Commission to consult on ISDS

21 January 2014

EU Trade Commissioner Karel de Gucht announced today that the EU will open a public consultation on investment protection measures in trade negotiations between the EU and the US.

Commenting on the announcement, Paul de Clerck from Friends of the Earth Europe said: "This is a step in the right direction, and signals growing opposition to the investor-to-state dispute settlement mechanism. The excessive rights granted by this mechanism, which would allow companies to sue governments if they see their profits affected by democratically agreed decisions, are both undemocratic and unnecessary."

"Opposition is growing amongst the public, Members of the European Parliament and national governments. This mechanism undermines governments' sovereign rights to regulate in the public interest. We call on the public to demand a clear 'no' to excessive rights for businesses".

"If the Commission is serious about genuinely consulting the public, on these so far secretive talks, then business should play no part. It must not use business statements in favour of investor protection as an excuse to put corporate interests before public interests".

Investment protection measures, specifically an investor-to-state dispute settlement mechanism (ISDS), are part of the proposed trade deal between the EU and the US. ISDS provisions allow corporations to sue governments for loss of revenue when government regulations are seen to affect (expected) profits.

Businesses can thereby circumvent national court systems and go directly to international, investor-biased, tribunals. For example, a company could sue for loss of profits if a government bans genetically modified foods, or a local government bans fracking for shale gas in their area. The tobacco giant Philip Morris is currently seeking damages from Uruguay and Australia under ISDS agreements in response to public health measures to restrict smoking.