Candidate for top EU post stumbles into trade minefield

Reuters News
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Posted: Sep 27, 2014 12:56 PM

By Adrian Croft

BRUSSELS (Reuters) - The European Union's trade commissioner-designate stumbled into a political minefield on Saturday by suggesting she wanted to exclude a controversial investor protection clause from a planned EU-U.S. trade agreement.

A European Commission source said however that the furor was the result of an error in a leaked draft version of testimony by Sweden's Cecilia Malmstrom that would be corrected in the final version.

A German member of the European Parliament for the Greens posted on his website the written responses of Malmstrom, put forward to be trade commissioner in Jean-Claude Juncker's new European Commission, to questions posed by legislators before Malmstrom's confirmation hearing on Monday.

In her prepared answers, Malmstrom addressed concerns over a dispute settlement provision that could form part of an ambitious EU-U.S. free trade agreement that is under negotiation.

Consumer and environmental groups and some EU lawmakers have been particularly critical of investor-state dispute settlement (ISDS), a provision allowing foreign companies to bring claims against a country if it breaches a trade treaty.

They say including it in the EU-U.S. trade deal, known as the Transatlantic Trade and Investment Partnership (TTIP), would limit a country's right to pass laws to protect its citizens or the environment.

In the document posted on EU lawmaker Sven Giegold's website, Malmstrom quotes Juncker as saying that no limitation of the jurisdiction of courts in EU member states would be accepted in the new transatlantic trade agreement.

"This clearly means that no investor-state dispute settlement mechanism will be part of that agreement," the document quoted Juncker as saying.

"I fully support this approach of the President-elect (Juncker) and will work in this sense in the negotiations," Malmstrom said.

SOCIALISTS PLEASED

Malmstrom's comment was pounced on by political opponents of the investor protection mechanism.

The Socialist group in the European Parliament issued a statement hailing "the significant shift in EU trade policy indicated by Commissioner-designate Malmstrom."

"This is extremely welcome news and a major victory for the Socialists and Democrats Group which has led Europe-wide calls for this mechanism to be scrapped," the Socialists' trade spokesman David Martin said in the statement.

But a European Commission source, speaking on condition of anonymity, said it was all a mistake and the quotation attributed to Juncker would not appear in the final version of Malmstrom's written testimony.

The source blamed the mistake on an unidentified official who had inserted words that Juncker had not actually uttered.

What Juncker did say in political guidelines issued in July was that he would not accept that "the jurisdiction of courts in the EU member states is limited by special regimes for investor disputes. The rule of law and the principle of equality before the law must also apply in this context."

Malmstrom, who is commissioner for home affairs in the current European Commission, is likely to face tough questioning about her position on ISDS at her confirmation hearing on Monday, when her official written responses will be made public.

The EU-U.S. talks to create the world's largest free-trade pact have met rising opposition from European farmers, unions and nationalist politicians who say the agreement will only benefit big companies, despite studies showing an accord could increase economic growth.

Germany's economy minister said on Thursday that Berlin would not sign a trade pact between Canada and the EU unless a similar investment protection clause was scrapped.

(Editing by Mark Trevelyan)