EU Proposes Changes in TTIP Investor Protection Clause
EU trade commissioner Cecilia Malmström has presented to the European Parliament (EP) the Commission's proposals for revising the terms of the controversial investor-state dispute settlement (ISDS) so that it can be included in the Transatlantic Trade and Investment Partnership (TTIP) between the EU and the US.
Intense public criticism of the clause that would allow investors to take governments to international arbitration tribunals rather than to domestic courts has threatened to completely derail the fragile talks.
The Commission excluded ISDS from the scope of the negotiations in 2014, but many in the chemical and other industries would like to see it reinstated.
The EU's revised concept paper, which the commissioner said reflects proposals raised in a public consultation, discussions in the EP, conversations with member states and dialog with civil society groups and experts in various fields, will attempt to "fix the problems with dispute settlement that have caused such concern," Malmström said.
The Commission's aim, she added is to "create a new modern system of investment arbitration."
Under the revised terms, the EU governing body proposes "to remove any ambiguity about sovereign governments' right to regulate." In the past, Malmström remarked, "agreements have been drafted more with the protection of investment in mind than the right of governments to regulate. It will no longer be the case."
The EU paper also addresses "fears of an unhealthy link between arbitrators and the parties to a dispute." The proposed improvement, it says, "would move away from individual, ad hoc cases to become much more like traditional courts. It sets out clearly that our goal is a permanent, international investment court."
Another of the Commission's goals is to "plug a significant hole in today's ISDS system: the lack of an appeal mechanism. "The goal," Malmström said, "is a multilateral appeal mechanism as part of a permanent court."
Germany's chemical industry association, Verband der Chemischen Industrie (VCI) has welcomed "the cornerstones for an ISDS reform within TTIP.
Giving up ISDS would be a wrong strategy for more global trade without barriers and a wrong signal for companies willing to invest," VCI President and Bayer CEO Marijn Dekkers said. "Globally operating companies need a legal framework that protects investments against expropriation and discrimination.
In the long run, Dekkers said, German chemical producers see "a permanent, internationally recognized investment tribunal as the best answer to the concerns of the public."