Many South Africans saw the irony, to say the least, in the European Commission’s (EC’s) announcement on January 21 of its intention to suspend investment treaty negotiations with the US under the Transatlantic Trade and Investment Partnership (TTIP) Agreement in order to address what it termed “unprecedented public interest” in the European Union (EU) on the matter of investment treaties.

The acknowledgement of these legitimate concerns follows the EC’s stinging rebuke of the South African government, just six months earlier, in July 2013, over our efforts to address the very same concerns.

Is this a case of double standards or does it mark a real shift for EC investment protection policy, bringing it closer to South Africa’s thinking on the matter?

Whatever the outcome of the wide consultations that will now unfold in the EU, the issues are genuine and arise from growing awareness of the deep malaise in the current international investment protection regime, with respect to both the legal provisions contained in the treaties and the current arbitration system for their enforcement.

The EC’s January announcement identifies many of the issues. In reaffirming the right of a government to regulate in the public interest, the EC is now acknowledging that the current regime has not struck the correct balance between that sovereign right and the rights of investors to protection.

The call to “close loopholes” in treaties is a recognition that unscrupulous com­panies have exploited this flawed system for unfair financial gain at the expense of tax­payers. The proposal for an arbitrator code of conduct is particularly telling as it confirms the lack of fairness, transparency and even-handedness in the current system.

Anything less than a major overhaul will not extinguish growing calls for an outright rejection of the current regime.

These issues do need to be tackled, but other questions also need to be answered. Foremost is the question of a compelling rationale for an investment treaty under the TTIP.

There is no evidence that an agreement will have any impact on already significant bilateral investment flows between the US and the EU. In insisting on retaining provisions that allow for resorting to international arbitration, the EC is inadvertently suggesting that existing investment protection law in the EU (or the US) is inadequate.

If, however, the motivation is to set a new precedent and new standards of protection for treaties with other governments, we will see a deepening of global divisions on investment treaty policy that will confound the search for a consistent and inclusive arrangement in future.

In clarifying a more progressive investment policy approach, the EC will also need to address, in a more decisive manner than it has to date, the growing inconsistency between its new thinking and the continued existence of the old-style, varied and risk-prone bilateral investment treaties maintained by its individual member States.

The widening differences in the standards of investor protection in the EU that this creates result in greater uncertainty and heightened risks for governments and for foreign investors in the EU.

Fortunately, South Africa has showed a way out by moving to terminate thoseout-dated treaties and relying on robust national legal frameworks for investor protection. An inclusive multilateral dialogue – not negotiations – on all these matters is increasingly urgent.

• Carim is the deputy director-general: international trade and economic development at the Department of Trade and Industry