Monday

20th Jan 2020

EU trade chief plays down fears over investor protection rules

  • The trade agreement will have “very clear boundaries in order to fully protect governments’ right to regulate in the public interest”, says De Gucht (Photo: consilium.europa.eu)

The EU’s top trade official has played down fears that rules protecting company interests could spark a wave of litigation from US multinationals, insisting there was “nothing shocking” about the plans.

EU and US trade officials will hold a sixth round of talks on what would be the largest free trade deal ever agreed, referred to as a Transatlantic Trade and Investment Partnership, in Brussels in July.

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 aim of both sides is to go beyond the scrapping of remaining tariff barriers on the trade of goods and harmonise regulatory standards across a range of sectors. Achieving this would make a deal worth more than €120 billion in economic gains per year, say European Commission officials.

One key hurdle is the question of how to apply international rules governing the rights of investors to protect their interests against governments.

Speaking on Wednesday (25 June) at a event in London organised by the trade group BritishAmerican, EU trade commissioner Karel de Gucht described them as “basic principles of the law” which would benefit European firms.

The mechanism, known as investor state dispute settlement (ISDS), allows companies to take legal action against governments on the grounds of unfair treatment or discrimination in favour of domestic firms.

De Gucht stated that EU governments were signatories to 1,400 investment protection agreements, nearly half of the 3,000 such deals between governments around the world.

He added that the rules would benefit European firms, who are responsible for more than half the number of investment dispute cases world-wide.

But rights for investors has become one of the main stumbling blocks in the trade talks.

Opponents of the regime say that investor claims can prevent governments from passing legislation in fields such as environmental and social protection, and allow multinationals 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, and point to a ongoing case brought by tobacco giant Philip Morris against the Australian government over laws requiring plain packaging for cigarettes sold in the country.

The Commission froze discussions on ISDS in March, pending a three-month public consultation which closes in two weeks time, following protests by NGOs and consumer groups.

Meanwhile, both the German and French governments have stated their opposition to including ISDS in TTIP on the grounds that US investors in the EU already have sufficient legal protection in national courts.

For its part, the US says that ISDS must be part of a final agreement, which officials are hoping to wrap up in late-2015.

De Gucht maintained that TTIP would leave “very clear boundaries in order to fully protect governments’ right to regulate in the public interest”.

EU officials were also bidding to increase transparency in arbitration tribunals, he said.

"Our choice is not between a world where each does as he pleases and a nightmare where we are ruled directly by multinational corporations," he concluded.

Analysis

From trade tariffs to trust – TTIP a year on

When political leaders on both sides of the Atlantic gave negotiators the green light to start talks on a Transatlantic trade and investment partnership (TTIP), it was widely seen as an economic 'win-win' - a debt free economic stimulus.

News in Brief

  1. 'No objection in principle' on Huawei cooperation, EU says
  2. French aircraft carrier goes to Middle East amid tensions
  3. EU suggests temporary ban on facial recognition
  4. EU industry cries foul on Chinese restrictions
  5. 'Devil in detail', EU warns on US-China trade deal
  6. Trump threatened EU-tariffs over Iran, Germany confirms
  7. EU trade commissioner warns UK of 'brinkmanship'
  8. Germany strikes coal phase-out deal

Boost for Right in post-Brexit EU parliament

The far-right Identity and Democracy will overtake the Greens as the fourth-largest party in the European Parliament on 1 February, after the UK's MEPs vacate their seats.

Opinion

Why EU minimum wage is actually bad idea for workers

As president of one of the largest trade union confederations in the EU, I see the need for good working conditions and decent pay in all member states - but an EU-wide minimum wage could be used to lower wages.

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

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