16 July 2014 - EPHA advocates that Investor State Dispute Settlements (ISDS) should be excluded from the Transatlantic Trade and Investment Partnership (TTIP) Agreement and future trade agreements due to the risks of abuse, and to postpone or delay legislation. The risks for public health policy from ISDS are greater than potential benefits. The Commission should prove that ISDS is justified and that proportionate measures to protect both investment and public health policy can be put in place.
EPHA welcomes the opportunity to take part in this consultation and the efforts DG Trade is making to improve transparency of ISDS. However, EPHA is concerned that the consultation paper’s approach assumed ISDS will be included as a foregone conclusion.
A number of countries are revisiting their approach to ISDS, including Australia, Indonesia, and South Africa. EPHA hopes the consultation will form part of a new EU approach to investment protection. There are also successful Free Trade Agreements without ISDS, such as those recently concluded between Japan-Australia, EU-Korea, and US-Australia.
As outlined in the consultation document, there are other reasons, such as level of investment insurance and political risks that deter countries from arbitrary expropriation.
EPHA would like to highlight that there is a lack of empirical evidence that IIAs increase foreign investment.
Preventing investors from simultaneously pursuing the same claim in domestic courts and via the ISDS mechanism, as proposed here, is critical to making sure that investors are not doubly compensated. However, this limitation does nothing to counter the much more fundamental problem of enabling foreign investors to circumvent domestic laws and courts and directly pursuing claims before ISDS tribunals, as the proposed TTIP investment chapter would allow. This would undermine the validity of US, Member State and European legal systems.
It is crucial that the scope of substantive investment protection provisions recognises: (1) that this conflict exists; and (2) that domestic governments’ sovereign rights to formulate and implement policies that protect public health should, without exception, override the principle of investment protection embodied in the TTIP. National governments should maintain their legal sovereignty and regulatory freedom in public health policy and should not be prevented or disincentivised from introducing policy that aims to protect public health.
Civil society assessments have shown how reforms advocated for by some members of the business community do not address underlying problems with the system. Tinkering around with Investor State Dispute Settlement is out of step with the international consensus calling for deep reforms.