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04/12/2016

Parliament’s opposition to TTIP arbitration on the rise

Trade & Society

Parliament’s opposition to TTIP arbitration on the rise

MEPs have submitted 898 amendments to the International Trade Committee's report on TTIP.

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Half of the European Parliament’s committees have rejected the Transatlantic Trade and Investment Partnership’s (TTIP) investor-state dispute settlement mechanism (ISDS), casting doubt over the trade deal’s prospects of to passing through Parliament. EurActiv France reports

MEPs hardened their position on TTIP in the run-up to the ninth round of negotiations between the EU and the United States, which are taking place this week in New York.

On 14 and 16 April, six of the 14 Parliamentary committees involved in drafting the European Parliament’s resolution on the trade deal passed draft opinions rejecting the arbitration clause that is currently part of the deal.

Opposition to TTIP among the European parliamentarians, particularly to the proposed arbitration system, appears to be strengthening, with criticism crystallising around ISDS. The mechanism is designed to protect investments by giving access to arbitration tribunals in the event of a conflict between a private company and a state.

Yannick Jadot, a Green MEP and vice-president of the International Trade Committee, welcomed the fact that “half of the European Parliament Committees that gave their opinion rejected the ISDS mechanism”.

Six committees opposed to arbitration

The committees on Economic and Monetary Affairs, Legal Affairs, Employment, Environment, Petitions and Constitutional Affairs all adopted draft opinions opposing the arbitration mechanism, despite the European People’s Party’s (EPP) dominance of the Parliament, and its position in favour of both TTIP and the arbitration clause.

“The positions of the committees on Legal Affairs and Economic Affairs are very important because they are responsible for the legal position of the European Parliament,” said Yannick Jadot. But other committees, including Industry and Foreign Affairs, voted in favour of arbitration.

In the Legal Affairs Committee, one of the most relevant to ISDS, the draft opinion tabled by EPP member Axel Voss was initially in favour of the dispute settlement mechanism, but was so greatly altered by amendments from the Greens and the radical left (GUE) that it finished as an anti-ISDS text. This U-turn pushed the EPP rapporteur to remove his name from the committee’s opinion, EurActiv was told.

The opinions of the different committees are not binding, but will serve to deepen the International Trade Committee’s report, which will be put to the vote on 28 May, before being presented to the whole Parliament at the June plenary session in Strasbourg.

Decisive vote

So far, a total of 898 amendments have been submitted for this draft report, drawn up by the German Socialist MEP and president of the International Trade Committee (INTA), Bernd Lange.

“The amendments […] show that there are now four main areas of disagreement between MEPs. These are data protection, services that could be opened up to American providers, environmental sustainability and investor protection mechanisms,” he said.

Although the European Parliament has no official place at the negotiating table for the transatlantic treaty, where the EU is represented by the European Commission, it will have the power to ratify or reject the final agreement once the negotiations are completed.

This power, also held by the member states’ national parliaments, gives a certain gravity to the INTA report, which will compile the MEPs’ demands on particularly sensitive issue like arbitration.

Growing opposition

“These different votes confirm Lange’s position, which is that recourse to arbitration mechanisms is not necessary in agreements with countries whose judicial and commercial systems are robust and equal to those of the EU, which obviously includes the United States and Canada,” Yannick Jadot explained.

The Lange report goes so far as to discount the concept of arbitration in disagreements between investors and states. “The settlement of disputes between states and the use of national judicial systems are the most appropriate solutions in the case of investment disagreements”.

It is by no means certain that the final report up for adoption in June will reject the arbitration mechanism. “But today it is within the realms of possibility that the report will be adopted, although of course the vote will be close either way,” the Green MEP said.

Opponents of ISDS can now be found right across the political spectrum in the European Parliament. In an editorial published by Le Monde last week, several French MEPs from the centre and the extreme left called on France to reject this “opaque and biased mechanism that would weaken the judicial system”.

Alternative

After the committees had voted, a source from the French government said they were “happy to see that the social-democrats’ position is gradually becoming the majority position”.

>> Read: France and Germany to form united front against ISDS

The French and German governments both support other possible options for the settlement of disputes between investors and states, including putting in place an appeal system, tightening restrictions on ISDS to avoid abuse by the private sector and establishing a permanent arbitration court.

But the European Commission is remaining cautious about these proposals. “I think this is a good idea, but it won’t happen tomorrow. For ISDS, we have to think short term, before this permanent court is established,” Cecilia Malmström, the European Commissioner for Trade said in an interview with Blastingnews.

>> Read: Commission swamped by 150,000 replies to TTIP consultation

Short of removing the arbitration clause altogether, the European Commission hopes to have new proposals for its improvement on the table by May.

Background

In June 2013, the European Union's heads of state and heads of government gave the Commission the responsibility for the free-trade negotiations between the EU and the United States.

The European Commission is seeking agreement on a number of issues, including the protection of investments and the proposed mechanism of dispute settlement between investors and states.

Negotiations between the United States and the European Union on the Transatlantic Trade and Investment Partnership began in July 2013. The guidelines stated that the EU should seek to include provisions on investment protection and investor-state dispute settlement (ISDS) in the proposed agreement.

>> Read: Special report: TTIP and the Arbitration Clause

The EU executive consulted the public on its possible approach to investment protection and ISDS in the TTIP, asking whether the EU’s proposed approach for TTIP achieves the right balance between protecting investors and safeguarding the EU's right and ability to regulate in the public interest.

This consultation was extended over the summer on account of the high interest and the Commission intends to publish a report in early 2015.

>> Read: Linksdossier: TTIP for dummies

Timeline

  • 28 May: vote in the International Trade Committee
  • 9 June: planned vote in the European Parliament plenary session in Strasbourg

Further Reading