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EU halts ground-breaking investment talks with United States

The European Commission has suspended its talks with the United States, which it hopes will provide the largest free-trade agreement in world history. The EU has decided to suspend talks for three months to allow a consultation on rules for businesses, reports the BBC.

The EU and the US announced last year that it would begin negotiation on the Transatlantic Trade and Investment Partnership (TTIP).

A study commissioned at the end of 2013 concluded that the deal could be worth as much as £100bn to the EU, and around £80bn to the United States, adding around 0.5% to the GDP of both.

Although initially involving only the United States and the EU, it is hoped that the TTIP will merge with trade agreements with Canada and Mexico to cover the whole of both continents in future.

Although negotiations were ongoing, several EU non-governmental organisations and others have questioned the rules on investment, believing that the agreement could subject countries to aggressive investment from powerful US companies.

As a result the EU has chosen to suspend talks to allow it to consult on opinions on how the rules should be set to protect EU companies and citizens.

"[Governments] must also find the right balance and treat investors fairly, so they can attract investment... Some existing arrangements have caused problems in practice, allowing companies to exploit loopholes where the legal text has been vague," said EU Trade Commissioner Karel De Gucht.

Several NGOs are concerned that the terms of the deal could mean that companies could sue EU governments if they impose environmental or social legislation that hits investor profits.

The BBC reports that Philip Morris tobacco is currently suing the Australian Government over the plain packaging legislation using a mechanism included in the Australia-Hong Kong bilateral trade agreement.