Will Juncker shine some sunlight on the EU-US Trade Negotiations? The Investor-to-State Dispute Mechanism

July 16th 2014. Incoming Commission President Juncker indicated in his inaugeration speech yesterday in the European Parliamenthe beliefs that without transparency the EU-US trade negotiations are doomed. Juncker also said he wants a balanced trade agreement where Europe’s safety, health, social and data protection standards, or our cultural diversity ‘are not sacrificed on the altar of free trade’.

The consultation on the investor to state dispute mechanism (ISDS) by the European Commission, which closed on July 13th, has in some regard been a rare move of transparency. It provides the general public with negotiating text proposals for (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP).  This is unprecedented and it must have been a culture shock for Directorate General (DG) Trade, as they have never shown to feel the need for transparency before.  However, although this might be a positive development it easily distracts us from the real issue at stake. The issue was never ‘how the mechanism through which companies can sue governments for expropriation before international arbitration panels outside of domestic courts, can be improved’ but whether ISDS should be included in TTIP at all. The approach the Commission has taken in framing the debate is misleading and disingenuous.

A new and improved ISDS:  the Commission proposes several adjustments to address the problems the system has, such as ‘right to regulate exceptions’ and adding ‘appellate mechanisms’. Although some of the proposals for tweaking ISDS are not minor, jointly they still do not come close to solving its fundamental problems. That is, it excessively protects investor rights over the rights of citizens and governments, and places justice outside of domestic courts and outside of democracy.  When you need all these adjustments to patch up a system, maybe the system as a whole is inappropriate. It is also unnecessary. The fact is, that approximately 70% of global investment happens without this extra ISDS protection. Investors do have other protections apart from regular domestic courts such as investor insurance and the state-to-state dispute mechanism under the World Trade Organisation. There is no need for ISDS in the EU-US Trade agreement, and its inclusion would be harmful for our societies. As many have pointed out, TTIP in itself is a very doubtful venture

Would the policymakers and negotiators that favour ISDS, really think that privileging corporate rights over the rights of other economic actors, is crucial for our societies? It seems most people will agree that its much more crucial to protect the right of governments to serve the public interest. Something ISDS would undermine. Indeed, with the latest developments around TTIP negotiations making it into the regular press people are increasingly starting to recognize that the public interest is not necessarily enhanced by such an agreement. In a world were information spreads so easily, ISDS does not fly; resentment against inequality, the power of large corporations and in-transparent initiatives like TTIP is growing everyday. And the EU should listen (Although we should pity the functionaries that have to go to the 100.000 consultation responses on ISDS that have been received).

Up to now, the Commission has failed to adequately respond to these developments. This disconnect is harmful for the EU and harmful for Europe.  It is time for the European Commission to wake up and take action. It seems now, it’s all eyes on Juncker. We can only hope he will he be the man to shine some light on TTIP, and force a desperately needed change of course on the Commission’s trade policy.

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