Brussels, 27/03/2014 (Agence Europe) - The European Commission wants to sound out stakeholders and public opinion on the controversial issue of the settlement of disputes between the investor and the state (ISDS).
On 27 March, the Commission launched an online public consultation on the protection of investors in relation to the negotiations for a transatlantic trade and investment partnership agreement (TTIP). This charm offensive comes as part of the efforts for transparency from the Commission to remedy the growing hostility aroused by this trade negotiation. The Commission thus wants to clarify the “misconceptions” and “misrepresentations” on the aims of the ISDS in the TTIP negotiations. The 90-day consultation will only officially begin after the translation of the reference document into all the official language of the EU.
The ISDS is the nub of the problem. NGOs and unions fear that, by allowing multinationals to take states to court to obtain compensation - for example, against public health legislation - such a mechanism might discourage states from regulating on social, environmental and public health matters. The court cases of world leading tobacco company Philip Morris against Australia for health warnings on cigarette packets constitutes a dangerous precedent, in the eyes of NGOs and unions.
European Commissioner for Trade Karel De Gucht told press on Thursday that he supported the ISDS as an instrument enabling the climate for investment to be improved, but also for arbitration to be more transparent and better delineated. “The Commission intends to ensure that investment protection and ISDS reflect best practice, not just in the TTIP but in all new EU investment agreements. The aim is to make the situation regarding investor protection in TTIP and other future investment agreements signed by the EU much clearer than it is in the more than 3,000 investment agreements currently in force worldwide”, says the Commission.
Without this new system, multinationals such as Philip Morris can continue to exploit the “enormous loopholes” of the current system, De Gucht told press. The TTIP agreement will include a filter allowing clearly unreasonable demands to be rejected, he said. Furthermore, the text will set much clearer limits on the regulatory area protected from action brought by multinationals - so that an appeal like that of Philip Morris against Australia will “not be possible at all” with the TTIP.
In response to the concerns and loopholes mentioned in the public debate, the Commission wants to develop an “innovative approach” - on the one hand, by clarifying and improving the rules on the protection of investments so as to guarantee that the right of legislating is not threatened; on the other hand, by developing a modern ISDS mechanism that can prevent risks of abuse, making the system of arbitration more transparent and prevent conflicts of interest or differences between the mediators. While ensuring more consistency and control, it will also have to be applied only in the case of breaches of the arrangements on the protection of investments, to the exclusion of any other part of the TTIP. (EH)