According to EU Commissioner for Trade Cecilia Malmström, “no direct relationship” can be seen between the controversial arbitration tribunals in the draft EU-US trade agreement and increased investment, adding fuel to its critics’ fires. EURACTIV Germany reports.
The planned free trade agreement between the United States and the European Union (TTIP) is proving to be controversial once again.
Whether the investment protection of trade agreements like TTIP and CETA will contribute more foreign investment is not clear, according to a European Commission assessment.
Most studies showed no “direct and exclusive causal relationship” between international investment agreements and foreign direct investment (FDI), replied Cecilia Malmström to a question posed by Fabio De Masi MEP (Die Linke).
The fact that direct effects are not identifiable is due to the complexity of economic relations, argues the Commission. There are numerous factors that affect investment. However, studies presented a “long term and transnational link” between investment protection agreements and investment, Malmström added.
The investment protection proposed in the planned TTIP agreement and the CETA deal is controversial. Critics fear that arbitration tribunals could be used to protect foreign investors, undermining regular court proceedings. The Commission has promised to eliminate weaknesses in conventional arbitration proceedings.
Malmström went on to add that investment protection would be an exclusive competence of the EU. This could have an impact on the adoption of both TTIP and CETA. Exclusive competence for the EU in investment protection and other contractual issues would facilitate adoption of the agreement.
But if it is a shared competency between the EU and the member states, then it would fall under the bracket of a so-called mixed agreement. In this scenario, the German government, as well as the other member states, would have to agree, too.
De Masi evaluated Malmström’s answer as an attempt to delay the CETA deal, for which a draft contract has already been drawn up. “The Commission has let the cat out of the bag, it fears democracy.” He added that Malmström contradicted the German government and that CETA will need the approval of the Bundestag in order to be ratified.