Transport and Environment (T&E)

MEPs demand end to aviation tax breaks, but fudge investor protection in trade deal

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Source: Transport and Environment (T&E)

MEPs today called for EU-US cooperation to end aviation fuel tax exemptions as part of the Transatlantic Trade and Investment Partnership (TTIP). The clear statement was in sharp contrast to the Parliament’s ambiguity on Investor-State Dispute Settlement (ISDS), where it called for an ‘alternative system’ but with the same purpose as ISDS – leaving EU negotiators none the wiser on a final agreement that would be acceptable to MEPs.

Transport & Environment, which is a member of the European Commission’s TTIP advisory group, welcomed MEPs' call for clear guarantees that TTIP won’t undermine EU environmental standards and climate goals and, crucially, for cooperation to end fuel tax exemptions for commercial aviation in line with the G-20 commitments to phase out fossil fuel subsidies.

Consumers, small businesses and hauliers pay an average of 48 cent in tax per litre [1] while commercial airlines in the EU don’t pay a cent in tax to fuel their planes. This subsidising is fuelling air traffic growth, with aviation’s greenhouse gas emissions expected to increase 300% by 2050. [2]

Cécile Toubeau, senior policy officer at T&E, said: “It is great that Parliament wants TTIP to end the outdated fuel tax exemptions for aviation – a €20 billion fossil fuel subsidy for the most carbon-intensive form of transport. With air passenger numbers set to grow 4% a year for the next 20 years, the aviation sector can well afford to pay its way.”

But MEPs from the European People’s Party and Socialist groups also voted through a compromise to replace ISDS with a ‘new system for resolving disputes between investors and states’, which is itself the purpose of ISDS. Critics said the ambiguity would keep both groups happy while offering the European Commission zero guidance on what form of investor protection could be passed by Parliament in a final deal.

ISDS clauses allow businesses to bypass national court systems and sue governments directly, in special private arbitration panels, over measures that can jeopardise future profits – typically laws designed to protect the public. ISDS cases have trebled in the last decade.

Cécile Toubeau concluded: “Centre-left MEPs claim this is a No to the inclusion of investor protection in TTIP, yet the centre-right insists this vote supports the Commission’s reformed investor-protection proposal. That ambiguity means the European Commission can feel in no way certain its version of investor protection will be acceptable to the Parliament.”

The 10th negotiation round of TTIP negotiations will take place next week. The Commission intends to publish its new text on investor protection after the summer, but before publication it will consult with EU governments, the Parliament, and the members of its advisory group.

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