EUROPEAN COMMISSION


What role do you see FTAs playing in increasing inbound FDI and assisting Europe’s return to growth? I expect our FTAs to play a very positive role in bringing Europe back on track. First of all, EU agreements cover both market access and investment protection, and empirical evidence shows that such a combination boosts investment flows.


Second, EU agreements also address issues such as IPR, public procurement


and trade in services that are important to investors. This enables our agree- ments to reflect the complexity of global value-added chains.


Third, EU agreements will bring clarity to controversial issues, such as in-


direct expropriation or transparency in dispute settlement proceedings, leading to greater legal certainty for investors.


states and various countries will be replaced by single, comprehensive agree- ments at EU level. In addition to maintaining a high level of protection for in- vestors, this creates a level playing field between them.


And every investment in the EU can help our economy, for example, by cre- ating jobs or expanding production capabilities. We are determined to use our agreements to ensure investment plays its part in Europe’s economic recovery and return to growth.


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The prospective Transatlantic Trade and Investment Partnership has been described as more than a traditional trade agreement, in that it aims to make the EU and US regulatory systems more compatible. But does mutual recognition run the risk of lowering quality of goods and services offered in the EU? Absolutely not. We should not confuse our intention to enhance regulatory compatibility across the Atlantic, which in some cases could be achieved through mutual recognition, with a race to the bottom. Both parties are com- mitted to maintaining their high levels of protection and will continue to take measures necessary to achieve legitimate public policy objectives and guarantee the safety of consumers.


Overall, these elements will make the EU even more attractive for investors.


We are determined to use our agreements to ensure investment plays its part in Europe’s economic recovery Finally, the bilateral investment treaties in place today between member


EXPERT ANALYSIS What we want to do is find out where we diverge unnecessarily, since the


EU and US often choose different approaches to achieve the same goal. And where it makes sense to do so, we want to make regulations more compatible or recognise that differing regulations have the same effect. We can also look at ways to make our sophisticated regulatory systems work more smoothly to- gether. The best approach is to prevent new barriers rather than fixing them later on. In industrial sectors such as automobiles, chemical, pharmaceutical and medical devices, there is clear scope for regulatory convergence.


Are you able to share the key pressure points in the EU-US TTIP negotiations? It is clear that both the EU and US have a lot to gain from liberalising trade and investment. Both sides have entered the TTIP discussions with a high level of ambition and commitment to the negotiations. And we both see this agree- ment as having the potential to deliver something transformative for our economies in terms of market access, regulatory compatibility and rulemaking. As we already have very low tariff arrangements we expect that the most sig- nificant gains would be obtained by tackling regulatory, so-called behindtheborder issues. A key issue for the EU remains the inclusion of fi- nancial services regulatory matters in these discussions – an area where the US is still hesitating. But the EU and US represent around 70% of the world’s fi- nancial services market, and we have a unique chance to reduce the regulatory barriers that keep us from fully exploiting this comparative advantage.


Although regulatory issues will clearly be the main focus of the EU in these


negotiations, improved market access for public procurement, services and in- vestments are also high on our list of priorities. Finally, we also intend to work together on developing global rules and standards that will shape the future business environment of the world in the years to come.


Talk surrounding a prospective EU-China investment agreement continues. In your view, what are the key ingredients for such an agreement to encourage EU investment in China, which at present is relatively low? It is true that today’s level of bilateral investment is not as high as could be ex- pected from two of the most important economic blocs on the planet. But this also means that there is a lot of untapped potential, which we want to draw upon with our investment agreement.


For the agreement to be successful, we will first need to reduce barriers to


investing in China and address market access issues such as mandatory joint ventures, which are inhibiting investment flows. But also, to make investing in China a more attractive option for Europeans, we must improve the protec- tion of European investments and legal certainty for our investors in China. We are looking forward to starting talks on an agreement soon, as the Foreign Affairs Council gave its green light on October 18 for the European Commis- sion to begin negotiations.


Rupert Schlegelmilch Director, European Commission Directorate General for External Trade, Directorate B


Brussels, Belgium W: ec.europa.eu/trade


About the author Rupert Schlegelmilch studied law and political science in Freiburg im Breisgau and Berlin, Germany. After a few years with the German Foreign Ministry, he joined the Directorate-General for External Relations of the European Commission in Brussels in 1993 as an OECD (investment) and later WTO negotiator. From 1998 to 2003 Schlegelmilch worked on WTO matters in the European Commission’s office in Geneva. He then worked extensively on trade and sustainable development, and managed DG Trade’s relations with Civil Society in Brussels. Between 2002 and 2006 Schlegelmilch was responsible for the EU’s bilateral trade relations with Greater China. This was followed by a period as head of the unit responsible for trade relations with the Americas (2006 – 2009) before taking up his assignment as head of the unit for trade relations with South Asia, Korea and Asean. From 1 April to 31 December 2011 he was the Director for Directorate E, responsible for public procurement and intellectual property, and bilateral trade relations with CIS countries, the Balkans, the candidate states and EFTA members. As of 1 January 2012, Schlegelmilch is the director for Directorate B, responsible for services and investment, intellectual property and public procurement.


IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014 7


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