Recommendations

122.  In a negotiation that is ostensibly between equals, it is in our view essential that one party should not be permitted to exclude a sector—which for these purposes includes not just the banking sector but also related industries, such as insurance—that is clearly central to both economies. We therefore judge that the EU is right to press the US on the inclusion of financial services regulatory matters in TTIP. [164]

123.  We were nonetheless struck by the vehemence of the US Administration's opposition, and found lukewarm support for the EU's stance among several of its member states. We struggled to understand what the UK Government's objectives were, and believe they must be articulated much more clearly if they are to have traction elsewhere, including among other EU member states. The shroud of secrecy around UK and EU objectives thus far has been unhelpful, and stokes unnecessary suspicion.

124.  We see no threat to financial and prudential regulation from the establishment of a more effective dialogue between EU and US regulators, for the reasons set out by the Financial Conduct Authority. We nonetheless judge that the UK and the European Commission will need to build a more compelling case for why the TTIP is the right vehicle for securing that outcome.

125.  There is clearly widespread dissatisfaction with the Financial Markets Regulatory Dialogue (FMRD), both in terms of its capacity to deliver results and in terms of a perceived lack of transparency and accountability around discussions held in that forum. We recommend that, pending any progress that TTIP may deliver, the UK Government should press the European Commission to bring forward proposals to improve transparency around the existing process, and allow member state governments and industry to hold the Commission to account in respect of its engagement in the FMRD.

Flagship Issues[165]

126.  When taking evidence from Commissioner De Gucht in November 2013, we asked him to identify the issues he thought would be most difficult for the EU and US to reach agreement on. He warned us that the biggest hurdles would not be the traditional issues that had led to trade disputes between the EU and US in the past, such as regulation around Genetically Modified Organisms (GMO) or hormone-treated beef. Instead, public procurement, some services—such as shipping and aviation—and Geographical Indications[166] (GIs) were likely to pose the biggest problem for the EU, he predicted. In those areas, it would be "very tough to get anything."[167]

127.  A number of written submissions also drew Investor-State Dispute Settlement to our attention as an issue likely to prove contentious on this side of the Atlantic. This has been borne out by subsequent events: in March 2014, the Commission launched a public consultation on a proposed EU text for the investment protection provisions in TTIP in response to concerns raised. We examine these issues in the sections that follow.

PROCUREMENT

128.  Access to public procurement contracts in the United States is a priority for both the UK and the EU. The UK Government told us that the scale of the US public procurement market at both state and federal level and the many "Buy America" provisions[168] in force across the US meant that this priority was "very much worth fighting for." They also pointed us to a Commission assessment suggesting that around 10 per cent of the EU's potential economic gains from TTIP could come from liberalisation of procurement.[169] In oral evidence, Lord Green of Hurstpierpoint, then UK Minister of State for Trade and Investment, added that "if we failed to do a deal on government procurement in the TTIP, that would diminish its significance quite considerably."[170]

129.  There are several reasons why it could prove difficult to reach agreement in this area. One is that, although "the prize is there on both sides", there is a bigger potential benefit to the EU than there is to the US from the government procurement discussions.[171] Lord Green explained that the Commission had calculated that the openness of the EU public procurement market was at 90 per cent compared to 38 per cent for the US. He suggested that the 90 per cent figure sounded "a bit high" but that the "discrepancy and directional difference is clearly correct, and therefore it is a significant prize in terms of the EU interest, as well as the British interest."[172]

130.  The second reason is that the EU is seeking access to US public procurement at the state level as well as the federal level. The federal government cannot bind the states—or is at least judged unlikely to wish to do so. Ambassador Sapiro, Deputy US Trade Representative (USTR), told us that the EU had indicated interest in more access to procurement contracts across all 50 states as well as more access to federal procurement.[173] 13 US states had not yet signed up to the relevant WTO commitment—the Government Procurement Agreement or GPA. Lord Green pointed out that those 13 states were currently under no obligation to consider bids from international suppliers at all, and that even those states that were covered by the WTO GPA were subject to Buy America provisions that required them to give price advantage to local suppliers.[174]

131.  The third reason is the political sensitivities around Buy America provisions in the United States. The AFL-CIO, for example, told us that they saw public procurement not as a trade issue, but as about "how a domestic government chooses to spend its very precious resources".[175] They suggested that being able to use that money "in targeted places for targeted people" was very important and that if all procurement were to be opened to European companies, the funds raised through taxes would not necessarily recirculate in the community and have the desired multiplier effect. The AFL-CIO also took the view that, if the US was to re-build its manufacturing sector, it needed to be able to compete with economies that use their industrial policy around procurement: "we don't want the US to be barred from playing that game which everyone else is playing by the TTIP".[176] Nor did we detect that this was a partisan issue: Senator Thad Cochran (Republican—Mississippi) predicted that politically active constituents in his home state would prefer local, home-grown workers to be employed on public contracts and to own the company that employs them.[177]

