Inside US Trade reports, “European Union member states (through the Council of Ministers have sent) a strong message to EU negotiators (under the jurisdiction of the European Commission) to preserve the high level of investment protection contained in existing member state bilateral investment treaties, according to informed sources. …Member states (in the Council of Ministers) vehemently oppose (the national treatment) qualification, which is included in the investment chapter of the North American Free Trade Agreement, sources said.”
“(The Council of Ministers) are worried that Canada could press for such a NAFTA-like qualification in the EU-Canada FTA investment chapter, and that this could set a precedent for including it in all EU-wide agreements. …As a result, (the Council of Ministers) have secured a pledge from the commission to pursue all three investment negotiations (with Canada, India and Singapore) separately, in order to avoid what they see as ‘NAFTA contamination’ on the national treatment language and other issues, sources said.”
National treatment: “The council’s text states that negotiations should strive for ‘unqualified national treatment’ for investors… That stands in contrast to the text proposed in January by the commission, which included a qualification that national treatment should apply for foreign investors ‘in like circumstances’ to domestic investors, according to a civil society source.”
Expropriation: “(But) the negotiating mandates approved by the council in several instances contains stronger investor rights than the initial commission proposal tabled in January… In addition to its demand that national treatment be ‘unqualified’, the council text strengthened investor rights relating to expropriation. It states that the agreement should ensure ‘protection against direct and indirect expropriation, including the right to prompt, adequate and effective compensation’. The commission, by contrast, had explicitly stated that non-discriminatory regulatory actions to achieve legitimate public policy objectives ‘do not constitute indirect expropriation’.”
Dispute settlement body: “This regulation would also aim to settle the question of where arbitration under an EU-wide investment agreement would be held, according to a private-sector source. This is an outstanding issue because the International Center for Settlement of Investment Disputes, the World Bank venue most commonly used for investment arbitration, is open to participation by members of the World Bank or party to the Statute of the International Court of Justice. This includes individual member states but not the EU as a whole.”
Penalties: “One new issue that arose in the talks between the European Council and commission on the negotiating mandates is whether member states or the EU as a whole will have legal and financial responsibility in the event that an investment agreement partner challenges measures imposed by a member state, sources said. The commission has pledged to come forward with a proposed regulation on this issue by the end of the year, which would have to be approved both by the council and the European Parliament…”
In order to better understand the different European Union decision bodies noted above:
The Council of Ministers/ Council of the European Union acts as one of the two chambers of the European Union’s legislative branch, the other chamber being the European Parliament. However the Council of Ministers only has legislative initiative in limited sensitive areas. It also holds, jointly with the Parliament, the budgetary power of the European Union and has greater control than the Parliament over the intergovernmental areas of the European Union.
The European Commission is the executive body of the European Union, so it is powerful, but it is also accountable to the European Parliament and the parliament can veto it and force its president to resign. The European Commissioner for Trade (currently Karel De Gucht) is a member of the European Commission. Actual trade negotiations are reportedly carried out by the Directorate-General for Trade. The President of the European Commission is the appointed president of the EU’s top administrative body, and he/she appoints the civil service.
The European Parliament is the directly elected parliamentary institution of the European Union. The Parliament is composed of 736 MEPs (Member of the European Parliament) and members are elected every five years. The President of the European Parliament presides over the debates and activities of the EP, his/her signature is needed to enact most EU laws and the EU budget.
