April 15, 2014

Irresponsible EU parliament vote on ISDS tomorrow

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Tomorrow the EU parliament will vote on investor-to-state dispute settlement (ISDS). The parliament will vote on a regulation regarding “International agreements: framework for managing financial responsibility linked to investor-state dispute settlement tribunals”. See the procedure file.

The regulation is a deal between council and parliament, it establishes rules for managing the financial consequences of investor-to-state dispute settlement (ISDS). Who will have to pay, the EU or the member state, if the EU loses an ISDS case? The regulation is a preparatory step to the inclusion of ISDS in EU trade agreements.

Today the international trade committee voted in favour of the regulation, tomorrow plenary will vote. We can expect the regulation to be adopted.

In my opinion, the vote is irresponsible.

When is the member state responsible? When the Member State acts in a manner inconsistent with that required by Union law, for example when it fails to transpose a directive adopted by the Union, that Member State should consequently bear financial responsibility.

Sounds clear and reasonable. But then, say a country is in a financial crisis. Member state, commission, council and IMF come together. A plan to save the financial system is made. Who then takes the decision? The threat of ISDS claims will loom over the decision.

ISDS adds extra complexity to solving a financial crisis. This heightens the chance on a financial system collapse.

The commission added a carve-out for financial crises? Yes, in true commission style: a dysfunctional one, dependent on the other party.

Now take a look at the procedure file again. Four committees decided not to give an opinion: Development, Legal Affairs, Budgets, Economic and Monetary Affairs.

Even Economic and Monetary Affairs wasn’t interested. They just left it to international trade committee.

ISDS threatens democracy, human rights and the stability of the financial system.

In my opinion the parliament should refer the regulation back to the committees and await the consultation.

On the positive side: if the parliament votes tomorrow, we will know on whom not to vote in the elections.