Brussels, 14/01/2015 (Agence Europe) - The reactions to the results of the public consultation on investor protection, as part of the EU-US free trade (TTIP) negotiations, which were unveiled on Tuesday 13 January, confirm the scepticism of a large majority of stakeholders about including an investor-state dispute settlement (ISDS) mechanism in the future TTIP agreement. These reactions point to a bitter debate looming on the horizon as regards this very sensitive issue.
The question behind the controversy on investor protection and the inclusion of an ISDS mechanism as part of TTIP is now well known - how to strike a fair balance between investor protection, on the one hand, and safeguarding the right and ability of the EU to regulate in the general interest, on the other. Despite the stakeholders' “huge scepticism” about including an ISDS mechanism in TTIP - a scepticism which the European Commission admits - the Commission has identified four priority axes to be assessed at the future debate (to be led by the Commission with the European Parliament and all the stakeholders during the first three months of this year, before issuing a political recommendation). These four axes are: (1) the protection of states' right to regulate; (2) the supervision and functioning of arbitration courts; (3) the relationship between an ISDS arbitration and the national judicial systems; and (4) the establishment of an appeal mechanism. This ISDS chapter currently, therefore, remains excluded from the negotiations that will be resumed in Brussels on 2 February.
In the coming months, the Commission will have to reckon with the Council, where Germany and France are very sceptical about including an ISDS mechanism in TTIP under its old form and are discussing joint proposals to make the mechanism evolve. “France will never accept private legal appeals from multinational companies being able to challenge the democratic choices of sovereign peoples”, warned France's secretary of state for trade, Matthias Fekl, on Tuesday. “Arbitration has seen very big developments over recent years in how it is used by certain companies with very strong risks”, he said, stating that initially it was used to protect investors from abusive risks of expropriation in some countries. On Tuesday, Fekl stressed the risk of challenging policies on health and environmental protection, and he stressed the risk of exorbitant demands for compensation by some companies that went down the path of suing. Berlin and Paris are therefore considering an option for fully involving national legal jurisdictions in arbitration proceedings, so as to be able to manage abusive appeals for arbitration, and they are considering an option for setting up an appeals mechanism for arbitration court judgments within an independent international body to be created.
The Commission will also have to reckon with the European Parliament, where distrust and opposition to TTIP and the ISDS mechanism is very strong. “The lessons to be learned from today's report on the public consultation on ISDS and investor protection in TTIP are twofold - ISDS as a system to protect investors' rights remains highly contentious, and the revised system the European Commission presented leaves a lot of room for improvement”, said Bernd Lange (S&D, Germany), the chair of the European Parliament's international trade committee, on Tuesday.
In the EPP Group, investor protection remains a priority. “The EPP Group is in favour of an effective ISDS system that will protect our European investors by implementing a well-balanced approach to TTIP, providing for better transparency and clearer definitions/wording on the basis of the CETA (EU-Canada trade agreement) text”, said German MEPs Godelieve Quisthoudt-Rowohl and Daniel Caspary, urging the Commission to take action quickly on finding an approach that ensures a fair balance between investor protection and protecting the right of states to regulate.
The S&D Group welcomed the Commission's recognition of the existence of serious problems with the ISDS mechanism. “Our group is open to looking at real improvements, but so far the potential dangers outweigh the benefits of ISDS. If the Commission is not serious about a thorough reform, it would be best to withdraw ISDS altogether”, said British MEP David Martin.
On behalf of the ALDE Group, Dutch MEP Marietje Schaake argued for “a roadmap” on this issue - which concerns not only TTIP but also the issue of maintaining the “old-fashioned form of ISDS” in thousands of existing bilateral agreements. Schaake also criticises Commission proposals to improve the current ISDS mechanism for not going far enough on appealing court decisions.
The Greens/EFA Group and the GUE Group, both strongly opposed to TTIP, called for stakeholders and the public to reject TTIP and the ISDS mechanism. They also criticised the Commission's disregard for civil society - both because the Commission believes that 97% of the replies sent via interest group platforms are irrelevant and contain, in GUE's opinion, predefined negative replies, and because the Commission rejects the Stop TTIP citizens' initiative, which has now gathered over 1,250,000 signatures. (EH)