Saturday

7th Dec 2019

EU drills into corporate protection clause in US trade deal

  • Under the new rules can a tribunal order compensation - but not order the reversal of a national law (Photo: europarl.europa.eu)

The European Commission launched a 90 day public consultation on Thursday (27 March) in a bid to address "misconceptions and misrepresentations" about plans to include controversial rules on investor protection into an EU-US free trade deal.

The mechanism, known as investor state dispute settlement (ISDS), allows companies to take legal action against governments if their decisions risk undermining their investments.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

The commission paused negotiations on the ISDS chapter in the trade talks January in the wake of claims by NGOs that it could allow US companies to undercut environmental and social protection laws, and enable corporations to sue governments and claim potentially unlimited damages in "arbitration panels".

Speaking with reporters on Thursday, EU trade commissioner Karel De Gucht said that the commission was hoping to draw up "an improved system of ISDS which will address existing loopholes, prevent abuse and provide a more accountable and predictable system."

"I fully agree with the many critics who claim that ISDS until now has led to some very worrying litigation against the state," he added, in a reference to an ongoing case brought by tobacco giant Phillip Morris against the Australian government over legislation demanding the plain packaging of cigarettes.

"The only way to close these loopholes is to reopen ISDS."

The three month consultation, which includes a public debate on ISDS, will get the green light as soon as it has been translated into the bloc's 28 national languages. The Commission will then finalise a public report before deciding on its negotiating stance to take with the Americans.

But although a spokesman for the EU executive insisted that the consultation was "not a referendum", the issue already looks as though it may prove to be a red-line for governments and MEPs in the European Parliament, both of which must back a trade deal before it becomes law.

French trade minister Nicole Bricq has already stated her opposition to ISDS being included in an agreement.

Meanwhile, in a letter addressed to De Gucht published by news agency AFP on Thursday, Germany's economy minister Sigmar Gabriel insisted that ISDS should be excluded from the proposed Transatlantic Trade and Investment Partnership (TTIP), arguing that the domestic legislation in place was sufficient.

"From the perspective of the [German] federal government, the United States and Germany already have sufficient legal protection in the national courts," Gabriel wrote.

For its part, the EU executive maintains that the regime would be limited only to investor relations and could not be used to overturn national law.

"An ISDS tribunal cannot order the reversal of a national law under any circumstances," an EU official involved in the negotiations told this website. "The most it can order is compensation".

Officials also say that the 'right to regulate' of national governments would be enshrined in any agreement, which would include a strict definition on a company's right to 'fair and equitable treatment' in order to prevent investors bringing forward multiple claims across a range of countries.

For the US, keeping ISDS in the scope of the talks remains a priority.

"A comprehensive 21st century trade agreement should include appropriate protections for investors ... and that does include ISDS," the US' lead trade negotiator Dan Mullaney told reporters following the end of a week of talks in Brussels earlier this month.

Feature

Russia makes big promises to Arctic peoples on expansion

The Arctic future conference kicked off with optimistic presentations by ministers and officials of the Russian government — but also a burst of scepticism from representatives of those actually living in Russia's Arctic and Far East regions.

Agenda

UK election plus EU summit in focus This WEEK

EU leaders will try to agree on the 2050 emission-free target - but they will deeply disagree on EU spending over the next seven years. Meanwhile the UK will elect its new political leadership.

News in Brief

  1. Greece denies access to fair asylum process, report says
  2. Report: Self-regulation of social media 'not working'
  3. Turkey: Greek expulsion of Libyan envoy 'outrageous'
  4. Merkel coalition may survive, says new SPD co-leader
  5. Von der Leyen Ethiopia visit a 'political statement'
  6. Over 5,500 scientists ask EU to protect freshwater life
  7. Iran defies EU and UN on ballistic missiles
  8. Committee of the Regions: bigger budget for Green Deal

Agenda

UK election plus EU summit in focus This WEEK

EU leaders will try to agree on the 2050 emission-free target - but they will deeply disagree on EU spending over the next seven years. Meanwhile the UK will elect its new political leadership.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. Russia makes big promises to Arctic peoples on expansion
  2. UK election plus EU summit in focus This WEEK
  3. Migrants paying to get detained in Libyan centres
  4. Searching for solidarity in EU asylum policy
  5. Will Michel lead on lobbying transparency at Council?
  6. Blood from stone: What did British PR firm do for Malta?
  7. EU Commission defends Eurobarometer methodology
  8. Timmermans warns on cost of inaction on climate

Stakeholders' Highlights

  1. UNESDAUNESDA appoints Nicholas Hodac as Director General
  2. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  3. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  4. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  5. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  6. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues

Join EUobserver

Support quality EU news

Join us