On 27 March, the European Commission (EC) launched a public consultation on the investor-state dispute settlement (ISDS) chapter within the context of the Transatlantic (ie EU-US) Trade and Investment Partnership (TTIP). Weeks earlier, the EU Trade Commissioner put a halt to negotiations over the ISDS due to mounting criticism from civil society groups and the European Parliament (EP).
07 April 2014 - This consultation has been presented by the EC as a solution to increase transparency over the process. However, in EPHA’s opinion, we see this consultation as a missed opportunity both in the way it is being conducted and in its scope.
Critics in favour of the elimination of the ISDS chapter within the TTIP argue that both the EU and the US have robust legal systems to reassure investors. Moreover, the current status quo has not prevented corporations from investing on the other side of the Atlantic. In fact, the reality is quite the opposite to what the Commission fears if we look at the figures and the comparison with other trading partners with 1421 billion Euros of EU direct investment in the US and 1344 billion for the US in 2011.
Another argument being raised against the ISDS is its lack of accountability and transparency. As an NGO representing the public health interest, we are concerned about the lack of independence of the ISDS panels, as has been criticised by several studies. This is crucial in areas such as public health due to the risk for potential bias or conflict of interest at the detriment of people’s well-being and health.
The ISDS consultation, which is not open until 21 April, presents the idea that the ISDS is necessary for the TTIP as it suggests changes in the "modalities for investment protection” but does not mention whether it should be included at all.
The Consultation text already includes provisions to safeguard the public interest and to protect health and the environment. However, there is a caveat: exception clauses if they are “manifestly excessive in light of their purpose.” Proportionality clauses have already caused problems within the North American Free Trade Agreement (NAFTA) between Mexico, the US and Canada. At EPHA, we fear that the inclusion of the ISDS chapter could promote a regulatory freeze, as public authorities will be threatened by the potential consequences of any act they pass that might contradict TTIP clauses.
As EPHA stated in the Financial Times, this consultation should be an opportunity for the European Commission to engage with civil society and address criticisms on the lack of democratic practices that EU institutions are blamed for.
Window of opportunity for the NGO community
Firstly, discussions around the ISDS chapter create a common platform so that interested civil society members can join forces. Issues around the ISDS can also give us the chance to learn and exchange views with similar NGOs on the other side of the Atlantic.
Secondly, if properly conducted, the TTIP will set a precedent on how future trade negotiations are dealt with. Due to the magnitude of this potential trade agreement, the TTIP has helped raise awareness on the issue of ISDS-like clauses and is giving civil society the opportunity to voice concerns on the as yet uncompleted Free Trade Agreement with Canada (CETA) and the still to be ratified FTA with Peru and Colombia.
Last but not least, the ISDS consultation can be an opportunity for the Commission to increase its credibility vis-à-vis the public and help create a more democratic Europe. The EC has taken the first, although not yet sufficient, step. Through responding to the consultation, civil society can remind EU leaders that a narrow focus on unproven economic growth and job creation is not enough to convince Europeans of the benefits to the largest trade agreement ever negotiated by the European Union.
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