Last Thursday, we had a coffee morning discussion with Professor Andrew Lang from LSE’s Law Department regarding the Transatlantic Trade and Investment Partnership (TTIP) and other issues related to the current state of economic diplomacy. TTIP is a mega regional trade agreement that is currently being negotiated between the US and EU, which has sparked much public interest due to how the negotiations have been conducted, and some controversial provisions.
Professor Andrew Lang gave us a concise overview of the three pillars underpinning the TTIP negotiations: market access, regulatory cooperation, and rules pertaining to issues such as investment protection. A particular sticking point in the negotiations has been the Investor-State Dispute Settlement (ISDS), which is not only a source of contention between US and EU negotiators, but also massively controversial internationally despite its inclusion in numerous existing bilateral investment treaties and trade agreements. The EU has openly acknowledged deficiencies with the existing ISDS system and has proposed an Investment Court System to address these problems, but the US prefers making minor tweaks to the existing system. The problems with the ISDS system has much to do with how the system is structured, with no mechanism for resolving interpretative divergences and conflicting jurisprudence, which perpetuates a legal ambiguity which makes states uneasy about ISDS provisions. While both EU and US seem to agree that adjustments need to be made to the current system, it is not so clear if they will come to an agreement on how the system should be adjusted. Any agreement between the EU and US will mark a significant step in attempting to fix a system that has been riddled with controversy.
Many characteristics of the TTIP negotiations are actually emblematic of the current state of and recent trends in economic diplomacy. Firstly, they mark an attempt by the US to write the rules of the trading regime, in light of how the multilateral trade system underpinned by WTO rules and negotiations seems to be faltering. Secondly, public concerns about the level of transparency in the TTIP negotiations are not new. During the discussion we noted some of the similarities between the ongoing TTIP negotiations and the negotiations on the Multilateral Agreement on Investment (MAI) between 1995 and 1998. The MAI negotiations marked a turning point in the involvement of civil society and public opinion in economic diplomacy, and since then public demand for enhanced transparency in international economic negotiations has been a force that negotiators have had to grapple with. The EU has clearly gleaned some lessons from the MAI experience, with its concerted efforts in public consultation and engagement. Nonetheless, the question remains as to how much transparency is sufficient and ideal, to attain the tricky balance between public accountability and the necessity for flexibility of negotiating positions. Given these characteristics, the process and outcome of the TTIP negotiations will give some valuable indications about the future of international economic diplomacy, and should be worth following.