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24th Feb 2024

EP chief brokers internal deal on US trade court

  • Schulz helped convince skeptical MEPs within his old group to back a compromise text on ISDS (Photo: European Parliament)

European Parliament president Martin Schulz helped broker a deal to get parliament to support an international public court system where firms can sue governments.

A compromise hammered out last week aims to extirpate the much-hated investor-state dispute settlement (ISDS) from the EU’s free trade talks with the United States, known as TTIP.

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That new system would replace the more traditional ISDS court, a secret arbitration typically held between two lawyers and a mutually nominated judge, with a public court.

Green French MEP Yannick Jadot told reporters in Strasbourg on Tuesday (7 July) that the parliament president, a former leader of the centre-left S&D group, had “twisted the arm of his group” and piled on enough pressure to convince some German and Spanish MEPs to agree to the new text.

“Schulz, not only wants Greece to have a technocratic democracy, but he wants to give European democracy to international firms", Jadot said.

The new text, to be voted on in a non-binding resolution on Wednesday steered by centre-left German MEP Bernd Lange, now proposes “to replace the ISDS-system with a new system for resolving disputes between investors and states".

It says the new system would be transparent, with debates made public and “where private interests cannot undermine public policy objectives.”

The Socialists say ISDS is now dead because of it.

Critics disagree, noting that a new system in whatever form is unnecessary because national and domestic courts already exist and are good enough.

ISDS supporters, meanwhile, back the Socialist amendment.

“I think it is possible to build a strong ISDS on the basis of this text”, said Sweden’s centre-right MEP Christofer Fjellner.

He said ISDS settlements only results in compensations, not a rewrite of national laws or regulations.

“The Socialist group seem to need some kind of help from Schulz to find an agreement”, he added.

The Schulz factor

One source said the latest draft was concocted by German chancellor Angela Merkel’s office and then introduced to the parliament via Schulz.

A second and third source both estimated that up to a third of the Socialist group still remain opposed, despite Schulz’s input.

“I think it's slightly less than one-third of S&D MEPs, [while] a solid majority support”, said a contact within the group.

Schulz, for his part, told this website that a new system excludes private arbitration altogether.

“I don’t understand those that object to the compromise amendment because it is exactly going in the direction that these critical people want”, he said.

Distance

Despite his achievement, he now appears to be distancing himself from the amendment, however.

A contact said Schulz doesn't want his name attached to it because a number of MEPs in his group are still against.

Schulz had already derailed the vote from the last plenary and sent it back to the parliament’s international trade committee to sort out differences on the court.

Lange at the time conceded that his original text was unclear.

“Last month it was not worded clearly enough. Now it is clear that ISDS has to be replaced by a public court”, he said earlier this month.

On Tuesday, he told the assembly “private systems of this type are dead.”

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