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Investment | Strasbourg, 13 January 2013

Question and Answers on the results of the public consultation

Consultation on investment protection in EU-US trade talks

1. What does the report include?

The report provides a factual overview of the results of the on line consultation. As set out in the consultation notice of 27 March 2014, the objective of the consultation was to seek views on a possible approach to investment protection and ISDS in the TTIP.

The first part of the report (pages 1-26) contains an overview of replies by number, types (collective submissions, citizen submissions or organisations) and origin of responses (businesses, NGOs, academics etc.) to identify general quantitative trends. It also provides in a summarised form the general views expressed on the proposed approach as well as a summary of views expressed notably on the TTIP negotiations and on ISDS. The report also lists four specific areas where respondents have raised particular concerns and where further improvements could be explored.

The second part of the report (pages 27-140) presents the methodology used to assess the 149 399 responses (Annex 1) as well as qualitative assessment of the 3146 contributions by individual citizens (Annex 2). In Annex 3, the results of the consultation are presented on a question by question basis. It first provides a detailed overview of the comments received on each of the 12 questions. For each of the 12 questions question, the report first recalls the proposed approach and then presents the views expressed in the collective submissions and then in submissions by organisations. Finally, it presents the findings under the last question (question 13) “General Assessment” broken down by type of respondent (collective, individual submissions). This includes views and suggestions expressed on the overall approach presented by the Commission, but also views and criticism on the desirability of TTIP in general and ISDS in particular.

2. What is the status of the report?

The report is a so called “Commission staff working paper”. Such documents provide the Commission with input to further reflect on a given policy. The report will be presented to the European Parliament and to the EU Member State governments for further discussion.

3. Why does it not have concrete policy recommendations?

It is premature to make policy recommendations. When the Commission launched the consultation it made a commitment to discuss the report with the Council, the European Parliament and stakeholders. This is what will happen next. In the case of TTIP, it is worth recalling that the mandate from Member States specifically includes negotiating investment protection and ISDS in TTIP. So in any case any change in policy in this respect must be agreed to by the Member States and it must be kept in mind that the European Parliament will be called upon to ratify the agreement, so its views are important.

4. Does the identification of 4 areas for further work not amount to a policy recommendation?

No. This report does not make any policy recommendations. The 4 areas have been identified on the basis of specific comments by respondents on the EU’s suggested approach and are without prejudice to other possible issues. Some of the concerns point to various aspects of the EU’s approach. The Commission, in consultation with the Member States and the European Parliament stands ready to further develop these areas for clarity or refinement. The final decision on the elements included in TTIP will ultimately be taken by the Member States and the European Parliament given their role in approving any agreement.

5. When can we expect a decision to be taken about investor-to-state dispute settlement (ISDS) in TTIP? Who will take that decision?

The discussions with the European Parliament, the EU Member States and key stakeholders will begin as soon as possible and continue for as long as it is necessary, mostly likely throughout the first quarter of 2015. On that basis, the Commission may propose to the Council (and with full transparency towards the European Parliament) how to proceed in TTIP. It is important that we get the EU approach towards investment protection and ISDS in TTIP right, even if it will take some time.

In the mandate given to the Commission unanimously by Member States in the Council it was made clear that investment protection and ISDS should form part of the agreement concluded with the US, provided a number of conditions, as set out in the mandate adopted by the Council, are met. The most relevant of these conditions for the concerns raised in the consultation is that investment protection and ISDS:

“[..] should be without prejudice to the right of the EU and the Member States to adopt and enforce, in accordance with their respective competences, measures necessary to pursue legitimate public policy objectives such as social, environmental, security, stability of the financial system, public health and safety in a non-discriminatory manner. The Agreement should respect the policies of the EU and its Member States for the promotion and protection of cultural diversity.”

It follows therefore that a decision on whether or not to include ISDS is to be taken during the final phase of the negotiations.

6. Do other trade agreements include an ISDS clause?

Investment protection and ISDS is not a new tool for European governments. The European Commission has been tasked by the EU Council of Ministers to negotiate TTIP including ISDS.

