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24th Jul 2021

MEPs back US free trade after Socialist U-turn

MEPs gave their thumbs up to EU-US trade talks and backed away from a confrontation with the European Commission over investor protection rights in a surprise vote on Thursday (28 May).

Deputies on the trade committee voted by 28 to 13 to support a non-legislative report by Bernd Lange, the German centre-left MEP committee chair, while the centre-left Socialist group had a change of heart on the controversial issue of investor/state dispute settlement (ISDS).

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The compromise resolution backed by the European Parliament’s main groups, including the centre-right EPP and the Socialists, calls for a transparent legal mechanism for disputes, where cases are heard by "publicly appointed, independent" judges, with the opportunity for decisions to be appealed.

It also suggests that a public international investment court would be the "most appropriate" means to handle investment disputes in the medium term.

Earlier this month, trade commissioner Cecilia Malmstroem unveiled plans to set up a global court to decide on disputes between investors and governments in a bid to defuse the controversy, although US officials have indicated that they do not support the re-opening of the ISDS regime.

Backing the compromise following days of back-room wrangling with the EPP marks a significant U-turn by the Socialists.

Lange’s draft report had originally called for ISDS to simply be excluded from the remit of negotiations.

At a press conference following the committee vote, Lange described the assembly’s position as “crystal clear”.

“The current model for ISDS is no longer being tolerated by Parliament,” he said, adding that any new legal instrument “would have to be an independent court arbitration … moving away from private courts”.

The vote was hailed as a "victory for free trade" by Christofer Fjellner, the EPP's spokesman on the committee.

But German Green deputy Ska Keller said: “There is no clear message now whether this report will exclude an ISDS or a reformed ISDS”.

Discussions on ISDS have been frozen since March 2014, when the commission opened a consultation to gauge public opinion on the issue.

Ninety seven percent of the submissions to the EU executive, most of them coming from campaign groups, opposed the inclusion of the investment regime.

Critics of ISDS warn that it allows firms to take governments to court if they discriminate against them or introduce new laws which threaten their investments, saying it could have grave implications for consumer protection, environmental and health legislation.

“ISDS needs reform but the reality is that we need to leave every option on the table … and not just leave red lines,” said British Conservative Party deputy Emma McClarkin.

“We desperately need investment in the EU,” she noted, adding that the vote by MEPs “injected a dose of caffeine into TTIP negotiations.”

The business lobby group BusinessEurope also welcomed the report.

“Today’s vote shows we have come a long way and positive dynamics are back,” said its chief, Markus Beyrer.

Others were less happy.

“There wasn’t enough courage to reject ISDS,” said German left-wing MEP Werner Schulz, who accused deputies of having ignored concerns on a raft of issues. The Greens and left-wing Gue group both voted against the resolution.

“Deplorably, the European Parliament took a very ambiguous stance on the infamous Investor/State Dispute Settlement (ISDS) system,” said Monique Goyens, secretary general of consumer association BEUC.

“We have yet to see any facts justifying its inclusion in an EU/US trade deal,” she added.

Trade officials have now completed nine rounds of negotiations since summer 2013 and are hoping to keep as close as possible to their self-imposed deadline of December 2015 to agree a draft text.

The timing is important in a bid to avoid TTIP getting caught up in the race to replace Barack Obama in the White House, which will begin in earnest in autumn.

The next round of talks will take place in July.

Although the EU parliament, which will adopt its final position in Strasbourg on June 10th, cannot change the commission’s negotiating mandate, it has the power to veto a draft agreement.

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