132.  This said, the US does have a reciprocal interest in better access to public procurement contracts in the EU. Ambassador Sapiro contested the idea that the EU was more open than the US, suggesting that when one looked at the detail, it could be seen that that was not the case. She pointed to instances where the EU had indicated programmes were open, but when reading the small print one saw they were not open to the US. In other cases it was a matter of transparency, or information only being published in certain languages, she suggested. There were thus "challenges on both sides."[178] Elena Bryan, Senior Trade Representative at the US Mission to the EU, also emphasised that the Single Market was "not perfect" in this respect, and that procurement would therefore be a "two-way discussion".[179]

133.  Our witnesses offered a number of suggestions for how the federal government might bind the states into a procurement agreement concluded as part of the TTIP. Gary Hufbauer of the Peterson Institute for International Economics suggested that, on a plain reading of the US Constitution, the federal government had power over inter-state commerce, if the Congress decided to exercise it. He noted that USTR was known to have a different view, and that as a political matter it was in any event "a different story" than as a legal matter. He went on to suggest two ways in which a Trade Promotion Authority (TPA) bill[180] could be used to create incentives for states to participate: first, it could be drafted in a way that created an "all or none" choice for each state on whether to participate; and second, a TPA bill could stipulate that companies would only be eligible for procurement opportunities in the EU if the state in which they had most of their employment had chosen to participate. The latter provision would in his view create an incentive for companies to lobby state governors. Mr Hufbauer also suggested that it would be open to the federal government to stipulate that procurement at sub-federal level that drew on a significant amount of federal funding would have to be open to EU bidders.[181]

134.  Kent Hughes of the Wilson Center pointed out that the US federal government already had practice in using incentives to influence states. Some states had already introduced certain regulations—such as speed restrictions—in return for federal transportation money, demonstrating that creative ways of "using the carrot" could be found.[182]

135.  Claude Barfield of the American Enterprise Institute warned us that although these were promising ideas substantively, they could be difficult to shoehorn into either a TPA bill or the TTIP agreement, because the federal government would face opposition not only from the states but from the separate and equally influential Buy American groups.[183]

136.  Dr Daniel Hamilton of Johns Hopkins University suggested that the trade agreement that the EU has recently concluded with Canada—known as CETA, or the Comprehensive Economic and Trade Agreement—might be relevant, because the Canadian provinces had been at the negotiating table.[184] Mauro Petriccione, the European Commission's Chief Negotiator on the CETA, confirmed that the Canadian federal government had taken a "basic political decision" at the outset that they would involve the provincial governments, and put in place consultation mechanisms to achieve this. He suggested this had been necessary because the EU had made clear from the outset that they regarded some areas of provincial competence as "indispensable" for a balanced agreement and the EU would not be interested in an agreement with Canada that did not cover those areas.[185] The Canadian provinces had thus "participated fully" in the negotiations, which had resulted in access to an estimated 70 to 80 per cent of the Canadian procurement market between the federal government, the provinces, and the large municipalities.[186]

137.  We concur with Commissioner De Gucht's assessment that a deal on procurement is likely to be hard-fought, not least because the EU hopes to obtain commitments from US states as well as the US federal government. The precedent set in negotiations with Canada and its provinces, and our witnesses' suggestions for steps the US federal government could take to create incentives for states to participate nonetheless demonstrate that with political will, there would be ways to attain the UK and EU's objectives.

138.  Political will on the part of the US administration and state authorities will in part hinge on the attractiveness of the reciprocal offer from the European Union. We are not persuaded that all EU member states consistently apply EU public procurement rules as diligently as could be hoped. TTIP negotiations may therefore present an opportunity to examine what the EU still needs to do to monitor and enforce the rules it has set for itself, and may to that extent help to spur the completion of the Single Market in this area.

