WASHINGTON/BRUSSELS (Reuters) - The United States is wary of a European Union proposal for a new court system to settle investment disputes as part of the world’s biggest free-trade agreement, U.S. Trade Representative Michael Froman said.
A Pacific trade deal agreed earlier this month amended rules allowing foreign companies to take legal action against governments to add more safeguards, he said, and Washington was open to discussing other reforms as part of a proposed trade deal with the EU.
But he was not sure about the EU’s idea for a new court system with an appeal tribunal, proposed after concerns that U.S. multinationals could use private arbitration rules in the Transatlantic Trade and Investment Partnership (TTIP) to challenge European food and environmental laws.
“Because of the high standards and safeguards in our agreements, there have been very few cases against the U.S., and to date, the government has never lost,” Froman said in an interview Wednesday, in comments approved for release on Thursday.
“It’s not obvious to me why you would want to give companies a second bite of the apple.”
Investor-state rules aim to protect foreign companies from unfair treatment by host governments and provide compensation if assets are appropriated. But critics have also noted a trend towards challenges over regulations, such as Marlboro maker Philip Morris’s (PM.N) action against Australian laws mandating plain packaging for cigarettes.
Froman said Washington’s baseline for TTIP included both model U.S. investor-state rules adopted in 2012 and a revised version contained in the 12-nation Trans-Pacific Partnership (TPP). Details of that agreement are yet to be released.
TPP safeguards included no forum shopping, to prevent companies going back to domestic courts if they lose challenges in special investor-state dispute forums, he said.
They also enshrined governments’ right to regulate for health safety and the environment, put the burden of proof on the claimant to prove there is a violation of the standard, and stopped companies suing on lost profit expectations or because of an expectation that regulations would remain static, he said.
Froman said there was every chance TTIP, which seeks to harmonize regulations as well as cut tariffs on exports, could be wrapped up in 2016.
“I don’t think there’s any reason it can’t get done before this administration is over. I think that’s in our mutual interest,” he said.
Editing by Bernadette Baum