During a stakeholders meeting on the TTIP / TAFTA trade agreement, EU and US negotiators showed determination to transfer sovereignty to companies.
On Friday 15 November, the last day of the second TTIP negotiating round, the EU commission organised a stakeholders meeting. Chief negotiators Dan Mullaney (US) and Ignacio Garcia Bercero (EU) gave a short talk and answered questions.
In the stakeholders meeting many topics were discussed, from investor – state dispute settlement, the right to water, the precautionary principle, to consumer safeguards. Here is a (low quality) audio recording, it starts half a minute into the meeting.
There were many questions about investor – state dispute settlement (ISDS). Under ISDS companies can sue states if new laws threaten to make expected profits lower. The cases are handled outside national court systems, by tribunals consisting of three investment lawyers. Civil society groups see ISDS as a threat to democracy.
ISDS transfers sovereignty in two ways. It gives companies equal standing to states. And it gives investment lawyers the power to decide in conflicts between companies and states.
Why on earth would one want to transfer sovereignty to companies and investment lawyers?
According to Mr. Garcia Bercero a well designed ISDS system can preserve the right to regulate:
“I first want to say, very clear, very firmly, that we certainly do not believe that a well designed investor to state dispute settlement system could compromise the right to regulate.
One of the fundamental issues we want to look at very carefully if we decide on any potential investment protection rules in a treaty, as we indeed did in the agreement with Canada, is to make sure that parties have the right to make policies in the public interest.” (at 48.20)
Mr. Garcia Bercero turns the question around. He takes transferring sovereignty for granted, and then wants to safeguard space for states to regulate. States become the begging parties. That is the world upside down.
Furthermore, the commission’s reassurances do not convince. Mr. Garcia Bercero states the commission got it right in the ISDS chapter in the agreement with Canada. However, already months ago Nathalie Bernasconi-Osterwalder showed serious flaws in the (leaked) draft. Moreover, arguments in favour of ISDS on the commission’s Q&A webpage were scrutinized by Corporate Europe Observatory, after which the commission withdrew the statements. A second commission attempt was strongly criticised by Glyn Moody. The commission’s beliefs are firm, but it comes empty handed.
Mr. Mullaney talked about a fair, quick and transparent ISDS system that safeguards regulatory space. Nothing would prevent non-discriminatory legitimate policy objectives.
He too takes transferring sovereignty for granted, and then wants to safeguard limited space for states to regulate. The policy objectives have to be non-discriminatory and legitimate. What is non-discriminatory and legitimate? The investment lawyers will decide on that.
Then someone asked the essential question: why is ISDS needed at all? Both negotiators mentioned protection against discrimination.
“I think it is fair to say that measures in the United States that specifically discriminate against EU [parts?] or EU companies and measures in Europe that discriminate against US property or companies, that would in fact be something you want to avoid in the agreement.” (at 1.41.26)
The answer doesn’t clarify why ISDS would be needed, as both the EU and US have good courts, and state – state dispute settlement can solve remaining issues.
In related news, last week Nobel laureate in economics Joseph Stiglitz wrote an opinion on ISDS. He makes it clear that the instrument is unnecessary:
“There is no reason that foreign-owned property should be better protected than property owned by a country’s own citizens. Moreover, if constitutional guarantees are not enough to convince investors (…) foreigners can always avail themselves of expropriation insurance provided by the Multilateral Investment Guarantee Agency (a division of the World Bank) or numerous national organizations providing such insurance.”
He also explains what is really behind ISDS:
“But those supporting the investment agreements are not really concerned about protecting property rights, anyway. The real goal is to restrict governments’ ability to regulate and tax corporations – that is, to restrict their ability to impose responsibilities, not just uphold rights. Corporations are attempting to achieve by stealth – through secretly negotiated trade agreements – what they could not attain in an open political process.”
A union without clothes
In my opinion, the EU is in dire straights. The EU gave us a euro with design flaws, it may soon transfer sovereignty to companies and investment lawyers. The political elite fails. It is time for a wake up call.