The European Parliament’s trade committee today decided that Europe’s national courts cannot be trusted with safeguarding the rights of international investors when it called for private arbitration to be retained in the EU-US trade deal. MEPs voted for the controversial Investor-State Dispute Settlement clause (ISDS) – though repackaged under a different name for the Transatlantic Trade and Investment Partnership (TTIP). ISDS allows foreign investors to directly sue governments in private arbitration panels, with potential awards paid by taxpayers.
Transport & Environment, a member of the Commission’s Advisory Group on TTIP, said that by backing ISDS the trade committee displays a lack of trust in European judicial systems, socialises private risks, and deters future EU laws to protect citizens and the environment. The vote marks a U-turn by MEPs after the Parliament’s environment committee said no to ISDS because of its chilling effect on regulation and that national courts would continue to vindicate the rights of international investors.
Cécile Toubeau, sustainable trade officer at T&E, said: “In the clash between lobbyists and the public interest, INTA MEPs side with the former by backing this deeply flawed private arbitration system. Not only do they not trust our courts, they are also willing to have Europeans pay for the private risks of big business, and tie the hands of future EU lawmakers by providing a implicit deterrent to public-interest regulation.”
The trade committee also failed to take a stance on the core issue of TTIP: Europe’s right to set its own environmental and safety standards. Tariff barriers between both blocs are already very low hence TTIP is mostly about divergences in EU and US standards. But the EU’s ability to set its own standards is not a tradable good. As witnessed with the impact of the EU-Canada agreement (CETA) on the Fuel Quality Directive, trade negotiations do have substantial influence on the EU’s independence to set its own rules.
MEPs today could have followed the approach taken by the environment committee, which emphasised that there are areas to which so-called ‘regulatory cooperation’ (e.g. mutual recognition of standards) should not extend. For example, talks about sanitary and phytosanitary (SPS) issues, animal welfare and chemical regulation are areas where regulation in the EU and US are based on completely different principles and cooperation beyond information exchange is unhelpful.
Cécile Toubeau continued: “Sadly the trade committee of the European Parliament have not listened to their expert colleagues in the environment committee who worked very hard to develop a resolution that would foster trade but also safeguard our regulatory freedom. The trade committee’s approach to the widely discredited investor protection clause is symptomatic. We hope MEPs will mobilise to fix this resolution in plenary vote next month.”