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Exclusive: EU wants to exclude utilities from U.S. trade talks
May 21, 2013 / 2:48 PM / 5 years ago

Exclusive: EU wants to exclude utilities from U.S. trade talks

BRUSSELS (Reuters) - The European Union wants to exempt state control of utilities and support for creative industries from free trade talks with the United States due to start next month, the latest draft of Brussels’ negotiating mandate showed on Tuesday.

A man walks next to world's biggest gas turbine inside the gas-fired power plant of German utility giant E.ON in Irsching near the southern Bavarian town of Ingolstadt April 26, 2013. REUTERS/Michaela Rehle

The draft outlines several exceptions that preserve EU states’ control over sensitive sectors, including the power and water industries and government controlled infrastructure and are likely to be the main areas it seeks to cordon off from negotiations.

Senior officials including EU trade chief Karel De Gucht and British Prime Minister David Cameron have called for the bloc to come to the table with a completely open mind and officials say it is unlikely further substantial exemptions will be added.

Unlike in the United States, many national European electricity grids and power generators are state-controlled, and governments fear that a deal supporting the free flow of U.S. companies and money into the sector would erode their influence over assets seen as vital to national infrastructure.

“The high quality of the EU’s public utilities should be preserved,” said the draft, seen by Reuters, which sought in particular to exclude “services supplied in exercise of government authorities.”

An EU official familiar with the documents said the document’s language was intended to ensure member states were able to regulate utilities and maintain their ability to control investment in these sectors.

Another EU source confirmed this.

France had also threatened to block the start of the talks unless the audio-visual industry is excluded.

“The agreement shall not contain provisions that would risk prejudicing the Union’s or its member states’ cultural and linguistic diversity, namely in the audio-visual sector, nor limit those member states from maintaining existing policies and measures in support of the audio-visual sector given its special status within EU law,” the draft mandate said.

EU sources said that France has been fighting for a stronger text that not only commits to maintaining the status quo but also giving states the ability to strengthen such policies.

DECADES OF WAITING

After the long drawn-out failure of the Doha talks on a world trade deal, officials have turned back to bilateral agreements in a bid to boost growth.

Brussels estimates a U.S. deal could increase Europe’s economic output by 86 billion euros a year, or 0.5 percent of gross domestic product, and the U.S. economy by 65 billion euros or 0.4 percent by 2027. nL5N0BD7T8

Trade barriers between the two sides are already quite limited and the talks are expected to focus on harmonizing regulations, so that a product or service approved in Europe can be readily sold in the United States and vice versa.

The latest draft follows talks with member states after the European Commission proposed a negotiating mandate in March.

Some EU member states are also concerned about a procedure included in the mandate to allow for resolving disputes between investors and states.

While such dispute mechanisms are increasingly common in free trade agreements, some EU diplomats say they are not necessary for two parties with strong legal systems already.

Campaigners warn creating a dispute mechanism would open EU members to lawsuits from firms seeking to weaken environmental and public health provisions and that the mere threat of a dispute could force states to give in to big business.

The updated draft includes language designed to calm such fears.

“Investor-to-state dispute settlement mechanism should contain safeguards against frivolous claims,” the draft said.

“The inclusion of investment protection and investor-to-state dispute settlement will depend on whether a satisfactory solution meeting EU interests... is achieved.”

Editing by Patrick Graham and Henning Gloystein

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