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On 20 March European Commissioner Cecilia Malmström, responsible for trade, and the United States (US) Trade Representative Michael Froman made a political statement on public services and trade agreements. They confirmed that no European Union (EU) and US trade agreement will prevent governments, at any level, from providing or supporting services in areas such as water, education, health and social services, or impose on governments to obligation to privatise services.

Even though this political declaration can undoubtedly be considered a step forward in ongoing negotiations on the Transatlantic Trade and Investment Partnership (TTIP), the current state of play of negotiations still presents many flaws and uncertainties that do not legally ensure the protection of public services. This is why last week we sent a letter to the Commissioner, to reiterate our concerns and requests.

In this article I want to draw attention to two specific aspects.

First of all, the approach taken so far in the negotiations to exclude from the agreements public services that are publicly funded is not enough. Stating that public services (or in EU jargon, services of general interest) are always publicly funded and that privately funded services are not in the general interest is an over-simplification of how those services are currently funded in the EU. It is a criterion that could have been used twenty years ago, but now the situation is much more complex. The reality is that, at least in some member states, many social, health and education services that are of general interest are privately funded or supported by a hybrid of public and private sources. The financial crisis and the implementation of austerity measures on the one hand, and national cultural traditions that privilege private for-profit provision and private investments on the other, are the main reasons for this situation. In our letter we have gathered some evidence through our members (see in particular Annex B).

Therefore, we call on the Commission and the US to exclude from the scope of agreements public services or services of general interest, in particular in the social, health and education fields, regardless of whether they are publicly or privately funded.

The second aspect regards governments’ rights to regulate. In the joint statement it is argued that EU and US agreements do not impede governments from adopting and maintaining regulations to ensure high quality of services or to protect public interests such as the protection of health.

So far, this is not the case. First of all, to protect governments’ rights to regulate, which includes the definition of safety and quality standards of services, it is necessary to explicitly state governments’ rights to regulate in the investment chapters of trade agreements, alongside the states’ obligations to protect foreign investors. In the agreement between the EU and Canada (CETA), the right to regulate has been included in the preamble and the chapters on environment and labour, but not in the investment chapter. This does not legally protect governments’ rights to regulate.

Secondly, even if 97% of 150,000 responses to the European Commission’s public consultation on the Investor-State Dispute Settlement (ISDS) system said no to this mechanism, the Commission’s approach is to foresee the inclusion of a reformed ISDS in TTIP. ISDS is a one-sided system that privileges foreign investors over anyone else (domestic companies, governments, citizens, other parties whose rights or interests are affected in a lawsuit). It also has a “chilling effect” on state regulatory powers; although arbitration tribunals have no authority to force a government to change the law called into question by the investor, some governments have stepped down from the process to avoid having to pay compensation. CETA includes a provision allowing compensation to be reduced by the arbitrators if the state has removed or amended the measure that is opposed by the foreign investor. We do not consider this acceptable.

It is well known that the tobacco company Philip Morris is currently suing Australia and Uruguay, under similar treaties, for their attempts to discourage smoking. In May 2014 the Tobacco Products Directive was adopted in the EU and will enter into force in member states in two years. The Directive is in line with the World Health Organisation (WHO) Framework Convention on Tobacco Control. If TTIP goes ahead with ISDS, will we expect a challenge by Philip Morris against an EU member state deeming, for example, that rules on plain packaging are unlawful?

This example shows that there is an urgent need to strike a fair and effective balance between the protection of investors’ rights, other human rights enshrined in international agreements and governments’ rights to regulate in trade agreements.