BRUSSELS (Reuters) – The European Parliament will seek to support a trade deal with the United States in two crucial votes, but the issue of how companies settle disputes will remain the pact’s Achilles heel, a senior EU lawmaker said on Wednesday.
Opposition to the proposed EU-U.S. free-trade agreement is intensifying in Europe and many EU lawmakers from the far-left, far-right and the Greens are determined to block the pact. The 751-seat chamber has the power to reject it.
While an accord will not be ready before 2016, the European Parliament must establish its position similar to the way the U.S. Congress must decide whether to grant President Barack Obama “fast-track” powers to negotiate trade deals.
“It would send the wrong signal if we cannot support an accord,” Bernd Lange, the head of the parliament’s trade committee told Reuters.
“I have a clear signal that the United States is watching,” said Lange, a German socialist, before his committee’s vote on Thursday. The full parliament votes on June 10.
Agreeing a position on a deal, which would encompass half the world’s economy and a third of global trade, has become torturous as lawmakers worry U.S. multinationals will challenge laws in Europe on grounds that they restrict free commerce.
The parliament has become harder to predict since last year’s European elections, in which anti-EU parties did well. The large centre-right European People’s Party (EPP) cannot always count on its traditional centre-left Socialist and Democrat (S&D) allies to pass laws.
“There is no grand coalition in the parliament,” Lange said. “We have enemies of free-trade on the far left, on the far-right we have members who are those against the European Union and then we have some in the middle who are in favour (of the trade accord)” he said.
EU lawmakers, fearful about losing safeguards for European food and labour, have suggested around 1,500 changes to Lange’s 12-page proposal for the parliament’s position on the deal.
Most explosive is the issue of investment arbitration in the accord, which Washington says is non-negotiable, even though EU governments have negotiated some 1,400 investment protection agreements since the 1960s.
The European Commission, which negotiates trade deals, is trying to convince the parliament to support an accord containing arbitration. It hopes to reform the way investors bring cases in trade treaties, amid concerns that U.S. firms could challenge EU law under the current system.
Lange could not guarantee the parliament will agree to a so-called investor-to-state dispute settlement (ISDS) mechanism in negotiations with Washington. “I’m convinced that we will get a resolution that is acceptable to a big majority in the house. Whether or not it will contain ISDS … let’s see.”
“The parliament will not agree to an old-fashioned ISDS, that’s for sure,” he said.
(Reporting by Robin Emmott; Editing by Tom Heneghan)