EU ‘Post-ISDS’ proposal more of same

16 September 2015

The European Commission has today announced its plan for reform of the investor-state dispute settlement mechanism (ISDS), the investor rights part of trade deals including the ongoing TTIP negotiations between the European Union and the United States. 

The main thrust of the proposal is a new Investment Court System which would replace the ISDS mechanism in all on-going and future EU investment negotiations.

Friends of the Earth Europe has criticised the proposal, which fails to fundamentally reform the flawed system of investor protection, in particular the granting of exclusive privileges to foreign investors over the rest of society, and ignores the fact that investor rights are not needed in an EU-US agreement.

In addition, Trade Commissioner Malmström confirmed today that the new proposal will not apply to the almost finalised EU-Canada agreement. This allows US companies with subsidiaries in Canada to sue European member states based on the old model.

Natacha Cingotti, trade campaigner at Friends of the Earth Europe, said:

"The European Commission's proposal for an 'International Court System' is tarred with the same old corporate friendly brush. Despite a new name and some reforms on the functioning of the system, it reaffirms the granting of VIP rights for corporate investors without giving them any obligations that would protect citizens and the environment.

"The inclusion of investor-state arbitration – albeit under a different name – in an EU-US agreement is not necessary. It would expand its scope to an unprecedented level to all trade between the EU and the US, while now less than 10% is covered by ISDS. As long as companies can sue governments if they act in the public interest, the ability of governments to regulate is undermined. It should be resisted at all costs."

The proposal, which is not the final EU legal text and has yet to be approved by the United States, confirms the lack of commitment by the European Commission to take into account overwhelming public opposition to special investor rights as a whole, instead focusing on cosmetic changes to keep the system alive.

It comes in a context of overwhelming public opposition to the proposed inclusion of special rights for investors in the on-going EU-US trade talks (TTIP) and in the EU-Canada trade (CETA) and heated political debate.