AGRICULTURE

139.  Although Commissioner De Gucht contested the idea that traditional areas of tension with the US over trade—such as hormone-treated beef and GMOs—would be the hurdle some might expect them to be in the negotiations, other witnesses made clear that a deal on the agriculture elements of the TTIP package would be critical to the overall political prospects of an agreement, particularly in the United States. The US Department of Agriculture (USDA) told us that other sectors of the US economy had been known to complain that when it came to agriculture, the sector might provide 20 per cent of the economic support but 80 per cent of the political support. They consequently predicted that it would be difficult to get an agreement through Congress without having a high-standard agreement in agriculture—a point also made to us by the EU's Chief Negotiator for the TTIP.[187]

140.  The USDA explained that the United States' priorities would be greater access to the EU's meat and poultry markets, and "more normalised trade" in areas where they felt they had experienced regulatory barriers, such as in biotechnology food products and on the use of certain food safety practices used in the US.[188]

141.  In respect of GMOs, the USDA noted that the EU has a procedure for approving new products, starting with the European Food Safety Authority (EFSA) evaluation, but that the procedure did not always operate on the timeline that it was supposed to. Even when the timeline was observed, every application took the maximum number of days for consideration. The US would therefore be looking for improvements in the predictability and timeliness of approvals for new biotechnology products.[189] Commissioner De Gucht confirmed that the EU already had in place a law on cultivation of GMO products and a procedure for their commercialisation, through which 49 GMOs had been approved for animal feed stock and two for human consumption. He indicated that he "could imagine that the procedure will be speeded up a little bit", but emphasised that the procedure itself and the requirements would not change.[190]

142.  Representatives of the UK's food and farming industry told us they were sympathetic to the US position. The National Farmers' Union (NFU) took the view that the EU legislative system for GMOs is "seriously broken", and indicated they would favour an EU system that was more consistent with that in the US and elsewhere. They described the procedures for importing biotechnology products from the US as "sluggish and slow" and "arguably not responding to the science". [191] The Food and Drink Federation drew a distinction between the EU's procedures on GMOs, and the outcome of those procedures, arguing that the procedures were rigorous, evidence-based and objective, and that the problem lay with the "decision-making following on from the procedures" and the time taken to implement that decision making where there was a positive recommendation.[192]

143.  On hormone-treated beef, Commissioner De Gucht's prediction was that the EU would be likely to follow the path it had charted with Canada in the CETA agreement, whereby Canada secured a quota of "hormone-free" beef it could export into the EU market.[193] "If we make an agreement with the United States, it would be exactly the same", he suggested.[194] The USDA, on the other hand, expressed scepticism that a quota increase for US beef would be sufficient to meet their objectives, and told us that the US would be looking for results on tariffs and quotas across all beef products.[195]

144.  The USDA warned that the US had seen "real hesitation" on further opening of the EU meat sector, and that was confirmed in evidence from other witnesses. The National Farmers' Union told us that, in light of the low average profitability of beef and sheep farms, they would need to look at the TTIP not just in terms of the potential job opportunities it might create but in terms of potential threats from competition that might arise from opening up trade.[196] They would consequently be looking for the Commission to produce an impact assessment of a proposed deal.[197] In respect of the CETA precedent on a quota for "hormone-free" beef, the NFU pointed out that there were potentially quite significant differences of scale in terms of the sizes of quotas offered to Canada as compared to the US.[198] The French government also noted that although they too saw a US quota for "hormone-free" beef as a possible "technical solution", if the results of the negotiation with the US were to multiply by three or four the figures provided to the Canadians, they would "have a very strong political difficulty."[199]

145.  The UK Government predicted that the US would also press the EU strongly "on some quite technical matters" such as Sanitary and Phytosanitary standards, and predicted that the Commission "will have quite a challenge to corral member states to support an agreement on this."[200] Corporate Europe Observatory noted that, prior to the launch of TTIP negotiations, the US had secured a lifting of an EU ban on use of lactic acid as a pathogen-reduction treatment on beef in the face of opposition from some EU member states, and expressed concern that other such measures might in time follow—for example on use of chlorinated water as a pathogen-reduction treatment on poultry meat.[201]

146.  On GMOs, we share the Commissioner's assessment that the area for compromise with the US lies in allowing existing EU procedures for cultivation and commercialisation of GMOs to work as intended. We note that the UK is in the unusual position of being closer to the US than the EU in its stance on this issue, and judge that it therefore has an important role to play in helping the Commission to win support for such a compromise among other EU member states.

147.  We are more pessimistic than Commissioner De Gucht about the ease with which an agreement on access for US beef products to EU markets could be reached, and note that parts of the UK industry could have difficulty in this area. We recommend that, as a possible compromise on this issue begins to take shape, the UK Government should produce a comprehensive impact assessment of the changes proposed on the UK's agriculture sector.

