Trade ministers beg Brussels to remove more national sovereignty

Prime Ministers blame Brussels for, well, everything, But trade ministers have just written to EU President Juncker insisting he removes more of their national sovereignty through secret corporate courts.

Jurgen Maier
27 October 2014

Conflict rages in Brussels between those seeking to salvage the embattled EU/US trade pact (TTIP) by dropping ISDS as its most controversial aspect, and those who still want to push through the whole project in the face of mounting public opposition.

The ‘investor-state dispute settlement system’ (ISDS) would allow investors and corporations to sue governments in private international tribunals for any policy they deem “unfair” or which could affect their “legitimate profit expectations”. I have written about it here.

It emerged last week that trade ministers from 14 EU member states have written to Juncker, telling him to make sure TTIP does include ISDS, and reminding him that he has a mandate from member states to include that.

The ministers include UK’s Lord Livingston, alongside trade ministers from the Czech Republic, Cyprus, Estonia, Denmark, Finland, Croatia, Malta, Lithuania, Ireland, Sweden, Spain, Portugal, and Latvia.

They wrote: “One of the issues that has attracted criticism is investment protection. The Commission is currently analysing the results of a public consultation on this issue and we look forward to the Commission’s response. The consultation was an important step in ensuring that we strike the correct balance to ensure that governments retain their full freedom to regulate, but not in a way that discriminates against foreign firms…. The Council mandate is clear in its inclusion of investor protection mechanisms in the TTIP negotiations; we need to work together on how best to do so.”

In reality, the negotiating mandate is ambiguous. It is in favour of ISDS and investment protection more generally, but also states:

“the inclusion of investment protection and investor-to-state dispute settlement (ISDS) will depend on whether a satisfactory solution, meeting the EU interests concerning the issues covered by paragraph 23, is achieved. The matter shall also be considered in view of the final balance of the Agreement.”

Juncker thus seems correct when he pointed out in his Strasbourg speech:

“The negotiating mandate foresees a number of conditions that have to be respected by such a regime as well as an assessment of its relationship with domestic courts. There is thus no obligation in this regard: the mandate leaves it open and serves as a guide.”

Juncker seems to be defending European member state sovereignty against the trade fundamentalists who would hand it over to corporations - for now.

On 22 October in his speech before the European Parliament vote confirming him as President, Juncker said:

“I took note of the intense debates around investor-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP) negotiations. Let me once again state my position clearly, that I had set out on 15 July in front of this House and that you will find in my Political Guidelines: My Commission will not accept that the jurisdiction of courts in the EU Member States be limited by special regimes for investor-to-state disputes. The rule of law and the principle of equality before the law must also apply in this context.

The negotiating mandate foresees a number of conditions that have to be respected by such a regime as well as an assessment of its relationship with domestic courts. There is thus no obligation in this regard: the mandate leaves it open and serves as a guide.”

The position of Juncker’s new trade commissioner, Swedish Liberal Malmström, is unclear. At her confirmation hearing she gave no clear indication where she stands on ISDS in TTIP. She said that the EU would want to include ISDS in future agreements with other parties, but added that possibly it could be excluded altogether from TTIP, and emphasized that the system needs to be “reformed”.

Malmström also claimed that there was no need to renegotiate ISDS in the equally controversial Canada free-trade agreement called CETA, since without it the deal could fall apart.

Juncker has just taken away Malmström’s power to negotiate this matter alone, giving new Commission First Vice President Frans Timmermans, a Dutch Social Democrat, oversight of the ISDS issue:

I have asked Frans Timmermans, in his role as First Vice-President in charge of the Rule of Law and the Charter of Fundamental Rights, to advise me on the matter. There will be no investor-to-state dispute clause in TTIP if Frans does not agree with it too.

But this conflict with potentially far-reaching implications takes place largely behind closed doors. If it were not for the massive public protests across Europe, the negotiation mandate, agreed secretly between the Commission and the governments of the member states in June 2013, would still be secret. The public, even the parliaments would know nothing. The US has even prohibited the Commission from giving the US negotiation documents to the member states.

Cameron, Merkel, Hollande claim they defend our interests, yet it is difficult to imagine how they can do that when they are prohibited from reading what the US is putting on the table.

And how dare our 14 trade ministers write to Juncker clamoring for ISDS to be kept in TTIP?

Not one of them had a mandate from their public or parliament to write ISDS into the secret negotiation mandate last year. Not one of them told their public or parliament that they did. I am sure not one of them had a mandate from their parliaments or was asked by their public to write such a letter now.

Were it not for some courageous whistleblower, we would not even know that they did.

It is particularly embarrassing for the Cypriot minister that his signature became public. As laid out in “Profiting from Crisis”, Cyprus is being sued by dubious banks in investor-state tribunals for enormous amounts of “compensation” for their speculative investments, based on other existing investment protection treaties with ISDS. A Greek-listed private equity-style investor, Marfin Investment Group, which was involved in a series of questionable lending practices, is seeking €823 million in compensation for their lost investments after Cyprus had to nationalise the Laiki Bank as part of an EU debt restructuring agreement.

 “EU trade policy” is formulated and carried out in a democracy vacuum. It stinks - and not only in Brussels. It stinks particularly in the capitals of the member states.

It is so easy for trade ministers to push privately for Brussels to adopt policies that never would be agreed in an open, democratic process.

It is so easy for ministers and prime ministers to then point the finger at the Commission in Brussels when voters get angry.

It is time for the voters to tell them who is the sovereign in a democratic country.

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