Brussels, 24/10/2014 (Agence Europe) - The trade ministers of 14 member states have informed Jean-Claude Juncker, the president of the incoming Commission, which will begin its term of office on 1 November, and his future trade commissioner, Cecilia Malmström, of their demand that the clause on investment protection and the controversial investor-state dispute settlement (ISDS) mechanism be retained in the free-trade talks between the EU and the United States (TTIP negotiations).
The letter, sent on 21 October to Juncker and Malmström, as well as to the outgoing Commission president José Manuel Barroso and trade commissioner Karel De Gucht, was signed by the ministers with responsibility for external trade of Cyprus, Croatia, the Czech Republic, Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, Malta, Portugal, Spain, Sweden and the United Kingdom.
“One of the issues that has attracted criticism (of the TTIP) is investment protection. The Commission is currently analysing the results of a public consultation on the issue and we look forward to the Commission's response. The consultation was an important step in ensuring that we strike the correct balance to ensure that governments retain their full freedom to regulate, but not in a way that discriminates unfairly against foreign firms. It is important that the outcome of this consultation runs its course and we carefully consider the views expressed by our stakeholders before reaching firms decisions on the way forward” the ministers state, going on: “The Council mandate is clear in its inclusion of investor protection mechanism in the TTIP negotiations. We need to work on how the best to do so”.
In his inauguration speech at the European Parliament on Wednesday 22 October, Juncker pledged that the TTIP would not contain any supranational arbitration body in the settlement of disputes between investors and states. “My Commission will not accept that the jurisdiction of courts in the EU member states be limited by special regimes for investor-to-state disputes. The rule of law and the principle of equality before the law must also apply in this context. The negotiating mandate foresees a number of conditions that have to be respected by such a regime as well as an assessment of its relationship with domestic courts. There is thus no obligation in this regard: the mandate leaves it open and serves as a guide”, stated Juncker, adding: “In the agreement that my Commission will eventually submit to the European Parliament for approval, there will be nothing that limits for the parties the access to national courts or that will allow secret courts to have the final say in disputes between investors and States”.
Juncker also moved to curtail the freedom of movement of his trade commissioner Cecilia Malmström on this highly controversial issue, calling on his future right-hand-man, Frans Timmermans, who will hold the position of vice-president with responsibility for the rule of law and the charter of fundamental rights to “advise me on the matter”. “There will be no investor-to-state dispute clause in TTIP if Frans does not agree with it too”, he said.
Debate over the ISDS clause has been raging in Europe for several months. Outgoing Commissioner for Trade Karel De Gucht had to put the chapter on investment protection and the ISDS mechanism on hold on the technical level - a chapter that was nevertheless provided for in the negotiating mandate given to the Commission by the Council in June 2013. Faced with the hostility of NGOs and public opinion to the ISDS, the outgoing Commission launched a public consultation on this issue in the spring, the results of which the Commission is currently studying.
The ISDS mechanisms aim to protect investors from unfair treatment from their host country. However, NGOs and unions fear that these mechanisms may allow a multinational, which considers itself aggrieved by a public policy, to attack a state and thus dissuade the states from regulating on social, environmental and health issues. This file has aroused distrust and hostility at the European Parliament and, among member states, Germany has on several occasions expressed its opposition to including ISDS in TTIP. (EH)