It’s clear that the EU-US trade deal negotiations have hit a few speed bumps. Participants complain that the negotiations for the Transatlantic Trade and Investment Pact (TTIP) have become bogged down in details, stuck over long-standing disputes such as US public procurement rules and French cultural protection laws, and have “lost their way”.
When we spoke earlier this year to the then-EU Commissioner for Trade, Karel De Gucht, he argued that much of the criticism of TTIP was misplaced. In particular, he believed that the argument that TTIP would erode rights and standards in the EU was “completely false, yet it is spreading like a kind of virus.”
To get a better idea about what TTIP represents, and some of the arguments for and against, you can see our infographic below (click on the image for a bigger version):
One of the current sticking points in the negotiations is over the Investor-State Dispute Settlement (ISDS). It is fairly common in international trade agreements to include this sort of investor protection, providing a neutral forum for investors to sue governments for compensation under specific circumstances. For example, the ISDS provides protection if investors are discriminated against based on their nationality, or if their investment is expropriated without compensation.
However, some of our commenters argue that the ISDS undermines democracy. For example, Anders sent us in the following comment:
TTIP in its current form allows corporations to SUE countries and governments over laws “limiting” their operations. This opens the door wide open to abuse of all kinds by big corporations, and effectively renders governments and countries in the pockets of Big Business. Democracy will suffer horrendously, freedom and rights that we currently have will also be adversely affected.
We put this comment to Peter Chase, Vice President, Europe of the US Chamber of Commerce. How would he respond to Anders?
[…] Sometimes even the best governments make mistakes. And sometimes rights under an international treaty cannot be enforced in a domestic court of law. This is why violations of these promises must be heard in neutral international tribunals with Investor-State Dispute Settlement.
And this is why the US business community will not accept investment protection provisions without ISDS – laws without effective enforcement are meaningless. The U.S. made that mistake once, in the US Free Trade Agreement with Australia, which does not have ISDS. Ever since, the US government has had to fight to explain why ISDS is needed in an agreement with one country when it wasn’t needed with Australia. How do you tell a country you trust its legal system less than you trust that of another? And ethically, in the end, these principles of fair treatment, and their enforcement, should apply to all countries equally.
We also spoke to Fredrik Erixon, Director of the European Centre for International Political Economy (ECIPE), a world-economy think tank based in Brussels that supports an ambitious and comprehensive EU-US Free Trade Agreement. He suspected there was some room for negotiation:
Investor protection issues have only quite recently begun to be dealt with at the EU level, which means that Europe is still in the process of trying to flesh out its own policies. And this is part of the reason why ISDS issues have become controversial over the past year […] which is the main reason why the European Commission wants to put a moratorium on the negotiations in TTIP over investor protection issues.
So, it’s a new issue. And it’s seen as an opportunity for each side to flesh out a new sort of policy. Not necessarily a full compromise position – where you put together the type of agreement that Member States had prior to investor protection becoming an EU issue – but that is part of the process…
My reading of the US position is that they are open to negotiations, and it’s not that they have a policy which is written in stone and they are not willing to change any parts of it…
Should an independent investor protection mechanism be left out of the EU-US trade agreement? Can a compromise be reached? Let us know your thoughts and comments in the form below, and we’ll take them to policy-makers and experts for their reactions.