GEOGRAPHICAL INDICATIONS

148.  Commissioner De Gucht explained to us that, if the EU did not secure at least partial protection for its Geographical Indications (GIs) in the US, it would be very difficult to conclude a deal on agriculture. He suggested that recognition of GIs would be a counterweight for concessions that would probably have to be made in US access to EU beef, chicken or pork markets, and would serve to soften the blow. "If you do not have that softener, it will become more difficult with the rest."[202]

149.  Lord Green of Hurstpierpoint, then UK Minister of State for Trade and Investment, emphasised that the issue of GIs is important to the UK: "I have had to dispel a sense in Brussels and elsewhere that this is not particularly a British concern. It is very clearly a concern of the French, Italian, Spanish and others, but I consistently make the point that we care about this too." He explained that the UK would be seeking protection for geographic indicators such as Scotch beef, Scotch lamb, Welsh beef, Welsh lamb and West Country farmhouse cheddar, with a view to tapping opportunities for more exports from the UK food and drink industry to the US.[203] The NFU confirmed that, although the UK had made relatively little use of geographical indicators by comparison to other EU countries, there was "continued interest" in building on geographical indications to help to enhance the provenance attributes of different products when marketing them. As well as the potential for Scottish and Welsh beef and lamb mentioned by the Minister, the NFU identified "a number of cheese products" that had PGI status and which the UK dairy industry would be looking to trade on.[204]

150.  Commissioner De Gucht explained that the US uses trademarks to protect this kind of intellectual property right, and that those trademarks are often held by big corporations, setting up a significant challenge.[205] Lord Green also warned us that the EU mindset was "in a different space than the American mindset" on GIs.

151.  The US Department of Agriculture acknowledged that they were concerned by the breadth of protection the EU was seeking for names that they consider generic. They predicted that there would be a lot of GIs, particularly compound[206] GIs very specific to European places, where the US and EU would not have a disagreement, but that protection for names the US considers generic and recognises as generic in the US intellectual property system would be difficult for them.[207] They explained, for example, that the US would consider "parmesan" to be a generic name, but would not consider "parmiggiano reggiano" to be a generic name. In the US market, parmesan was widely used as a generic term. They consequently suggested that the US would be willing to engage on the basis of a system "that recognises generics and trademarks". If it were possible to engage on that level and have a "granular" (name-by-name) conversation, it should be possible to make progress.[208]

152.  The US Chamber of Commerce confirmed that any attempt to "claw back" generic food terms in the US would face stiff opposition from the US dairy foods industry.[209] Other US witnesses suggested that the EU could nonetheless find allies on the other side of the Atlantic. David Short of Fedex told us that his observation during stakeholder days as part of TTIP negotiating rounds was that American producers—Napa wine, Kona coffee from Hawaii—wanted to have a scheme that would protect the geographical origin of their products, so that finding allies in the US and identifying synergies might be the key to making progress.[210]

153.  It was also suggested to us that the outcome of the CETA negotiations between the EU and Canada could again set a "helpful" precedent.[211] Mauro Petriccione, the European Commission's Chief Negotiator for the CETA, explained that the EU's main achievement on GIs in the agreement with Canada had been to extend protection to over 160 Geographical Indicators, the great majority of which would be fully protected with no conditions. For "15 or 20 controversial names", reasonable compromises of different types had been found. For example, there were a handful of GIs, including Parma ham, where the problem was co-existence with existing trademarks in Canada, which meant that European exports were prohibited from using the same name. Agreement had been reached on co-existence, allowing those products to be lawfully exported to the Canadian market and enjoy protection against everyone except the holder of those prior trademarks. The most difficult cases, according to Mr Petriccione, were products that Canada insisted had become generic, including feta cheese. There the compromise struck was that current users of the name in Canada would be free to continue to use it but no new uses would be allowed unless accompanied by terms such as "style", "imitation", "kind", etc.[212]

154.  The USDA warned us that they did not think the CETA agreement offered a suitable precedent, and that their market circumstances are different, notably in regard to the dairy sector.[213]

155.  The prospects of reaching an agreement on Geographical Indications (GIs) are in our view better than Commissioner De Gucht predicted, at least insofar as the UK interest is concerned. We anticipate that, as in negotiations with Canada, protection for names potentially considered generic (parmesan, feta) will be hardest-fought. We see scope for the UK Government to attain its objectives, which mainly relate to protection for compound names, and should be correspondingly less contentious.

INVESTMENT PROTECTION AND INVESTOR-STATE DISPUTE SETTLEMENT

156.  A wide range of witnesses drew our attention to their concerns about the inclusion of Investor-State Dispute Settlement (ISDS) provisions in a prospective TTIP agreement.[214] The TTIP is expected to contain provisions on investment, and would to that extent be an investment treaty as well as a trade agreement. Investment treaties typically set out between those states that are party to them the protections that each will accord to investors from the other state. ISDS is a mechanism for providing dispute resolution where there are questions about whether those protections are being provided. It allows foreign investors to file claims against the host state if they believe it to be in breach of the commitments it took on in the treaty, and therefore serves as an enforcement mechanism. Critically, arbitration of such claims takes place under international law, rather than through the domestic legal system of the state that has hosted the investment.

