Friday

18th Aug 2017

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.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

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.

Brexit realities dawn in UK

Just over a year after a small majority voted for Britain to leave the EU, new realities are dawning on both the in and the out camps.

News in Brief

  1. Macedonia sacks top prosecutor over wiretap scandal
  2. ECB concerned stronger euro could derail economic recovery
  3. Mixed Irish reactions to post-Brexit border proposal
  4. European Union returns to 2 percent growth
  5. Russian power most feared in Europe
  6. Ireland continues to refuse €13 billion in back taxes from Apple
  7. UK unemployment lowest since 1975
  8. Europe facing 'explosive cocktail' in its backyard, report warns

Stakeholders' Highlights

  1. European Healthy Lifestyle AllianceDoes Genetics Explain Why So Few of Us Have an Ideal Cardiovascular Health?
  2. EU2017EEFuture-Themed Digital Painting Competition Welcomes Artists - Deadline 31 Aug
  3. ACCABusinesses Must Grip Ethics and Trust in the Digital Age
  4. European Jewish CongressEJC Welcomes European Court of Justice's Decision to Keep Hamas on Terror List
  5. UNICEFReport: Children on the Move From Africa Do Not First Aim to Go to Europe
  6. Centre Maurits CoppietersWe Need Democratic and Transparent Free Trade Agreements Says MEP Jordi Solé
  7. Counter BalanceOut for Summer, Ep. 2: EIB Promoting Development in Egypt - At What Cost?
  8. EU2017EELocal Leaders Push for Local and Regional Targets to Address Climate Change
  9. European Healthy Lifestyle AllianceMore Women Than Men Have Died From Heart Disease in Past 30 Years
  10. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  11. ACCAAnnounces Belt & Road Research at Shanghai Conference
  12. ECPAFood Waste in the Field Can Double Without Crop Protection. #WithOrWithout #Pesticides