The inclusion of such provisions in TTIP and in other agreements is also a natural consequence of the fact that such provisions have formed part of EU Members States’ own investment policies for the past 50 years.

The EU Member states have over 1400 bilateral agreements with third countries in force, some also with the US and Canada, to encourage reciprocal investment. Almost all of these agreements provide for investment protection and ISDS in case there is a conflict between an investor and the host country. These bilateral agreements have all been agreed by national parliaments.

The EU was given by Member States competence over investment policy after the entry of force of the Lisbon Treaty, also in order to develop an EU wide policy on investment protection and ISDS, bringing improvements where necessary. The online consultation explained how the proposed approach - which is substantially different from the existing system of investment protection agreements - would address some of the deficiencies that have characterised the current system (e.g. lack of transparency, open, imprecise nature of provisions).

7. Why is there a need for further discussion with European stakeholders?

The process has helped bring into focus concerns that go beyond the scope of the consultation. This is notably reflected in the numerous collective submissions which mark opposition to TTIP and to ISDS as well as in some responses submitted by individual citizens. The reasons, when stated, vary considerably, e.g. from the perceived secrecy surrounding TTIP to claims that ISDS undermines democratically elected governments. Some of these concerns, notably on TTIP, must be addressed through other channels, for instance through better communication with stakeholders and more transparency.

However, views are more varied and detailed in the replies by the organisations (NGOs, Trade Unions, business associations, law firms …). Some view the EU’s approach as insufficient to address concerns related to the right to regulate, while others caution against not lowering too much the protection for investors. The improvements to transparency are generally rated positively. There is much discussion of the relationship between ISDS and domestic courts, and of the EU’s approach to the appointment and qualifications of arbitrators. The possibility of an appeals body is also generally welcomed but the lack of certainty as to its creation is seen as a problem.

The diversity of perceptions and interests amongst the respondents makes further discussion necessary. The aim is to find the optimal way to address all interests and concerns, through an approach that would guarantee effectiveness, balance and transparency.

8. Who will be involved further in the debate?

A broad involvement of European stakeholders is foreseen. Discussions with Member States and European Parliament will start in the second half of January. In the European Parliament there will be discussions with the Committee on International Trade (first meeting already scheduled on the 21-22 January). Beyond Member States and the European Parliament, civil society will also be part of the debate. Avenues for civil society participation in TTIP negotiations in general are already in place:

  • Regular Civil Society Dialogue meetings, in which hundreds of stakeholders take part (in Brussels);
  • TTIP Advisory Group, which include sixteen civil society, business and trade union experts. The Group meets regularly and reports are available online; its next meeting is on 16 January 2015
  • Stakeholders’ events, organised during each negotiating round with US, where civil society has the possibility to discuss the progress of negotiations directly with EU and US negotiators.

In addition, the Commissioner meets on a regular basis with stakeholders where the TTIP negotiations are discussed.

More in general, the Commission is committed to transparency in respect of these negotiations, so that a more informed debate can take place.

9. What kind of suggestions did respondents make about the EU’s approach?

There are a number of suggestions for further improvements. For example, several respondents call for more clarity in the wording of the legal provisions in order to reduce the scope for interpretation. More generally, there is a wish to see the “right to regulate” affirmed more strongly. Many replies suggest to state more clearly that the substantive investment protection provisions do not constitute a commitment not to modify or introduce legislation aimed at safeguarding the public interest. A number of respondents wish to see a further balancing or at least more clarity on the balance between investors’ rights and their obligations in the host country.

On the issue of the relationship between ISDS and domestic courts many respondents make general statements instead of commenting on the proposed approach. This denotes a need for greater clarity. Conversely, many respondents consider the question of the ethics and conduct of arbitrators to be crucial. The possibility of an appeals body is also generally welcomed as a means to improve the coherence and legitimacy of ISDS but the lack of certainty as to its creation is seen as requiring further discussion.