157.  Traditionally, the purpose of including investment protection provisions in a treaty and providing for their enforcement through an ISDS mechanism is to encourage foreign investors to invest in one's own country and provide protection for one's own investors in the other country. Individual EU member states are already party to some 1400 investment treaties with third countries. Eight member states already have their own bilateral investment treaty with the United States.

158.  In the case of the TTIP, an ISDS mechanism appears to be on the agenda partly because US negotiators have put it there, and partly because some member states and the European Commission also want it there.[215] The Czech government, for example, told us that investment protection provisions could be one of their priorities for the TTIP, for three reasons: first, they favoured a comprehensive agreement, including investment; second, they hoped TTIP would serve as a model agreement for future negotiations, including with emerging economies, and it should therefore include investment provisions for their precedent value; and third, they already had a bilateral investment agreement with the US which they considered outdated, and saw the TTIP as a good opportunity to update it.[216] Professor Evenett noted that the Lisbon Treaty gave the Commission the competence to negotiate on certain investment issues, and suggested that the Commission would want to "play with its new toy…if only to establish the precedent elsewhere."[217]

159.  Lord Goldsmith QC suggested that there were also traditional reasons for including ISDS provisions in TTIP, namely that the EU could not seek protection for its own investors in the US without agreeing to provide reciprocal protection for US investors in the EU. He pointed out that EU investors had been prolific users of investment protection provisions in existing treaties: more than half of claims filed between 2008 and 2013 had been initiated by EU investors.[218] He cited the Loewen case in Mississippi as an example of why foreign investors might need protection in the US, suggesting that there were issues in relation to state courts and jury awards.[219] Lord Goldsmith also noted that the UK and EU would expose themselves to a charge of hypocrisy if they failed seriously to consider the inclusion of ISDS in trade agreements with other developed countries, when they insist on these same provisions when negotiating with developing countries. He warned that the omission of ISDS from an EU-US agreement would likely affect the ability of the UK and EU to negotiate ISDS provisions in future trade deals.[220]

160.  The UK Government told us they thought it "preferable" to have ISDS provisions in a TTIP agreement, in order to provide confidence for investment. They too took the view that state-based law in the US is "not quite as consistent" as federal law.[221] They nonetheless recognised that a number of member states were nervous about the inclusion of such provisions—Germany being the most vocal among them.[222] The German government confirmed that they had a "rigid negative opinion" of the necessity of the investment chapter itself and of ISDS provisions within it.[223]

161.  Witnesses including the German government highlighted a series of concerns about the inclusion of investment protection provisions enforceable by an ISDS mechanism in a TTIP agreement. A first concern was that it might lead to litigious activity against EU member states by US investors. Corporate Europe Observatory told us that US investors had launched by far the largest number of ISDS claims—nearly one quarter of the total—and were supported by "equally litigious" US law firms, who "dominate the global arbitration business".[224] Dr Lauge Poulsen of Oxford University suggested that the UK should expect to be subject to at least as many claims as were filed by US investors against Canada under the NAFTA agreement (which also contained ISDS provisions), given that 8 per cent of US outward foreign direct investment stock was in Canada while 13 per cent was in the UK.[225] Lord Goldsmith QC contested this analysis "very strongly", suggesting that claims might be brought against the UK, but successful claims would be "very limited" due to the nature of the protections that existed already under UK law and practice.[226] The UK Government also challenged the idea that ISDS would be used only by American companies, noting that in 2012, 60 per cent of ISDS cases had come from the EU, compared with 8 per cent from the US.[227]

162.  A second concern raised was that the very prospect of claims being filed would create a "regulatory chill" which "stays the hand of governments to regulate in the public interest for fear of litigation."[228] Corporate Europe Observatory suggested that the threat of an expensive and reputation-damaging investor-state lawsuit could be used by companies in battles over regulation.[229] The TUC told us that they were concerned that the inclusion of investment protection provisions enforceable through an ISDS mechanism "might restrict the ability of a future Government to redraw the boundary over what is provided publicly and what is provided privately in the National Health Service".[230] They consequently proposed that, if ISDS was not to be dropped completely, health services should be excluded from the agreement.[231] The German government noted that the EU and Germany would need "policy space" when looking at banking and bailout measures, and were concerned that action taken in the future "might lead to arbitration and huge awards".[232] Lord Livingston of Parkhead, UK Minister for Trade and Investment, suggested that although clarity about governments being able to legislate in a non-discriminatory way on public health matters would be an important part of the agreement, he did not "see us having a carve-out for the NHS per se."[233]

