The European Commission has announced new measures to make the negotiation of the Transatlantic Trade and Investment Partnership ("TTIP") with the United States more transparent. This move comes after criticism of the opaqueness of the process. This increased transparency presents opportunities for businesses, both to plan for TTIP and, potentially, to seek to change it while it is still under negotiation.
If and when it enters into force TTIP is set to have a significant impact on businesses and investors operating in the United States and the EU. TTIP will remove trade barriers between the EU and the United States, making it easier and cheaper for companies to sell and buy goods and services. It is estimated that the EU economy will be increased by 0.5% of GDP, or €120 billion annually, as a result of TTIP.
One of the key chapters in TTIP will address the protection of investments. It is likely that the investment chapter will include investment protection standards, such as protection against uncompensated expropriation and the requirement that foreign investors be afforded fair and equitable treatment. However, a hotly debated issue is whether or not TTIP should include investor-State dispute settlement ("ISDS"). Most investment treaties contain ISDS. This is a potentially powerful mechanism for a foreign investor as it allows an investor to commence international arbitration against a State, without the need for any further consent on the part of that State.
There have been doubts as to whether TTIP will include ISDS, in particular because of opposition from Germany. However, the German Economic Affairs Minister has dropped his opposition to the inclusion of ISDS in the Comprehensive Economic and Trade Agreement ("CETA"), an EU trade and investment agreement with Canada. This may increase the likelihood that TTIP will also feature an ISDS mechanism.
New rules on transparency
One point of criticism about TTIP has been the aura of secrecy surrounding the negotiations. In response, the Commission has adopted a Communication outlining how the negotiation process for TTIP will be made more transparent. This will include making public more negotiating texts and publishing an updated list of TTIP documents shared with the European Parliament and the Council. More generally, from 1 December 2014 Commissioners, their Cabinets, and the Directors-General of the Commission services are required to publish information on meetings which they attend.
Opportunities for businesses
All companies operating across the Atlantic should be aware of the possible impact TTIP could have on their business, as well as the opportunities. TTIP will open new markets and opportunities by decreasing barriers to trade. Increased transparency in the negotiation process is to be welcomed. It will allow companies to plan more effectively for the implementation of TTIP. In addition, it provides companies with the opportunity to lobby (either individually or as part of industry groups) for changes to TTIP.
We frequently advise investors on investment protection, including the opportunities provided to them by new investment treaties. We also regularly act for both investors and States in arbitrations under investment treaties.