26th Oct 2016

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:

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.

News in Brief

  1. Report: EU to rule on Gazprom pipeline link
  2. France registers biggest fall in unemployment for 20 years
  3. May feared businesses would leave the UK over Brexit
  4. US judge approves deal to buy back dirty VW diesel cars
  5. MEPs lift Jean-Marie Le Pen immunity
  6. Norway agrees to host 330 US soldiers
  7. Eurozone fund agrees €2.8bn Greece payment
  8. French shift 2,300 from Calais migrant camp

Stakeholders' Highlights

  1. EFADraft Bill for a 2nd Scottish Independence Referendum
  2. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  3. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  4. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  5. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  6. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  7. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  8. Dialogue PlatformIs Jihadism Blind Spot of Western Intellectuals ? Wednesday 26 October
  9. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum
  10. Crowdsourcing Week EuropeMaster Crowdsourcing, Crowdfunding and Innovation! Conference 21 November - 10% Discount Code CSWEU16
  11. EJCEU Parliament's Roadmap for Relations with Iran a Massive Missed Opportunity
  12. Nordic Council of MinistersFish Skin on Bare Skin: Turning Fish Waste into Sustainable Fashion