Online Protest Delays EU Plan To Resolve US Trade Row

(Reuters) - European campaigners against an EU-U.S. accord have held up progress towards the world's biggest free trade deal by deluging an online public consultation that EU officials had hoped would help them unblock a key issue.

Of almost 150,000 submissions to the public forum on how to protect businesses from unfair government interference, over 95 percent were from supporters of a small group of organizations hostile to a deal with Washington and who submitted identical or very similar responses, two EU officials have told Reuters.

Investor protection is among the most contentious issues in the proposed EU-U.S. trade pact because Europeans fear U.S. multinationals would use the investor-to-state dispute settlement (ISDS) mechanism to challenge food and environmental laws in the EU on the grounds that these were restricting free commerce.

The hijacking of the online consultation has undermined an EU plan to offer credible evidence of widespread concerns about arbitration and ways to handle it. A goal of having a new EU negotiating position on it by November cannot now be met, the officials said, risking a broader delay.

Negotiators hope to conclude talks late next year, but there are signs of growing skepticism on both sides of the Atlantic despite leaders' insistence free trade can revive the economy.

"The public consultation has not delivered a clear-cut conclusion on investment protection. Delays to a decision are now inevitable," said one EU official.

Many responses to the EU survey appeared to be automated or generated by forms filled in on campaign websites, encouraging EU citizens to reject arbitration policy in the planned deal, the Transatlantic Trade and Investment Partnership (TTIP).

The campaign reflects the way Europeans fear being forced to import genetically-modified crops or U.S.-style chlorine-washed chicken, while activists note how a U.S. tobacco company is using arbitration to challenge Australia's smoking laws.

"TTIP is a very bad idea," said Natacha Cingotti, a campaigner at Friends of the Earth Europe. "People are very worried about food safety. ISDS is dangerous."

The Commission, which handles trade policy for the EU's 28 countries, froze negotiations with Washington on the ISDS issue and launched its consultation in January to ease concerns.

The trade accord would create a market of 800 million people, going well beyond the import and export of goods to tie Europe and United States together, adding $100 billion a year to output on both sides of the Atlantic.

The Commission closed the consultation in July and was due to report back in early November to allow negotiations on investment with the United States to resume. TTIP advocates believe a deal should be sealed by the end of 2015.

But EU officials say the Commission is divided over how to draw conclusions from such a wide range of opinions from the consultation and given the huge volume of contributions, a decision may not come before the end of the year.

"MOCK PROCESS"

Even after the release of the report, the Commission is expected to spend the coming months talking directly with interested parties and working out what to do.

About 500 submissions came from NGOs such as trade unions, and business associations, the EU officials said. The remainder came from companies and private individuals.

One protest group, Corporate Europe Observatory, said in its submission that the consultation was "a mock process leading to a pre-determined outcome: the Commission's own agenda".

Critics, such as German Green lawmaker Reinhard Buetikofer, have complained that the Commission failed to ask whether respondents wanted ISDS or not, but the Commission has insisted the consultation is not meant to be a referendum on the issue.

But the ISDS issue has sparked so much public concern that the European Parliament, which must ratify the agreement, says it cannot accept an EU-U.S. trade agreement that contains such provisions, even if they are common to some 3,000 trade and investment treaties around the world.

Germany's economy minister has also voiced resistance to ISDS in the accord, while new European Commission President Jean-Claude Juncker says he will not accept that "the jurisdiction of courts in the EU member states is limited by special regimes for investor disputes."

By contrast, U.S. Trade Representative Michael Froman said last month that it was hard to imagine a trade deal with the European Union without strong investor protection.