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BackThe thought behind the Investor-state dispute settlement (ISDS) is to provide enterprises with incentives for foreign investments. However, ISDS also means that corporations may sue states if they suspect that new laws might cut their profits. Hence, this means, which is more than questionable in terms of democracy, has led to widespread protests by trade unions, political parties and civil society. In order to shed more light on this subject, AK EUROPA together with NGO Friends of the Earth and the European Consumer Organisation BEUC hosted an all-day conference in Brussels on Tuesday, 9th December 2014.To begin with, participants of the all-day conference initially discussed the opportunities and dangers of a transatlantic trade agreement. Even though Rupert Schlegelmilch, Director of the European Commission's Directorate in charge of international investment negotiations, spoke of the significance of such an agreement for both regions, he also conceded weaknesses with regard to transparency. In contrast, the Director at Friends of the Earth, Magda Stoczkiewicz also named the negative effects of bilateral trade agreement. Monique Goyens, Director General of BEUC, pointed out that trade agreement might basically have a positive impact on consumer protection and the situation of consumers. However, referring to the current discussions on TTIP, she regards it rather as a decrease in standards. Valentin Wedl, Head of Office EU and International Affairs of AK Vienna, questions TTIP as a means for tackling the crisis. In contrast to frequently voiced claims such an agreement was not a means to solve the current crisis in Europe, as it was first and foremost the result of a lack of domestic demand. Hence, an agreement such as TTIP, which provides for investment easements, would not make a significant impact to give Europe a leg up. Apart from that, Wedl also pointed towards the danger that such an agreement might put pressure on labour standards and trade union rights.
The second part of the conference focussed on ISDS and its economic and legal consequences. The Director of the Investment and Enterprise Division at the United Nations Conference on Trade and Development UNCTAD, James Zhan, recognized the challenges arising from the current ISDS regime and suggested that it was timely for States to assess the current system, weigh options of reform and then decide upon the most appropriate route. Celeste Drake, Trade & Globalization Policy Specialist at the AFL-CIO, regarded ISDS, apart from entailing democratic problems, also as a tool to privatise profits and to generalise losses. Jan Kleinheisterkamp, Associate Professor of Law at the London School of Economics, called ISDS outdated. He asked the question whether it might not be more sensible to look for new options rather than as the EU Commission would try to patch up an obsolete system.
The third part of the conference dealt with the options to also guarantee investors appropriate protection for international activities outside ISDS. To begin with, the South African Ambassador Xavier Carim described the foreign trade policy situation of his country. In 2007, all bilateral investment agreements were critically reviewed with regard to their benefit. However, no connection between ISDS and an increase in international investments could be established. Therefore it was decided to dissolve the existing contracts. Sanya Reid-Smith, legal advisor and senior researcher at Third World Network, spoke of the many complaints with regard to existing arbitration processes. For example, such proceedings prevented the State of California from banning polluting additions in fuel. Gus van Harten, associate professor at Osgoode Hall Law School in Canada pointed out that arbitration courts, in contrast to state courts, could not be controlled and that their independence could not be guaranteed. Elisabeth Beer, trade expert of AK Vienna, began by questioning the economic benefit of ISDS and referred to the dangers such arbitration processes might pose for fair competition within the EU. Such an agreement was also not sustainable in terms of democracy. Leopoldo Rubinacci, Head of the Investment Unit of DG Trade of the European Commission, pointed out that even though ISDS was part of the negotiation mandate, because of the increasing criticism there would be a new start with regard to the TTIP negotiations. However, he did not go into detail whether and in which form ISDS would remain part of the agreements.
The final part began with the American Ambassador to the EU, Anthony Gardner-Luzzatto speaking of the benefits of investor-state arbitration. In the past, he himself had been involved in such international trade disputes as a private judge. Gardner-Luzzatto called the public consultation on this subject and the more than 150,000 contributions made as irrelevant, as they had been generated with the support of trade unions and civil society organisations, and in particular by an automated process. AK and ÖGB together with Friends of the Earth Europe had contributed to informing people and easy participation via an online tool. Monique Goyens of BEUC strongly criticised the statements of the American Ambassador. She emphasized that the preparation of complex issues was a cornerstone of democratic participation and should therefore not be played down. Bernd Lange, chairman of the Committee on International Trade of the European Parliament, and Kai Jan Krainer, SPÖ Member of the Austrian Parliament, were in favour of initially going back to national courts. ISDS in this form was not necessary, said Krainer. Robert Weissman, President of the American NGO Public Citizens, emphasized that ISDS could be used to undermine the democratic decision-making process and to institutionalize the big business interests.
