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Paris and Berlin to form united front against ISDS in ‘free trade’ deal

Both the French and German governments have previously expressed their concern about the inclusion of the investor-state dispute settlement (ISDS) provision in the proposed United States-European Union Transatlantic Trade and Investment Partnership (TTIP). Now Euractiv.com reports, “The two countries are discussing throwing their combined weight behind a common position on the matter… Paris and Berlin want the Investor State Dispute Settlement mechanism removed from in the transatlantic trade treaty currently being negotiated with Washington.”

The French Secretary of State for Foreign Trade Matthias Fekl says, “[I would] never allow private tribunals in the pay of multinational companies to dictate the policies of sovereign states, particularly in certain domains like health and the environment.” He says the government could face “exorbitant demands” from transnational corporations that could threaten “the public finances and place an economic burden on citizens”. And German Environment Minister Barbara Hendricks says she is “skeptical about the Investor State Dispute Settlement mechanism” which she describes as “simply not necessary”.

The French government is reportedly looking at options such as: 1) bringing national courts into the investor-state system; 2) establishing an appeal system administered by an international organization so that arbitration tribunal decisions could be challenged; and 3) addressing conflict of interest issues in arbitration cases.

The governments of the largest and second largest economies within the European Union, Germany and France respectively, have made their concerns very clear in previous statements.

In September 2013, French Trade Minister Nicole Bricq said, “Our fear is that European companies and European governments find themselves in a difficult situation legally speaking vis-a-vis American companies, which as we know are very quick to use lawyers, should there be disagreements or conflicts. So we do not want European governments to be too vulnerable concerning such possible . . . offensive moves from American companies.” In February 2014 she said, “France believes that a state to state dispute settlement mechanism is enough under the transatlantic trade and investment partnership…”

In March 2014, German Secretary of State in the Ministry of Economy Brigitte Zypries said, “From the perspective of the federal government, the U.S. investors from the EU offer sufficient legal protection in their national courts… The federal government has critically examined from the beginning, whether such a provision in the negotiations to be included on a free trade agreement…. We are currently in the consultation process and are committed to ensuring that the arbitration proceedings are not included in the contract.” In September 2014, German Economy Minister Sigmar Gabriel stated, “It is completely clear that we reject these investment protection agreements. …I am certain that the debate is not over by a long shot.”

While these concerns have largely been raised in the context of the US-EU ‘free trade’ negotiations, the same provision exists in the Canada-European Comprehensive Economic and Trade Agreement (CETA). The Council of Canadians argues that Canadian subsidiaries of US-headquartered transnationals will also be able to use CETA to sue European governments. In other words, if these governments are concerned about ISDS in TTIP, they should be equally concerned about its inclusion in CETA.

The Euractiv article also notes that Denmark, Luxembourg, the Netherlands and Sweden “agree with at least some aspects of the French position.” Various reports have suggested that Austria, Belgium and Italy are also concerned about provisions in these proposed agreements.

While the New Democrats in Canada are still determining their position on CETA, it is notable that in December 2014 NDP leader Thomas Mulcair told a European audience that, “Europe shouldn’t let itself be locked into an agreement that contains such a provision, especially since it’ll serve as the basis for an eventual agreement with the United States. Because ultimately, all these tools, whether it be trade, public spending, natural resource exploitation, or finances, should be at the service of citizens.”

The next round of United States-European Union TTIP talks will take place in Washington, DC the week of April 20-24.