March 10, 2015

Vrijschrift letter highlights dangers ISDS in CETA and EUSFTA

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A Vrijschrift letter to the Dutch Parliament highlights the dangers of investor-to-state dispute settlement (ISDS) in the trade agreements with Canada (CETA) and Singapore (EUSFTA).

On 25 March EU trade ministers will meet (informally) to discuss trade agreements and ISDS. In preparation, the Dutch Parliament trade and development committee meets on 11 March. Today Vrijschrift has sent this committee a letter. Original in Dutch, translation:

Dear members of the BuHaOs committee,

On March 11 you will discuss trade agreements. The discussion will include proposals to reform investment arbitration (ISDS).

Presently the main question regarding ISDS is: what to do with ISDS in the trade agreements with Canada (CETA) and Singapore (EUSFTA)? This is a crucial question because multinationals from the US and other countries will be able to use CETA and EUSFTA.

According to the EU commission, only minimal improvements that will fit into the “legal scrub” are still possible. As a result, only minimal improvements are possible in CETA and EUSFTA.

The paper the minister added to her letter conforms to the recommendations of the commission. Serious deficiencies, pointed out by more than 110 scholars, will not be remedied. (Scholars, 2014)

These deficiencies include no separation of powers, no institutional safeguards for independence, perverse incentives, investment protections that are ripe for exploitation by creative lawyers (FFII, 2014a); and unfairness, because foreign investors will be able to use ISDS and national investors won’t.

Furthermore, it is a strategic mistake as the procedural rules in CETA and EUSFTA give the US an unfair advantage. (FFII, 2014b, 2015)

We would like to suggest to ask the Minister the following questions. Can the minister guarantee

– that the procedural rules which give the US an unfair advantage will be removed from CETA and EUSFTA, and will not be part of TTIP?

– that foreign investors will not have a procedural advantage?

– that investment protection in CETA, EUSFTA en TTIP will respect the separation of powers?

– that investment protection in CETA, EUSFTA and TTIP will contain the conventional institutional safeguards of independence, such as tenure, fixed salary, and prohibition of outside remuneration?

– that investment protection in CETA, EUSFTA and TTIP will not contain perverse incentives?

We would also like to point out that the Canadian professor Van Harten discovered a serious flaw in the government study on ISDS. (Van Harten, 2015)

Yours sincerely,
On behalf of Vrijschrift,

Ante Wessels

FFII, 2014a, Seven things you should know about EU-Singapore ISDS,
http://people.ffii.org/~ante/ISDS/EU-Singapore-ISDS.html

FFII, 2014b, ISDS: A rigged system, avoid lock-in, submission to EU consultation on ISDS,
https://blog.ffii.org/draft-ffii-submission-on-isds/

FFII, 2015, White House defends ISDS,
https://blog.ffii.org/white-house-defends-isds/

Scholars, 2014 , Statement of Concern about Planned Provisions on
Investment Protection and Investor-State Dispute Settlement (ISDS) in the
Transatlantic Trade and Investment Partnership (TTIP),
https://www.kent.ac.uk/law/isds_treaty_consultation.html

Van Harten, 2015 , Creative accounting and the sales pitch for ISDS,
http://www.euractiv.com/sections/trade-society/creative-accounting-and-sales-pitch-isds-312677