BRUSSELS The European Commission has launched three months of public consultations about a planned EU-U.S. trade deal to allay concerns that it will undermine EU members' rights to set laws on public safety or the environment.
EU Trade Commissioner Karel De Gucht wrote to the trade and economy ministers of the EU's 28 members, saying consultations would concern the contentious investment protection provisions of the world's largest free-trade deal.
Consumer and environmental groups and some EU lawmakers have been particularly critical of investor-to-state dispute settlement (ISDS), a provision allowing foreign companies to bring claims against a country if it breaches a trade treaty.
They say including it in the trade deal, known as the Transatlantic Trade and Investment Partnership (TTIP), would limit a country's right to pass laws to protect its citizens or the environment.
Some cite as a warning the Asian arm of tobacco group Philip Morris's (PM.N) legal challenge of Australia for introducing plain cigarette packaging, arguing it was a breach of Australia's trade deal with Hong Kong.
De Gucht wrote in the letter seen by Reuters on Tuesday that some critics had "got the wrong end of the stick".
De Gucht said in the letter that all EU member states except Ireland currently had ISDS clauses in investment agreements with third countries, and that ISDS had been part of all the negotiating directives the Commission had received.
"The European Commission is not pushing something new, but pursues a policy that is firmly anchored in national policies and binding treaties," he wrote.
However, he also said that he would seek to improve the system to stop potential legal loopholes being used for "frivolous" claims against a state or potential abuse through shell companies.
The European Commission said that no other part of the negotiations were affected by the public consultation and that TTIP talks would continue as planned.
Friends of the Earth Europe said it welcomed the Commission's move as long as it did take public opinion into account.
"It clearly shows the Commission is reconsidering this part of the trade agreement," said Paul de Clerck, head of the environmental group's economic justice team.
He acknowledged there were already some 3,000 bilateral trade agreements in place including ISDS, but that many were with developing countries without strong multinationals.
"With Canada and especially the United States it changes the whole game. With the U.S. claim culture it is very likely that companies will use that to challenge whatever policy or legislation," he said.