Pittella: ISDS is dead, EU-Canada trade deal must be reopened

Gianni Pittella [BiennaleHabitat/YouTube]

The investor-state dispute settlement mechanism (ISDS) as we know it is dead and must be replaced by a new public system, said Gianni Pittella, in an interview with EURACTIV.

Gianni Pittella is President of the Socialists & Democrats group in the European Parliament. He has been a member of the legislature since 1999. 

He spoke to EURACTIV’s Editor-in-Chief, Daniela Vincenti

S&D this week had an internal vote on a controversial amendment related to ISDS, which derailed a vote last month on the Parliament’s TTIP non-binding resolution. Can you give me an exact reading of this amendment? Are we talking about a reformed ISDS with publicly appointed judges?

ISDS is dead. It must be replaced by a new public and transparent system of investment protection, in which private interests cannot undermine public policy and which is subject to public law.

For us, a new system means publicly appointed judges. No to private arbitrators. Yes to full transparency during the court cases. Yes to an appellate mechanism.

These are the conditions for a new system. If these conditions are not met, it’s not good enough for us.

Does that mean the CETA, the Comprehensive Trade and Economic Agreement between the EU and Canada, which has a reformed ISDS, preserving the state right to regulate and achieve legitimate policy objectives – such as health, safety , environment – needs to be reopened and renegotiated?

We will fight for a review of the agreement. We want all trade agreements to include these provisions, including TTIP.

That means reopening CETA to amend ISDS provisions?

We will pursue in this direction. We have to be coherent in our position.

But your group is quite divided on ISDS …

It is a physiological state of affairs. A third of colleagues expressed a different position and two-thirds, which represent a fairly solid majority, who want to give a clear indication to the negotiators. This is the fundamental point: Can the European Parliament refuse to give clear guidelines to those who are negotiating a crucial trade agreement? I say: No. We have to be clear on this.

We, European Parliament, have to tell the Commission that TTIP is good only if it guarantees social standards, consumer rights, environment and foods. At the same time, it has to include a system where disputes between state and private investors are settled by publicly appointed judges.

These are the conditions.

You talked about safety standards. One of the most controversial aspects of the TTIP negotiations is regulatory convergence, especially in sectors where we have more stringent rules, like the EU REACH, versus the US TSCA. Washington last week pushed for a complete overhaul of their chemicals’ 40-year old legislation. Why is nobody in the European Parliament talking about this?

This is because we are leading an ideological battle. A number of movements have a prejudicial position against TTIP, because they don’t want international trade. These are anti-globalisation, protectionist movements. This is not the socialist culture. The socialist culture is in favour of governing globalisation, to increase trade but notwithstanding some conditions, defending workers and consumers, defending public standards.

If TTIP guarantees all this it produces wealth, prosperity and jobs. We cannot close ourselves in our little homes and say: We keep our trade in our little vegetable garden. This is the wrong approach to fight globalisation challenges.

Allow me to go back to ISDS. The idea of a permanent court seems very much a long-term plan. In the meantime we need to find other viable solutions. ISDS still exist between some member states – I am thinking of Germany and Bulgaria, Germany and Sweden. Isn’t this a bit of a hypocrisy? We have it at home, but we don’t want it with the US. So how do we reform the whole system?

It is not up to me to decide what system. I am a legislator. I give a clear indication. I say this arbitration system must have a public structure, must be independent, transparent and must guarantee an appellate mechanism. Then, how this has to be done will be the subject of negotiations.

It is not up to me, President of the S&D group of the European Parliament, to build an arbitration system.

But Commissioner Malmström came with some proposals.

Precisely, we are giving Malmström clear instructions. If she doesn’t follow these guidelines to replace private arbitrators with public judges she has to face a battle. We need a transparent, public system rather than a behind closed doors apparatus. I do not exclude to have a public international court in the long run, but for the time being Malmström must take not of our red lines.

What about with China, since we are also negotiating a bilateral investment agreement with Beijing.

What I said applies for all trade and investment agreements these principles apply.

So the resolution will pass next week, right? There are no other skeletons in the closet … right?

I hope not.

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