This is from a recent speech by EU Trade Commissioner Cecilia Malmstrom:
Let me start by stating what is perhaps obvious. The Commission's assessment is that we need to negotiate rules on investment protection and ISDS in TTIP. I know that some members of this house believe otherwise, for various reasons.
But my view is that we should, and for the following reasons:
First, there are issues to be addressed in the US specifically.
Some believe that there is no problem in the US that ISDS can solve. "The US has a fully functioning legal system," they say. "So what are we worried about?"
It is true that the risks of expropriation and discrimination are much lower in the US than in other parts of the world. But the fact remains that no US law prohibits discrimination against foreign investors. Putting investment in the deal would close that gap, but only if the commitments are enforceable.
ISDS is the only way to enforce them effectively:
- International law cannot be invoked in US courts.
- And state-to-state dispute settlement would effectively cut off small companies from the system, since the EU will only be able to pursue a limited number of very big cases, as happens in the WTO today.
A couple thoughts:
-- It's interesting that she focuses on the possibility of discrimination against foreigners in the U.S. As I like to point out, if that were all investment obligations prohibited, ISDS would not be making headlines. It's the broader provisions such as "fair and equitable" treatment that are the main source of controversy.
-- My sense of the EU's approach to WTO dispute settlement is that it is willing to take on cases for a variety of reasons, and cases get brought even where there is not a big corporation lobbying for them. So, I'm not sure why state-state processes would cut off small companies. I would think the folks at the European Commission could use their discretion to focus on the cases where the EU investors had been treated the most unfairly, even if the company was a small one. Thus, as talked about here, I think state-state dispute settlement would work fine for investment obligations in the TTIP.
