[A2k] Bridges Weekly: TTIP: EU Officials Weigh ISDS Options as High-Level Meetings Continue

Thiru Balasubramaniam thiru at keionline.org
Thu Mar 26 22:19:03 PDT 2015


BRIDGES <http://www.ictsd.org/bridges-news/Bridges>
TTIP: EU Officials Weigh ISDS Options as High-Level Meetings Continue
26 March 2015

EU officials are now weighing potential ideas for addressing the
controversial subject of investor-state dispute settlement (ISDS) in their
trade talks with the US, with European Trade Commissioner Cecilia Malmström
holding meetings in recent weeks with both EU parliamentarians and trade
ministers to present some preliminary ideas.

Though the portion of the EU-US negotiations relating to ISDS and
investment protections has been suspended since early 2014, the issue has
remained at the forefront of TTIP-related public debate. (See Bridges
Weekly, 23 January 2014

EU member states have been divided in their opinions on ISDS, with Germany
among the most vocal in expressing its scepticism. The US, for its part,
has been insisting on the inclusion of investor-state dispute settlement
provisions in TTIP, though the issue has also been divisive on the American
side of the Atlantic.

*EU trade chief: public consultation “not a referendum”*

The European Commission had decided put the ISDS and investment protection
talks on hold in order to conduct a public consultation on the subject,
with the results of that process released this past January.

The report summarising these results indicated “huge scepticism” over ISDS,
Brussels officials noted at the time, pledging to hold additional
consultations before making any policy proposals. (See Bridges Weekly, 15
January 2015

“The consultation was not a referendum even if the responses showed huge
scepticism and concerns about the system,” Malmström told members of the
European Parliament’s International Trade Committee (INTA) last week.

“What the consultation did do is allow us to understand the main concerns
about the system and give us ideas for how to address them,” she said,
affirming that the Commission still holds the view that ISDS and investment
protection rules should be negotiated under TTIP.

“The fact remains that no US law prohibits discrimination against foreign
investors. Putting investment in the deal would close that gap, but only if
the commitments are enforceable,” Malmström explained, also noting that
other US trading partners – such as Japan and Canada – have or will have
access to investor protection on the American market.

The EU trade chief then outlined to INTA members a series of “preliminary
ideas” from the Commission on ways to move forward with ISDS in the
negotiations, while qualifying that these were not formal proposals.

For instance, in response to concerns over the potential implications of
ISDS on governments’ right to regulate, the Commission could push to
include an article within the TTIP text that clarifies the right of
governments to pursue public policy objectives, while adopting the level of
protection they decide is necessary.

Furthermore, Malmström said, the Commission would like to see a clause
explaining that rules on investment protection “offer no guarantee for
investors that the legal regime under which they have invested will stay
the same.”

The functioning of tribunals was another area that was raised in the public
consultation as needing improvements. The Commission is therefore
suggesting that governments outline a “limited list of trustworthy
arbitrators” who would be tasked with any investment disputes under the
trade deal, and that these arbitrators meet certain qualifications.

Regarding concerns raised by both civil society and the private sector over
the lack of appeal mechanisms in ISDS tribunals, the Commission is
suggesting the establishment of an appeals body made up of permanent

Lastly, the EU executive would like to see TTIP clarify the relationship
between domestic legal proceedings and those under ISDS.

“If anything contributes to the perception of ISDS as unfair, it’s the
notion that investors have a second chance to overrule the decisions of
national courts,” Malmström said.

Possible solutions could involve, for example, requiring investors to
choose which forum to use before bringing a case, or instead to require
investors to stop any domestic processes if they choose to pursue an ISDS

The EU Trade Commissioner is discussing the issue further with European
Council trade ministers during an informal meeting in Riga this week, with
the eventual goal of developing a common EU position on the subject. The
Council had included ISDS and investment protection in the Commission’s
TTIP mandate, as long as the final outcome is in line with EU interests.
(See Bridges Weekly, 16 October 2014

*April negotiating round*

The US and EU, which together already have the world’s deepest trading
relationship, have been working toward a “fresh start” to their bilateral
negotiations, now nearly two years old.

In this context, officials from both sides had outlined in February an
“intense work schedule” for the coming months, with the next negotiating
round set to be held in the Washington area in April. A subsequent round is
then planned for July. (See Bridges Weekly, 12 February 2015

Though the date of the April round has not formally been announced,
Malmström met with US Trade Representative Michael Froman in Brussels last
week to discuss the negotiations to date, with observers expecting the meet
to give some additional political direction on the next stages of the talks.

Following their meeting, the two trade chiefs issued a joint statement on
the importance of protecting public services in both the bilateral TTIP
negotiations, as well as a separate endeavour known as the Trade in
Services Agreement (TISA), a group which involves the US and the EU
together with 22 other participants.

Various civil society groups have raised questions – and concerns – as to
whether public services might be covered in the planned bilateral pact, and
if so what that would entail.

In the statement, Malmström and Froman affirmed that any trade deals
involving either party do not in any way limit domestic governments from
providing services in areas such as water, education, and health, nor do
they require government privatisation of services.

Furthermore, the officials said, “EU and US trade agreements do not impede
governments’ ability to adopt or maintain regulations to ensure the high
quality of services and to protect important public interest objectives,
such as the protection of health, safety, or the environment.”

Malmström also highlighted the “considerable progress” that the two
officials had made on advancing services-related negotiations, including
ways to work toward tabling new services market access offers before the
tenth round. The EU trade chief did not elaborate further, however, on what
these offers might entail.

Services, together with tariffs and government procurement, are the three
main areas under which TTIP negotiators are working on improving market

*European Council calls for 2015 result*

The European Council, which met on 19-20 March, affirmed
<http://data.consilium.europa.eu/doc/document/ST-11-2015-INIT/en/pdf> that
it is still hoping for a final deal this year and urged both parties to
work toward this goal.

“The EU and the US should make every effort to conclude negotiations on an
ambitious, comprehensive, and mutually beneficial agreement by the end of
the year,” said the Council, which is made up of the heads of state or
government of the EU’s 28 member states, together with the presidents of
the Council and Commission.

Trade observers have suggested, however, that this date may not be
realistic, given the various political decisions that still need to be
taken, as well as technical work.

On the US side, the 2015 edition
<https://ustr.gov/sites/default/files/2015-Presidents-Trade-Agenda_2.pdf> of
the President’s Trade Agenda – released earlier this month – indicated only
that the Obama Administration “expects to make substantial progress in the
TTIP negotiations,” without outlining any target date.

The political climate in the US, particularly ahead of the 2016 general
election, is also expected by many to affect the TTIP timeline. While the
election is still over a year away, being scheduled for 8 November 2016,
some potential candidates have already indicated their intent to run, with
more expected. Due to US term limits, Obama cannot run for a third term,
guaranteeing that there will be a new leader in the White House.

The merits of trade deals have already been at the forefront of recent
Washington policy discussions, with lawmakers having spent the past several
months wrangling over whether to renew an expired piece of legislation
known as Trade Promotion Authority (TPA), and if so in what form. (See
Bridges Weekly, 19 March 2015

TPA allows the US executive branch to negotiate international trade deals –
such as TTIP – and submit them to Congress for a straight up-or-down vote,
without amendments. The policy also outlines congressional negotiating
priorities for such agreements.

ICTSD reporting.

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