ISDS: VIP treatment for corporations?

EU-US trade deal 'Trojan horse' threatening democracy, argues Paul de Clerck.

By Paul de Clerck

26 Jan 2015

The European commission is scrambling to find a way to ignore the resounding negative response it got to its recent public consultation on the investor-state dispute settlement (ISDS) mechanism in the EU-US trade deal that is currently under negotiation.

The ISDS system allows corporations to circumvent national courts and sue governments for compensation in secretive corporate tribunals when laws and regulations hurt their profits.

The consultation, the results of which the commission dilly-dallied with for months, found that over 97 per cent of people responding categorically opposed the inclusion of ISDS in this deal. So why did so many Europeans - a record number for a commission consultation - almost unanimously oppose this mechanism?

"The intention to level the regulatory playing field for US companies foreshadows a severe cutting-back of protections for Europeans' jobs, health and environment"

There are myriad problems with this trade deal. The lack of transparency and accountability of the negotiations led the European ombudsman to launch an own-initiative inquiry which found the commission's efforts very lacking, and Friends of the Earth Europe and allies to submit a formal complaint over denied access-to-documents requests.

The intention to level the regulatory playing field for US companies foreshadows a severe cutting-back of protections for Europeans' jobs, health and environment. But ISDS has become a totemic issue in this debate.

This is possibly because it brazenly typifies the problem running like a thread through all of the other threats this trade deal poses - a complete disregard for the citizens of the countries involved and VIP treatment for corporations.

Other trade and investment agreements have already included this mechanism, and have led to some very high-profile cases. Swedish energy company Vattenfall is seeking €4.7bn from Germany for hastening its nuclear phase-out, and tobacco giant Phillip Morris has started procedures against Australia after their government planned to introduce plain cigarette packets.

Apart from the fact that the taxpayers of these countries may lose out, the threat of future litigation may also have a chilling effect on governments considering introducing other protections for their citizens or environment.

Research released by Friends of the Earth Europe last month detailed the 127 known cases that have been taken against EU member states since 1994, under various trade and investment agreements, and found that companies had sought at least €29bn in compensation - although figures were only publicly available for half of known cases.

"This EU-US trade deal is a Trojan horse, and while ISDS is just one of the dangers lurking within, it has been spotted for what it is"

The EU-US trade deal would dwarf any previous agreements, and it would be reasonable to expect a steep rise in the number, frequency and magnitude of ISDS cases taken against EU member states.

In the consultation, the commission presented a number of reform proposals for the current ISDS system, but an analysis by civil society organisations of similar provisions in the proposed trade deal with Canada has already shown that they will be ineffective and in some cases even increase the dangers of ISDS.

The overwhelming opposition to ISDS in their consultation should propel the commission to take it off the negotiating table when they announce their decision in the coming months. The worry is that they are laying the groundwork to call foul and not take this unprecedented participation seriously.

This EU-US trade deal is a Trojan horse, and while ISDS is just one of the dangers lurking within, it has been spotted for what it is. For the commission to ignore the public outcry against it and to press on regardless would be a terrible thing for European democracy indeed.

 

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