[CTC] IUST: CETA/TISA: Uncertainty around CETA likely to delay EU's data flow proposal in TISA

[Deborah James]

As everyone laser-focused on ensuring TPP doesn¹t pass ­ for those who might
be interested, the US is also working hard to finalize the TiSA (including
the TPP financial data ³fix²) by early December, completely under the radar
screen as most media have not even published a single article about it ­ and
it might not even be subject to a Congressional vote! Very worrying!

INSIDE US TRADE
Uncertainty around CETA likely to delay EU's data flow proposal in TISA
October 21, 2016
The European Council's inability thus far to approve the Comprehensive
Economic and Trade Agreement between the EU and Canada is expected to
prevent the European Commission from tabling a proposal on data flows in the
Trade in Services Agreement by the November round, according to informed
sources.

Sources had initially expected <https://insidetrade.com/node/156170>  the EU
to come forward with language on data flows ahead of the Nov. 2-10 TISA
round, but that expectation changed this week after a regional Belgium
parliament voted against CETA <https://insidetrade.com/node/156281> ,
thereby not allowing Belgium's federal government to approve the deal at an
Oct. 21 European Council meeting. Belgium was the only EU member state that
did not endorse the deal, Council President Donald Tusk said in remarks
after the meeting.

The Commission must first get a TISA proposal on data flows approved by its
member states, which it has not yet done. This means the earliest the
commission can come forward with its proposal would be in the middle of the
November round, according to one EU source.

A U.S. industry source said the EU proposal is now not expected until the
end of November. If the EU waits that long to come forward with its
proposal, it would then present other TISA parties with a ³take it or leave
it² scenario because the proposal could come shortly before a Dec. 5-6
ministerial where negotiators are hoping to wrap up the TISA talks
<https://insidetrade.com/node/156015> .

But the EU delay in bringing forward a proposal on data puts that time line
in jeopardy, especially because negotiators have yet to resolve other
outstanding issues on electronic payment services and reinsurance, as well
as the U.S. proposed ban on data localization that will cover financial
services firms. The U.S. sees its proposal as critical because it was part
of a deal to appease industry and some members of Congress who had withheld
their support for the Trans-Pacific Partnership because it did not include a
data localization ban for financial services firms.

Part of the issue on data flows is an internal Commission debate over how to
structure a proposal that will not undermine the EU's data protection
regime. The European Parliament and civil society groups have also
highlighted the need for strong data protections. If language on data flows
is included, they say the EU's data protection regime should separately be
updated.

³The TiSA negotiations are advancing rapidly, with other countries setting
the rules while EU decision makers are trying to find a solution among
themselves,² Lea Auffret, a trade officer for The European Consumer
Organization (BEUC), wrote in an Oct. 20 blog post
<http://www.beuc.eu/blog/why-privacy-safeguards-in-trade-deals-need-urgent-i
mprovement/> . ³That is why during this debate in the European Parliament,
some MEPs, BEUC and other NGOs have proposed a fall-back option: if rules on
data flows are in the end included in TiSA and TTIP, current data protection
safeguards in the agreements absolutely need to be improved.²

Another possible obstacle for TISA is the uncertain future of TPP. One
source speculated that if Congress fails to pass TPP in the upcoming
lame-duck session, TISA members could rethink their ambition for the deal.
This is because countries that are party to both agreements may have put
forward their TISA market access offers with the understanding that they
would receive certain benefits, not necessarily related to services, from
TPP. Without those benefits, they could become less willing to offer
concessions in TISA, the source said.

European leaders <https://insidetrade.com/node/156240> , and Canadian Trade
Minister Chrystia Freeland <https://insidetrade.com/node/156282>  are making
arguments for CETA that are similar to the arguments U.S. leaders are making
for TPP -- that failure to ratify the deals would undermine other countries'
faith in the U.S. or EU as a trading partner.

Also unresolved in TISA is the EU's proposal to carve out new services from
national treatment coverage under the deal. The EU's approach is also backed
by Norway, and possibly also Switzerland and Iceland, according to a source
close to the negotiations.

U.S. Trade Representative Michael Froman highlighted the differences
<https://insidetrade.com/node/156270>  between the U.S. and EU on the new
services issue in a video address at the Global Services Summit on Oct. 19.
Sources have said the EU's new services carveout would be a ³poison pill² to
the agreement if it's included in its second revised market access offer.
Industry and key congressional members have said rejecting the EU's offer is
a priority in the talks.

However, it is unclear how much influence members of Congress can have in
the negotiations as they may not have the opportunity to vote on a completed
TISA deal. Multiple sources said that U.S. officials are privately saying
that Congress will not have to approve TISA because it will not require any
changes to U.S. law, rather only regulations that can unilaterally be
changed by the appropriate government agencies. USTR did not respond to a
request for comment.

An aide for Senate Finance ranking member Ron Wyden (D-OR) told Inside U.S.
Trade that ³until there is a final agreement, it is too early to speculate
whether it will need congressional approval.² --Brett
Fortnam(bfortnam at iwpnews.com <mailto:bfortnam at iwpnews.com> )

 
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