Saturday

10th Apr 2021

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

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe 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. Turkey blames EU for sexist protocol fiasco
  2. France to close elite civil-service academy
  3. Covid-19 cases in UK drop 60%, study finds
  4. White House urges 'calm' after Northern Ireland riots
  5. Italy's Draghi calls Turkey's Erdoğan a 'dictator'
  6. Slovakia told to return Sputnik V amid quality row
  7. EU risks €87bn in stranded fossil fuel assets
  8. Obligatory vaccination not against human rights, European court says

Column

Why Germans understand the EU best

In Germany, there is commotion about a new book in which two journalists describe meetings held during the corona crisis between federal chancellor Angela Merkel, and the 16 prime ministers of its federal constituent states.

Stakeholders' Highlights

  1. Nordic Council of MinistersDigitalisation can help us pick up the green pace
  2. Nordic Council of MinistersCOVID19 is a wake-up call in the fight against antibiotic resistance
  3. Nordic Council of MinistersThe Nordic Region can and should play a leading role in Europe’s digital development
  4. Nordic Council of MinistersNordic Council to host EU webinars on energy, digitalisation and antibiotic resistance
  5. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  6. Nordic Council of MinistersWomen benefit in the digitalised labour market

Latest News

  1. The Covid bell tolls for eastern Europe's populists
  2. Four deaths after taking Russian Sputnik V vaccine
  3. Post-Brexit riots flare up in Northern Ireland
  4. Advice on AstraZeneca varies across EU, amid blood clot fears
  5. Greenland election could see halt to rare-earth mining
  6. After 50 years, where do Roma rights stand now?
  7. Why Iran desperately wants a new nuclear deal
  8. Does new EU-ACP deal really 'decolonise' aid?

Join EUobserver

Support quality EU news

Join us