The all-day conference clearly showed the different points of criticism and problems investor-state arbitration would entail. Goyens said: “If there is such a wide range of problems concerning ISDS, why don’t we just reject it and put our energy into something new: modern and democratic investor protection fit for the 21st century.” An assessment, which has the full support of AK and ÖGB.
The second part of the conference focussed on ISDS and its economic and legal consequences. The Director of the Investment and Enterprise Division at the United Nations Conference on Trade and Development UNCTAD, James Zhan, recognized the challenges arising from the current ISDS regime and suggested that it was timely for States to assess the current system, weigh options of reform and then decide upon the most appropriate route. Celeste Drake, Trade & Globalization Policy Specialist at the AFL-CIO, regarded ISDS, apart from entailing democratic problems, also as a tool to privatise profits and to generalise losses. Jan Kleinheisterkamp, Associate Professor of Law at the London School of Economics, called ISDS outdated. He asked the question whether it might not be more sensible to look for new options rather than as the EU Commission would try to patch up an obsolete system.
The third part of the conference dealt with the options to also guarantee investors appropriate protection for international activities outside ISDS. To begin with, the South African Ambassador Xavier Carim described the foreign trade policy situation of his country. In 2007, all bilateral investment agreements were critically reviewed with regard to their benefit. However, no connection between ISDS and an increase in international investments could be established. Therefore it was decided to dissolve the existing contracts. Sanya Reid-Smith, legal advisor and senior researcher at Third World Network, spoke of the many complaints with regard to existing arbitration processes. For example, such proceedings prevented the State of California from banning polluting additions in fuel. Gus van Harten, associate professor at Osgoode Hall Law School in Canada pointed out that arbitration courts, in contrast to state courts, could not be controlled and that their independence could not be guaranteed. Elisabeth Beer, trade expert of AK Vienna, began by questioning the economic benefit of ISDS and referred to the dangers such arbitration processes might pose for fair competition within the EU. Such an agreement was also not sustainable in terms of democracy. Leopoldo Rubinacci, Head of the Investment Unit of DG Trade of the European Commission, pointed out that even though ISDS was part of the negotiation mandate, because of the increasing criticism there would be a new start with regard to the TTIP negotiations. However, he did not go into detail whether and in which form ISDS would remain part of the agreements.
The final part began with the American Ambassador to the EU, Anthony Gardner-Luzzatto speaking of the benefits of investor-state arbitration. In the past, he himself had been involved in such international trade disputes as a private judge. Gardner-Luzzatto called the public consultation on this subject and the more than 150,000 contributions made as irrelevant, as they had been generated with the support of trade unions and civil society organisations, and in particular by an automated process. AK and ÖGB together with Friends of the Earth Europe had contributed to informing people and easy participation via an online tool. Monique Goyens of BEUC strongly criticised the statements of the American Ambassador. She emphasized that the preparation of complex issues was a cornerstone of democratic participation and should therefore not be played down. Bernd Lange, chairman of the Committee on International Trade of the European Parliament, and Kai Jan Krainer, SPÖ Member of the Austrian Parliament, were in favour of initially going back to national courts. ISDS in this form was not necessary, said Krainer. Robert Weissman, President of the American NGO Public Citizens, emphasized that ISDS could be used to undermine the democratic decision-making process and to institutionalize the big business interests.
The all-day conference clearly showed the different points of criticism and problems investor-state arbitration would entail. Goyens said: “If there is such a wide range of problems concerning ISDS, why don’t we just reject it and put our energy into something new: modern and democratic investor protection fit for the 21st century.” An assessment, which has the full support of AK and ÖGB.