Tuesday, 21 October 2014

The Trojan Horse in the Transatlantic Trade and Investment Partnership (TTIP)

Is the EU Commission about to back down over clauses giving multinationals wide ranging powers to challenge democratic decisions?

Under pressure from Germany, and European citizens groups, the Investor State Dispute Settlement mechanism (ISDS) could be withdrawn from negotiations leading towards the proposed EU/US Transatlantic Trade and Investment Partnership (TTIP).
As details of the proposed treaty have been revealed, concern has grown among citizens, and some governments, especially about the ISDS clauses. Under other international trade agreements with similar provisions multinational companies have challenged governments for potential loss of profits, because a country in which they have invested, or intend to invest, has more constraining laws, regulations or standards than in their country of origin, and they claim these would have an adverse impact on their potential sales. 

These secret clauses are a neoliberal dream
The current version of the ISDS clauses is still secret, but in early drafts it was proposed that each case would be decided by three arbitrators chosen from a panel of international lawyers.  There could be no appeal. If it won the case, as well as obtaining very substantial financial compensation, a company could also demand that democratically agreed laws be changed. These clauses are similar to those included in the EU-Canada CETA trade treaty, which in turn were based on the World Trade Organisation’s model.

ISDS clauses in the North American Free Trade Agreement NAFTA, have led to many controversial judgements overwhelmingly in favour of US companies. During 20 years of the operation of the NAFTA agreement the government of Canada has had 30 cases brought against it by private US companies and it has lost 30 times. Mexico has had 5 cases against it by US firms and has lost 5 times resulting in compensation payments of $204 million. Canada and Mexico have brought 22 cases against the US and the US has won 22 times.   All together it’s an outstanding record for so-called independent arbitrators and a US neoliberal dream come true.

It's the potential for this kind of assault on European democratic institutions and their decisions which is at the centre of the opposition to these negotiations.

Jean-Claude Juncker

The appointment of Jean-Claude Juncker, the new President of the European Commission, and a group of new Commissioners opens up an opportunity for major changes in the treaty negotiations as the tide of opinion turns against the negotiations lead by the outgoing Trade Commissioner Karel De Gucht.

Timeline of recent developments
January 2014
In January 2014 the negotiation of the section of the treaty dealing with the ISDS mechanism was suspended by Trade Commissioner Karel De Gucht pending the results of a public consultation. This closed on 13th July 2014, and nearly 150,000 responses were received, 99.62% coming from individuals. A report will be issued in November 2014.

March 2014
Germany announced in March 2014 that they would push for ISDS Clauses to be excluded from the treaty.

July 2014
On 11th July 2014 the new President of the EU Commission, Jean-Claude Juncker expressed his view to a meeting of the European Parliament green parties, that he could see no reason why national judiciary shouldn’t be able to judge arbitration cases brought by multi-national companies when they considered that their treatment in a particular national jurisdiction was unfair.

When asked by Yannick Jadot Green MEP about his stance on the controversial Investor-to-State Dispute Settlement process (ISDS) Juncker stated: 

“I don’t understand why great democracies would not have faith in the judiciary. We have courts which are able to deal with cases that are brought to them, and so I’m not really in favour of what one could call “private courts” or arbitration bodies which may sometimes reach good decisions but don’t always have to justify their decisions.”

He has subsequently been quoted in an article by the Dutch journalist Caroline de Gruyter, writing for NRC Handelsblad, on 15 October 2014 as saying that he now sees ISDS as a "lightning rod" issue for TTIP opponents. Politically, Juncker believes it cannot be won, as those in favour are “not fighting back.”

September 2014
Cecilia Malmström
In written replies leaked before the confirmation hearings of Cecilia Malmström, the proposed new EU Trade Commissioner, Ms Malmström appeared to refute the need for an ISDS procedure, saying:

"No limitation of the jurisdiction of courts in the EU member states will be accepted in this context; this clearly means that no investor-state dispute settlement mechanism will be part of that agreement."
She later retracted the statement, taking to social media to claim that:

"The sentence everybody is so excited about on ISDS / TTIP is not written by me in the final version of my answer to the EP [European Parliament]."
An EU official stated that the text released earlier had been in error and would be corrected when the final version of the replies was published.

October 2014
De Gucht warns no TTIP without ISDS

Karel De Gucht
The outgoing European Trade Commissioner Karel De Gucht has warned this month that there will be no free trade agreement between the EU and US without the controversial Investor-State Dispute Settlement (ISDS) clauses.
Speaking to Reuters in Rome, De Gucht – who is to leave his position shortly – said, in reference to the clause's biggest European objector, Germany:
"They should realise there will be no TTIP without an ISDS," adding that neither side would be able to insist on investor protection clauses in other agreements if they didn't include it in the Transatlantic Trade and Investor Partnership (TTIP)."
Is there any point to TTIP without ISDS?
For once he’s right.  The Investor-to-State Dispute Settlement mechanism is the principal means by which non-tariff barriers to trade would be steadily dismantled. The alternative is likely to be a series of never ending bilateral negotiations in which individual states will seek to protect their national interest and will have every opportunity to delay taking any action. Set against that are all the risks involved in handing over power to multi-nationals to challenge democratic decisions in all fields of trans-Atlantic trade.  Unless of course certain areas of trade in goods and services have been specifically excluded by the treaty!

But don’t forget that the EU Commission’s own study predicted, as a result of a treaty including ISDS clauses, an average increase in the growth of EU economies of only 0.5% by 2030. So, if the teeth in the TTIP treaty are to be withdrawn, the hoped for results in terms of economic growth would most likely be nullified and there would be no point in continuing with the negotiations. That is assuming that the US would still want to do so!

So that sounds like good news but what about the deal with Canada?
The Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada has gone ahead and been signed.  It now has to be ratified by national governments and the European Parliament. Despite Germany’s objections the Consolidated CETA Text  dated 26th September 2014 still includes ISDS clauses. (Chapter X, Section 6 pages 134 – 185).

So if CETA is ratified what does this mean?
Any US multinational company with a subsidiary in Canada could, after certain conditions have been satisfied, challenge any EU government in just the same way as if ISDS clauses were included in a US – EU TTIP trade deal!

So the ISDS Trojan horse won’t go away?
And it doesn't matter whether TTIP includes ISDS clauses or not. A route still exists for multinationals to sue European governments. If they can prove to the satisfaction of a group of international lawyers, who are answerable to nobody, that a democratically validated law, regulation or standard is more onerous in the target country than in their own, and could affect their potential profits, they can still overturn it and get paid for doing so.

If you think I'm exaggerating Australia has been sued by Philip Morris Asia in Hong Kong, under a 1993 bilateral trade agreement, over its adoption of a law enforcing plain packaging for cigarettes.  Forty other WTO members have joined the dispute as third parties, a record number. The case is ongoing.

The only way to remove this threat is to halt the TTIP negotiations and not to ratify the CETA treaty!
Please sign the petition which proposes a European Citizens Initiative (ECI) to do this here. http://stop-ttip.org/sign/  they need at least a million signatures and at today’s date (25th November 2014) they have 936,000. They have also announced that they will take the EU Commission to court to challenge their decision that the ECI was not valid.

You can read more about it here. http://johnpreedy.blogspot.fr/2014/10/the-eu-commissions-own-goal.html

The Reasons why I Oppose Neoliberalism are explained here.


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