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01/10/2016

Parliament’s TTIP vote cleared by S&D, with a new ISDS

Trade & Society

Parliament’s TTIP vote cleared by S&D, with a new ISDS

Martin Schulz and Gianni Pittella

[Gianni Pitella/Flickr]

The S&D group in the European Parliament voted today (1 July) on a controversial amendment which keeps investor protection in the EU-US trade agreement (TTIP), paving the way for a vote in plenary, possibly next week in Strasbourg, EurActiv has learned.

S&D MEPs agreed to replace the controversial Investor-State Dispute Settlement mechanism with a new system.

Sources told EurActiv that the compromise was pushed through by Martin Schulz, the German Socialist President of the Parliament.

With 56 votes in favour and 34 against, the group backed the wording that would allow it to stick to its goal of overcoming private arbitration, but leaves room for the Commission to come up with an alternative.

The compromise amendment clearly states the need to “replace the ISDS-system with a new system for resolving disputes between investors and states […] where potential cases are treated […] by publicly appointed, independent professional judges […] and which includes an appellate mechanism.

Private interests cannot undermine public policy objectives, ends the text.

Currently, the ISDS system allows investors to take governments to international arbitration tribunals rather than to domestic courts.

For months, civil society organisations have campaigned to keep ISDS out of the deal, insisting that Europe and the United States had comparable legal system and didn’t need private arbitration to settle disputes.

But because the US has insisted that ISDS be included in the landmark free trade agreement, the Commission has pledged for a reformed ISDS.

That did not impress MEPs, and for weeks, the two political groups have tried to bridge the divide and come up with a palatable compromise.

A compromise on the extra-legal arbitration mechanism was struck in May, after fierce horse-trading between political parties, who decided to keep ISDS, albeit revised.

>>Read: MEPs give passing vote to TTIP

But the compromise was put back into question, when the S&D group said it would never accept any kind of private arbitration, as the EU and the US have reliable national courts which should be the regular venues to solve any dispute.

>>Read: Parliament’s vote in limbo

New amendments were then submitted to the plenary, which prompted Schulz to postpone the vote, in order to avoid the public embarrassment of having the resolution defeated.

>>Read: Delayed TTIP vote drives wedge between grand coalition

Tomorrow, the Parliament Conference of Presidents is expected to decide whether or not the non-binding resolution goes to the plenary in July, or wait until Fall.

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.

Positions

The president’s proposal discriminates: only foreign investors would have access, local investors, states or citizens won’t, said Antje Wessel from the Foundation for a Free Information Infrastructure e.V.

It is also anti-democratic and a slippery slope. Supranational fora fall outside a democratic context. There are no voters at the supranational level. The Parliament would not be able to adjust the rules to correct expansionist interpretations, Wessel added.

"The president’s version is based on an earlier seriously broken amendment by rapporteur Bernd Lange," she continued, adding that  reassurance is empty as an additional forum to challenge government decisions creates an additional threat to public policy objectives.

Background

In June 2013, EU heads of state and government mandated the Commission to start negotiating a free trade agreement with the US, giving guidelines concerning what the negotiations should include.

The guidelines stated that the EU should seek to include provisions on investment protection and investor-to-state dispute settlement (ISDS) in the proposed agreement.

Member states already have 1,400 ISDS-type agreements with other countries, some dating back to the 1950s. There is an urgent need for reform, and everybody agrees.

Read>>Special report: TTIP and the Arbitration Clause

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

Negotiations on investment in TTIP were suspended in January 2014. They will only resume once the Commission believes its new proposals guarantee, among other things, that the jurisdiction of national courts won’t be limited by special regimes for investor-to-state disputes.

The final decision, which must be ratified by both EU Council and Parliament in a full vote, will only be taken with the agreement of European Commission First Vice-President Frans Timmermans. Commission President Jean-Claude Juncker gave Timmermans the veto. He will ensure ISDS complies with the rule of law, and principles of equality and transparency, according to a memo published by the executive.

Read>>Linksdossier: TTIP for dummies