163.  Lord Goldsmith QC told us that there was legitimate scope for discussion about how the regulatory space of a particular country might be affected by the extent of the protections afforded to foreign investors in an investment treaty, but that this could be addressed by looking at the substantive protections provided.[234] He went on to suggest that the CETA agreement between the EU and Canada demonstrated that "the question of what protections you have is a matter for negotiation and agreement, and therefore one can deal with concerns that way."[235] Mauro Petriccione, the European Commission's Chief Negotiator on the CETA, told us that the substantive rules on investment protection had been "improved in a very clear manner" in the agreement with Canada. By contrast to most bilateral investment treaties, the notion of fair and equitable treatment had been clearly defined: investors would only be able to demonstrate that they had been treated unfairly or inequitably in a limited and defined set of circumstances. "Legitimate expectation" would be a cause for complaint only if the state had made a specific promise to the investor, on the basis of which promise the investment was made. The concept of "indirect expropriation" had been clearly defined to exclude legitimate public policy measures. A number of procedural improvements had also been secured: hearings would be open, all documents would be made public, interested parties would be able to make submissions, lists of approved arbitrators would be chosen by the parties, and there would be strict application of the "loser pays" principle by contrast to other agreements where the question of costs had not been sufficiently clear and winning governments had had to pay part of the cost of claims brought unsuccessfully. The EU and Canada would also be able to agree on binding interpretations, so that if arbitrators were interpreting the agreement in an unintended way, they would be able to clarify the matter and bind the arbitrator to what was intended.[236]

164.  Dr Poulsen suggested that these steps still did not address what in his view was "the heart of the matter", namely why, when a Canadian investor ran into a dispute with the UK Government, that investor should not go through UK courts.[237] This third concern—that foreign investors should not have access to legal remedies outside the domestic legal system of the host state—was also raised by a number of other witnesses. Corporate Europe Observatory questioned why it was necessary to reform investment arbitration when there were "very good national legal systems" in place in the US and across the EU. They suggested that this violated a key principle of the rule of law, namely the principle of equitable access to justice, because only foreign investors had access to the remedies available under ISDS.[238] The TUC suggested that the inclusion of an ISDS mechanism in TTIP would be "anomalous" because such provisions were designed to offer security for investors in countries where there was no developed legal system to protect their investments. The EU and US, on the other hand, had "sophisticated legal systems for guaranteeing financial activity against risk."[239] Dr Poulsen suggested that, like the UK, the United States had a strong tradition of protecting capital, and had "independent and efficient courts." There was in his view no evidence that courts in the US or Europe were "systematically biased against foreign investors"—evidence which he suggested would be needed to justify the inclusion of ISDS provisions in TTIP.[240]

165.  A further objection raised was that investment protection provisions enforceable through ISDS were not necessary to attract investment to either the EU or the US. Dr Poulsen told us he had "seen no evidence that the absence of an investment treaty with the United States means that UK investors are not investing in the United States" or that "US investors were investing less in the UK because of the absence of an investment protection agreement."[241] He went on to suggest that very strong justification would be needed "for why we would want to risk the political agreement for the transatlantic trade agreement as a whole derailing because provisions are included that, in the case of the United States, are not even necessary."[242]

166.  The TUC drew our attention to the previous Australian government's refusal to include ISDS provisions in trade agreements.[243] Dr Poulsen also cited the 2005 investment treaty between the US and Australia as an example of the US "hesitantly" agreeing to exclude ISDS provisions.[244] He went on to suggest that, if the EU tried to use the CETA agreement with Canada as a precedent for negotiations with the United States, the US might prefer to have no investment agreement at all than to have an agreement based on the European Commission's proposals.[245]

167.  We agree with those witnesses who emphasised that Investor-State Dispute Settlement (ISDS) provisions are in themselves only an enforcement mechanism: the substantive protections afforded to foreign investors in the investment chapter of a TTIP agreement would matter most.

168.  We are persuaded that, as appears to have been achieved in the CETA agreement between the EU and Canada, steps can be taken to strike a better balance between affording protection to investors and the right of states to regulate, notably by defining the grounds on which claims may be brought with more precision, and allowing for binding interpretations. Measures can also be taken to improve transparency around ISDS proceedings, for example by making hearings and documents public, allowing interested third parties to make submissions, and reviewing rules around the appointment of arbitrators. We deem the "loser pays" principle particularly important, as without it all these steps can be in vain. We recognise that the European Commission is already committed to pursuing all these improvements.

