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United States | Strasbourg, 13 January 2015

Report presented today: Consultation on investment protection in EU-US trade talks

Today, the European Commission published its analysis of the almost 150,000 replies to its online consultation on investment protection and investor-to-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP). The Commission asked the public for their views on a possible approach to protecting investments and settling investment-related disputes between private investors and governments. A key question in the consultation was whether the EU’s proposed approach for TTIP would achieve the right balance between protecting investors and safeguarding the EU’s right and ability to regulate in the public interest.

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The Commission's report sets out a detailed analysis of all the replies. The Commission will now discuss the way forward with the European Parliament, EU Member States and other interested stakeholders, including NGOs, businesses, trade unions consumer organisations and academia.

“The consultation clearly shows that there is a huge scepticism against the ISDS instrument”, said Cecilia Malmström, Commissioner for Trade, in a comment.

We need to have an open and frank discussion about investment protection and ISDS in TTIP with EU governments, with the European Parliament and civil society before launching any policy recommendations in this area. This will be the first immediate step following the publication of this report. I also note that there were constructive proposals in the consultation on areas that can be reformed. We will have a close look at them in the course of the dialogue. Furthermore, we need to reflect upon how to address the fact that EU countries already have 1400 bilateral agreements of this kind, of which some date back to the 50s”, added Malmström.

"The vast majority of these agreements do not include the kind of guarantees that the EU would like to see. This will also have to be an important element of our reflection when considering how to best deal with the question of investment protection in EU agreements, as failure to replace them by more advanced provisions will mean they remain in force – with all the legitimate concerns they have been raising over the last months", the Commissioner highlighted.

“And let me be clear: the TTIP that the European Commission will negotiate and present for ratification will be an agreement that is good for citizens – good for growth and jobs here in Europe. It will be an agreement which strengthens Europe’s influence in the world, and which would help us protect our strict standards. The European Commission would never even consider an agreement which would lower our standards or limit our governments' right to regulate. Neither would EU Member States, nor the European Parliament”, said Cecilia Malmström.

Details of the report

The consultation questionnaire explained in detail the EU’s approach on 12 issues concerning investment protection and ISDS in TTIP. The approach builds on the improvements the EU seeks to bring to the existing system. The 12 issues on which questions were asked include safeguards on governments' right to regulate in the public interest, full transparency of ISDS proceedings, ethical requirements for arbitrators, and a possible appeals body.

The vast majority of replies, around 145,000 (or 97%), were submitted through various on-line platforms of interest groups, containing pre-defined, negative answers. In addition, the Commission received individual replies from more than 3,000 individuals and some 450 organisations representing a wide spectrum of EU civil society, including NGOs, business organisations, trade unions, consumer groups, law firms and academics. These replies generally go into more detail on the proposed approach. (See MEMO)

Broadly speaking, the replies can be divided into three categories:

  • replies which indicate opposition to or concerns around TTIP in general;
  • replies opposing or expressing general concerns about investment protection/ISDS in TTIP;
  • replies which provide detailed comments on the EU’s suggested approach in TTIP, representing broad and divergent views;

The many replies in the first two categories are a clear indication of the concerns that many citizens across Europe have concerning TTIP generally and about the principle itself of investment protection and ISDS.

The replies in the third category contain specific comments on the various aspects of the EU’s approach and in some cases concrete suggestions for further change. The views are divided with regard to almost all the 12 issues under consideration. Based on the comments received, there are a number of areas that appear to be particularly important to respondents, amongst others:

  • the protection of the right to regulate;
  • the establishment and functioning of arbitral tribunals;
  • the relationship between domestic judicial systems and ISDS;
  • the review of ISDS decisions for legal correctness through an appellate mechanism.

These represent four areas of work that should be explored further.

Next steps

In the first quarter of 2015, the Commission will organise a number of consultation meetings with EU governments, the European Parliament, and different stakeholders, including NGOs, business, trade unions, consumer and environment organisations, to discuss investment protection and ISDS in TTIP on the basis of this report. As a first step, the consultation results will be presented to the INTA Committee of the European Parliament on 22 January. Following these consultations during the first quarter, the Commission will develop specific proposals for the TTIP negotiations.

Background

EU Member States asked the Commission to include Investment Protection and ISDS in the TTIP negotiations.
These negotiating directives (known as "the mandate", which has been made public) for the negotiations of the TTIP foresee the inclusion of investment protection and investor-to-state dispute settlement (ISDS) provided a number of conditions are met. Making thus clear that a decision on whether or not to include ISDS is to be taken during the final phase of the negotiations.

The negotiations on investment in TTIP have been suspended and will only resume once the Commission has come to the assessment that its new proposals guarantee among other things that the jurisdiction of courts in the EU Member States will not be limited by special regimes for investor-to-state-disputes.

In view of the strong public interest in investment protection and ISDS in TTIP, the Commission organised a public consultation between 27 March and 13 July 2014. The consultation sought feedback on whether the proposed EU approach would achieve the right balance between protecting investors and safeguarding the EU’s and Member States' right and ability to regulate in the public interest. Investor-state dispute settlement through international arbitration is nothing new. It is included in over 1,400 investment treaties concluded by EU Member States and 3,000 worldwide.

In 2009, the Lisbon Treaty transferred competence for investment protection to the EU. Since then the Commission has made substantial efforts to reform the existing system of investment protection and ISDS. The EU’s proposed approach is substantially different from that in the 3,000 existing agreements containing traditional investment protection and ISDS clauses, many dating from the 1960s, 70s and 80s. The EU has introduced modernised investment protection and ISDS provisions in its trade agreements with Canada (CETA) and Singapore. The Investment Protection and ISDS provisions in CETA and Singapore include the highest standards of transparency, fairness and accountability. The approach also builds on the EU's successful efforts in the United Nations to create the first system of global rules on transparency for ISDS under UNCITRAL.


Useful Links

Report on the online public consultation on investment protection and investor-to-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP) (other languages available)

MEMO on the consultation

Replies as sent by participants of the consultations

Facts and figures on ISDS

TTIP Negotiating directives

More questions and answers