Tuesday

28th Mar 2017

EU commission freezes US talks on company protection

  • De Gucht has come under pressure over the rights of companies to litigate against EU governments (Photo: consilium.europa.eu)

The European Commission has halted EU-US trade talks related to legal protection for companies and launched a three-month public consultation on the matter.

Negotiations between EU and US trade officials began last September. They are meant to lead to a trade deal which the EU claims could be worth an extra 1 percent to the bloc's economic output.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

But the issue of rules to protect investors' rights, known as investor state dispute settlement (ISDS), has proved controversial.

The commission says that ISDS is needed to protect investors from unfair treatment at the hands of foreign governments and discrimination in favour of domestic firms.

Critics say that investor claims can prevent governments from passing legislation in fields such as environmental and social protection, enabling corporations to claim potentially unlimited damages in "arbitration panels" if their profits are adversely affected by new regulations.

They also claim that arbitrations are carried out in secret by trade lawyers.

Campaigners point to a recent move by tobacco giant Philip Morris to sue the Australian government over new legislation requiring plain packaging for cigarettes sold in the country.

They say this is an example of what the EU could face.

In a statement released on Tuesday (21 January), EU trade commissioner Karel De Gucht said that governments needed to "treat investors fairly, so they can attract investment."

But he conceded that "some existing arrangements have caused problems in practice, allowing companies to exploit loopholes where the legal text has been vague."

"Some people in Europe have genuine concerns about this part of the EU-US deal," he added.

De Gucht said he was "determined to make the investment protection system more transparent and impartial, and to close these legal loopholes once and for all."

The commissioner said he would publish an EU text on investment protection in March prior to the next round of talks between EU and US officials - scheduled the same month in Brussels.

A spokesman for consumers' interest group BEUC, Johannes Kleis, welcomed the EU executive's move.

"When the consultation is closed, we expect the commission to explain how they plan taking the feedback they received into account," he said.

The EU executive is anxious to retain public support for the trade talks, following the collapse of the anti-counterfeit treaty Acta in July 2012 at the hands the European Parliament.

Under the EU treaties, the parliament has the final say on whether to approve trade deals brokered by the commission.

MEPs have already expressed concern about ISDR leading to a system where national governments or the EU are sued by companies because of changes in regulation.

"The [ISDS] mechanism is unnecessary in an agreement between two countries that fully respect the rule of law," said the parliament's centre-left socialist and democrat group in a statement Tuesday.

"Accepting the ISDS would mean opening the door for big corporations to enforce their interests against EU legislation," it added.

The commission has also set up an advisory committee representing business and consumer groups, which met for the first time on Tuesday, to feed into negotiations.

Austria wants out of EU migrant relocation scheme

Austria is required to start relocating asylum seekers from Italy and Greece after an exemption to the scheme ended on 11 March. But Austria's chancellor has other ideas and wants the exemption prolonged.

Focus

Uber: Goodbye Denmark, but not farewell

Ride-sharing service Uber has announced it will shut down activities in Denmark in protest over a new law introducing the same requirements for Uber as for other taxi services.

News in Brief

  1. Scottish MPs give go ahead to seek referendum
  2. Uber pulls out of Denmark over new taxi-regulation
  3. EU court validates sanctions on Russia's Rosneft
  4. Luxembourg to team up with Ireland in Apple tax appeal
  5. EU majority against GM crops, but not enough to block them
  6. Turkish referendum voting starts in Europe
  7. Le Pen says she lacks election funds
  8. UN dinner for Cyprus leaders to restart stalled peace talks

Stakeholders' Highlights

  1. The Idealist QuarterlyCan Progressive Stories Survive Our Post-Truth Era? After-Work Discussion on 6 April
  2. ACCAG20 Citizens Want 'Big Picture' Tax Policymaking, According to Global Survey
  3. Belgrade Security ForumCall for Papers: European Union as a Global Crisis Manager - Deadline 30 April
  4. European Gaming & Betting Association60 Years Rome Treaty – 60 Years Building an Internal Market
  5. Malta EU 2017New EU Rules to Prevent Terrorism and Give More Rights to Victims Approved
  6. European Jewish Congress"Extremists Still Have Ability and Motivation to Murder in Europe" Says EJC President
  7. European Gaming & Betting AssociationAudiovisual Media Services Directive to Exclude Minors from Gambling Ads
  8. ILGA-EuropeTime for a Reality Check on International Day for the Elimination of Racial Discrimination
  9. UNICEFHuman Cost to Refugee and Migrant Children Mounts Up One Year After EU-Turkey Deal
  10. Malta EU 2017Council Adopts New Rules to Improve Safety of Medical Devices
  11. Nordic Council of MinistersNordic Energy Research: How to Reach 100 Percent Renewable Energy
  12. Party of European SocialistsWe Must Renew Europe for All Europeans