169.  We nonetheless conclude that proponents of investment protection provisions enforced by an ISDS mechanism have yet to make a compelling case for their inclusion in TTIP or to convincingly dispel public concerns. We recognise that there may be a precedent value in their inclusion and that this may be an important consideration ahead of similar EU agreements with other countries such as China. We also recognise that for member states with an existing bilateral investment treaty with the United States, TTIP presents an opportunity to update such provisions. From the UK's perspective, however, we see two principal justifications for their inclusion: to attract more investment from the US, and to afford better protection to our investors in the US. We recognise the potential risk to UK investors in the US but judge that, to build a better case for the inclusion of investment protection provisions in TTIP, isolated cases would need to be supplemented by evidence that the UK could attract more investment from the US by signing up to such provisions.

170.  We see a risk that this issue could distract from, or even derail progress on TTIP negotiations—especially in view of the hostile stance of the German government and German public. We therefore recommend that, having expressed a preference for the inclusion of ISDS provisions in an eventual agreement, the UK Government should use the Commission's consultation period to take a more proactive role in the debate before valuable momentum and public confidence are lost. We support the Government's stance on the inclusion of investment protection provisions only on condition that the EU is able to secure the same range of safeguards in an agreement with the United States as were included in the CETA agreement with Canada. Those safeguards themselves require proper explanation—a task for which we believe member states including the UK should take their share of responsibility.


102   BIS, para 46. Back

103   BIS, para 46. Back

104   Q 144. Back

105   IbidBack

106   Q 147. Back

107   Q 148. Back

108   Q 150. Back

109   IbidBack

110   IbidBack

111   Q 152. Back

112   IbidBack

113   Q 151. Back

114   IbidBack

115   Q 154. Back

116   Q 144. Back

117   IbidBack

118   Q 11. Back

119   Q 15. Back

120   Q 153. Back

121   Q 146. Back

122   Q 150. Back

123   Q 153. Back

124   Q 124. Back

125   Q 154. Back

126   Q 154. Back

127   IbidBack

128   Q 48. Back

129   Q 84. Back

130   Q 78. Back

131   Q 18. Back

132   IbidBack

133   Ibid., paras 46-47. Back

134   Q 117. Back

135   Full title: Dodd-Frank Wall Street Reform and Consumer Protection Act. The Act, passed in 2010, is the largest overhaul in US financial regulation since the 1930s, and is named after its Democratic sponsors in Congress, Senator Chris Dodd and Representative Barney Frank. It included new rules for banks, hedge funds and derivatives transactions intended to prevent a repeat of the 2008 financial crisis. The Act also created a new Consumer Financial Protection Bureau to protect retail users of banking products and a new Financial Stability Oversight Council to guard against looming threats to the financial system. For a more detailed summary of measures in the Act, see US Senate Committee on Banking, Housing and Urban Affairs, Brief Summary of the Dodd-Frank Wall Street Reform and Consumer Protection Act, 2010, available at http://www.banking.senate.gov/public/_files/070110_Dodd_Frank_Wall_Street_Reform_comprehensive _summary_Final.pdf. Back

136   Q 119. Back

137   QQ 116-117. Back

138   Q 116. Back

139   IbidBack

140   Q 137. Back

141   European Commission, TTIP: Cooperation on financial services regulation, 27 January 2014, available at http://trade.ec.europa.eu/doclib/docs/2014/january/tradoc_152101.pdf. Back

142   Q 136. Back

143   QQ 129-131. Back

144   IbidBack

145   Q 140. Back

146   European Commission, TTIP: Cooperation on financial services regulation, 27 January 2014, available at http://trade.ec.europa.eu/doclib/docs/2014/january/tradoc_152101.pdf. Back

147   Appendix 4: Evidence taken during visit to Washington, D.C., paras 138-9. Back

148   Appendix 4: Evidence taken during visit to Washington, D.C., paras 17-18. Back

149   Q 128. Back

150   Appendix 4: Evidence taken during visit to Washington, D.C., para 113. Back

151   Ibid., para 34. Back

152   Q 116.  Back

153   Q 14. Back

154   IbidBack

155   Appendix 4: Evidence taken during visit to Washington, D.C., para 35. Back

156   Appendix 4: Evidence taken during visit to Washington, D.C., para 36. Back

157   Q 116. Back

158   QQ 142-143. Back

159   QQ 116-117. Back

160   Q 78. Back

161   Q 44. Back

162   Q 85. Back

163   Q 95. Back

164   In contrast to audiovisual services-which have been explicitly excluded from the European Commission's negotiating mandate altogether, at least for the time being-the US and EU have both agreed in principle to include financial services in the negotiations on trade in services. The US is seeking to restrict the scope of those negotiations to investment and market access issues. Back

