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EU consultative body rejects ISDS in CETA and TTIP

The day after the European Parliament’s international trade committee (composed of Members of the European Parliament) voted 28-13 in favour of the United States-European Union Transatlantic Trade and Investment Partnership (TTIP), the European Economic and Social Committee (EESC) voted to oppose the inclusion of the investor-state dispute settlement (ISDS) provision in both TTIP and the Canada-EU Comprehensive Economic and Trade Agreement (CETA).

The European Economic and Social Committee is an advisory assembly composed of social partners, namely: employers, labour unions, and representatives of various other interests.

EESC rapporteur Sandy Boyle says, “This is not an opinion against investor protection but an opinion that opposes ISDS, which is not a form of dispute settlement acceptable to a large majority of civil society. Opacity, lack of clear rules of arbitration, the lack of right of appeal, and discrimination against domestic investors who cannot use the system have undermined the credibility of this system.”

The EESC believes that investment disputes should be dealt with by mediation, domestic courts and state-to-state resolution.

It does, however, also call for the establishment of an international investment court. This is similar to EU trade commissioner Cecilia Malmstrom’s proposal that the EU work towards the establishment of a permanent multilateral investment court with tenured judges. Her suggestion has been criticized as an aspiration at best (and simply a means to secure support for TTIP at worst), rather than a genuine commitment.

That said, the United States argues the existing ISDS mechanisms are satisfactory and that they see no need for reforms or an international investment court, while Canada has stated that the negotiations for CETA are completed and that it is unwilling to reopen the deal to amend the ISDS provision.

A resolution endorsing TTIP will be voted on by the full European Parliament in Strasbourg on June 10.

For an interesting analysis of the vote at the EP’s international trade committee, please click here.

Further reading
Crucial vote on ISDS in European Parliament coming within weeks (May 2015 blog)
MEPs and EU trade ministers reject Malmström’s ISDS reforms (May 2015 blog)