<html><head></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; color: rgb(0, 0, 0); font-size: 14px; font-family: Calibri, sans-serif;"><div>As everyone laser-focused on ensuring TPP doesn’t pass – for those who might be interested, the US is also working hard to finalize the TiSA (including the TPP financial data “fix”) 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! </div><span id="OLK_SRC_BODY_SECTION"><div dir="ltr"><div lang="EN-US" link="#0563C1" vlink="#954F72" fpstyle="1" ocsi="0"><div style="direction: ltr;font-family: Tahoma;color: #000000;font-size: 10pt;"><div style="font-family: Times New Roman; color: #000000; font-size: 16px"><div id="divRpF765715" style="direction: ltr;"><br></div><div></div><div><div class="WordSection1"><p class="MsoNormal">INSIDE US TRADE</p><h1 style="margin-right:0in; margin-bottom:7.5pt; margin-left:0in; background:white"><span style="font-size:22.0pt; font-family:"Arial",sans-serif; color:#333333">Uncertainty around CETA likely to delay EU's data flow proposal in TISA</span></h1><p class="MsoNormal" style="margin-top:12.0pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">October 21, 2016</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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.</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">Sources</span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"><a href="https://insidetrade.com/node/156170" target="_blank"><span style="color:#0066CC; border:none windowtext 1.0pt; padding:0in">had
initially expected</span></a></span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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</span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"><a href="https://insidetrade.com/node/156281" target="_blank"><span style="color:#0066CC; border:none windowtext 1.0pt; padding:0in">voted
against CETA</span></a>, 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.</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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.</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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 “take it or leave it” scenario because the proposal could come shortly before a Dec. 5-6 ministerial where negotiators are hoping</span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"><a href="https://insidetrade.com/node/156015" target="_blank"><span style="color:#0066CC; border:none windowtext 1.0pt; padding:0in">to
wrap up the TISA talks</span></a>.</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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.</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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.</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">“The TiSA negotiations are advancing rapidly, with other countries setting the rules while EU decision makers are trying to find a solution among themselves,” Lea Auffret, a trade officer
for The European Consumer Organization (BEUC), wrote in</span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"><a href="http://www.beuc.eu/blog/why-privacy-safeguards-in-trade-deals-need-urgent-improvement/" target="_blank"><span style="color:#0066CC; border:none windowtext 1.0pt; padding:0in">an
Oct. 20 blog post</span></a>. “That 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.”</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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.</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"><a href="https://insidetrade.com/node/156240" target="_blank"><span style="color:#0066CC; border:none windowtext 1.0pt; padding:0in">European leaders</span></a>, and</span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"><a href="https://insidetrade.com/node/156282" target="_blank"><span style="color:#0066CC; border:none windowtext 1.0pt; padding:0in">Canadian
Trade Minister Chrystia Freeland</span></a></span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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.</span></p><p style="margin-right:0in; margin-bottom:12.0pt; margin-left:0in; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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.</span></p><p style="margin-right:0in; margin-bottom:12.0pt; margin-left:0in; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">U.S. Trade Representative Michael Froman</span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"><a href="https://insidetrade.com/node/156270" target="_blank"><span style="color:#0066CC; border:none windowtext 1.0pt; padding:0in">highlighted
the differences</span></a></span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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 “poison pill” 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.</span></p><p style="margin-right:0in; margin-bottom:12.0pt; margin-left:0in; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">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.</span></p><p style="margin-right:0in; margin-bottom:0in; margin-left:0in; margin-bottom:.0001pt; background:white"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">An aide for Senate Finance ranking member Ron Wyden (D-OR) told</span><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><em><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black; border:none windowtext 1.0pt; padding:0in">Inside
U.S. Trade</span></em><span class="apple-converted-space"><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black"> </span></span><span style="font-size:9.0pt; font-family:"Arial",sans-serif; color:black">that “until there is a final agreement,
it is too early to speculate whether it will need congressional approval.” --<em><span style="font-family:"Arial",sans-serif; border:none windowtext 1.0pt; padding:0in">Brett Fortnam</span></em>(<a href="mailto:bfortnam@iwpnews.com" target="_blank"><span style="color:#0066CC; border:none windowtext 1.0pt; padding:0in">bfortnam@iwpnews.com</span></a>)</span></p><p class="MsoNormal"> </p></div></div></div></div><p>
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