165   This is not an exhaustive list, nor does it reflect the economic significance of the issues listed-which is often entirely at odds with their political significance. Back

166   Geographical indications are usually place names that identify products originating in a particular geographical location-for example Champagne, Scotch whisky or Parma ham. The EU protects these indications as intellectual property rights in the Single Market, and through its trade policy, also attempts to secure protection for them in third countries and in the WTO. Back

167   Q 105. Back

168   The Buy American Act 1933 governs procurement by the federal government and places conditions on it, including in regard to the level of American content. The Act has only been substantively amended four times, but many complementary provisions have been adopted in the meantime, at both federal and sub-federal level. Back

169   BIS, para 46. Back

170   Q 120. Back

171   IbidBack

172   IbidBack

173   Appendix 4: Evidence taken during visit to Washington, D.C., para 144. Back

174   Q 120. Back

175   Several UK trade unions shared this view, see for example TUC, para 12 or Unite, para 2.5. Back

176   Appendix 4: Evidence taken during visit to Washington, D.C., paras 23-25. Back

177   Appendix 4: Evidence taken during visit to Washington, D.C., para 64. Back

178   Appendix 4: Evidence taken during visit to Washington, D.C., para 144. Back

179   See evidence volume for note of the discussion. Back

180   See para 174. Back

181   Appendix 4: Evidence taken during visit to Washington, D.C., paras 94-95. Back

182   Appendix 4: Evidence taken during visit to Washington, D.C., para 96. Back

183   Appendix 4: Evidence taken during visit to Washington, D.C., para 97. Back

184   Ibid., para 98. Back

185   Q 188. Back

186   QQ 196-197. Back

187   Appendix 4: Evidence taken during visit to Washington, D.C., para 74 and para 117. Back

188   Appendix 4: Evidence taken during visit to Washington, D.C., para 71. Back

189   Appendix 4: Evidence taken during visit to Washington, D.C., para 77. Back

190   Q 105. Back

191   Q 164. Back

192   IbidBack

193   The term "hormone-free" is used to refer to beef which has not been treated with hormone implants, but is potentially misleading to the extent that all beef contains naturally-occurring hormones, and indeed some cuts (e.g. from bulls) contain more hormones naturally than others which have been treated with hormone implants. Back

194   Q 105. Back

195   Appendix 4: Evidence taken during visit to Washington, D.C., para 78. Back

196   Q 159. Back

197   Q 166. Back

198   Q 169. Back

199   Q 70 and Q 77. Back

200   Q 121. Back

201   Q 245. Back

202   IbidBack

203   QQ 121-123. Back

204   Q 161. Back

205   Q 105.  Back

206   Compound GIs refers to designations that include more than one term, e.g. "Mozzarella di Bufala Campana" rather than mozzarella. Back

207   Appendix 4: Evidence taken during visit to Washington, D.C., para 75. Back

208   Ibid., para 76. Back

209   Appendix 4: Evidence taken during visit to Washington, D.C., para 54. Back

210   Ibid., para 53. Back

211   Q 121. Back

212   Q 195. Back

213   Appendix 4: Evidence taken during visit to Washington, D.C., para 75. Back

214   See for example written evidence from Which?, Unite, AFL-CIO,GMB, Linda Kaucher, OurNHS openDemocracy, and the TUC. Back

215   Q 125, Q 46. Back

216   Q 89. Back

217   Q 11. Back

218   Q 209. Back

219   QQ 213-214. The case in question concerned a Canadian funeral company, the Loewen Group, which was sued by a local competitor in a Mississippi court. The Loewen Group subsequently filed an investment arbitration against the US, alleging numerous violations of the North American Free Trade Agreement (NAFTA). For more detail on the Loewen v US case, see the supplementary evidence submitted by Lord Goldsmith. Back

220   Lord Goldsmith, supplementary written evidence. Back

221   Q 258 Back

222   Q 125. Back

223   Q 46. Back

224   Q 246. Back

225   Q 212. Back

226   IbidBack

227   Q 258. Back

228   TUC, para 6. Back

229   Q 246. Back

230   Q 227. See also TUC, paras 5-10. Back

231   Q 227. Back

232   Q 46. Back

233   Q 260. Back

234   Q 219. Back

235   Q 222. Back

236   Q 192. Back

237   Q 222. Back

238   Q 246. They also suggested that investment arbitration violated the principle of judicial independence, because arbitrators are typically private lawyers paid per case rather than judges paid a fixed salary.  Back

239   TUC, para 7. Back

240   Q 214. Back

241   Q 222. Back

242   Q 217. Back

243   TUC. Back

244   Q 218. Back

245   Q 223. Back


 
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