Tuesday

12th Nov 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 18 year's of archives. 30 days 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.

Catalan MEP is 'elected', court advisor says

In a boost for the cause of three Catalan MEPs, the advocate general of the EU Court of Justice has recognised their mandate as elected MEPs -but it is up to the parliament if they should enjoy immunity.

News in Brief

  1. Three new commissioner-designates pass legal scrutiny
  2. ECJ: EU countries must label Israeli settlement products
  3. Belgian asylum centre set on fire
  4. Xi Jingping in Athens promises new investment
  5. Farage's Brexit Party will not stand in Tory-held seats
  6. British founder of Syrian 'White Helmets' found dead
  7. Eight member states ask for EU aviation tax
  8. EU allocates €55m humanitarian aid to Sudan

Agenda

New hearings for the von der Leyen commission This WEEK

Next week will see a new round of commissioner hearings for the latest candidates from France, Hungary and Romania in the European Parliament, while crucial elections take place in Romania and Spain.

Stakeholders' Highlights

  1. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  2. Nordic Council of MinistersBrussels welcomes Nordic culture
  3. UNESDAUNESDA appoints Nicholas Hodac as Director General
  4. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  5. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  6. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  7. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  8. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues
  9. Nordic Council of MinistersNo evidence that social media are harmful to young people
  10. Nordic Council of MinistersCanada to host the joint Nordic cultural initiative 2021
  11. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  12. Nordic Council of MinistersEducation gets refugees into work

Latest News

  1. Catalan MEP is 'elected', court advisor says
  2. Pro-Israeli group scores own goal on EU retail labels
  3. New commissioners clear 'conflict of interests' hurdle
  4. Israeli labelling ruling lets consumers make choice
  5. What does Macron really want on Western Balkans?
  6. Far-right Vox celebrates, as Spain left without majority
  7. EU 'climate bank' won't rule out carbon capture
  8. New hearings for the von der Leyen commission This WEEK

Join EUobserver

Support quality EU news

Join us