The right to say of national parliaments

The run-up the Agreement of the EU with Singapore led to a question of authority between Member States and the European Commission, which resulted in the European Commission turning to the ECJ. The latter decided in May 2017 that portfolio investments in investment protection as well as the regulation on settling disputes between investors and states do not come under the exclusive competence of the EU (“EU only”) but also require the approval of national parliaments. As a result the Agreement was separated into a trade and an investment agreement. This decision by the ECJ also applies to future agreements of the EU. 

Agreements strengthen corporations

Apart from the lack of obligations regarding climate and environmental protection as well as labour and human rights, civil society and the Chamber of Labour above all criticise the Investment Court System (ICS), which is part of the investment agreement. This represents a new form of the Investor state dispute settlement (ISDS), which is also part of CETA. Even though the system has been reformed, corporations still have the option to sue states if these enact laws, which might put investments by corporations at risk or render them less profitable. This concerns above all laws relating to health, labour law and the environment, as shown by the Vattenfall case. In many cases, the threat of bringing action alone, can lead to influencing legislation, for example within the sense that countries, being frightened of investors, are deterred to adopt laws in accordance with the wishes of their citizens (“regulatory chill”)

Demand: Rights for People, Rules for Corporations

Meanwhile, NGOs, social movements, trade unions and AK Europe demand new rules for corporations. The campaign “Rights for People, Rules for Corporations - Stop ISDS!”, which was started on January 22, and which has already been signed by more than 500,000 people, is aimed at the corporations’ special rights to sue. The objective is to create binding rules, which hold corporations responsible for violations against human rights.

MEP Graswander-Hainz demands fair and sustainable trade agreements

The majority of the European Parliament has now approved of both Agreements. Some Austrian MEPs have voted in favour; however, all Social Democrat and Green MEPs have voted against both Agreements. MEP Karoline Graswander-Hainz explains the rejection: ”As long as the EU Commission deals with the business of market radicals and corporations, we are resolutely against this policy. It does not matter whether recently regarding JEFTA or today concerning the EU-Singapore Agreement, the concerns of trade unions and civil society are being ignored. This is politics made for shareholders; however, citizens do not see any benefits.” Apart from that, she criticised that the EU Commission represents the interests of corporations and that the concerns of trade unions and civil society are being ignored.

Before the investment agreement can be enforced it has to be ratified by national parliaments. The Austrian Council of Ministers had already approved of the Investment Protection Agreement in October 2018.

Further information

European Commission: Key elements of the EU-Singapore trade and investment agreement

AK Position Paper: Multilateral reform of investment dispute resolution

Brochure on the arbitration courts of AK Vienna, DGB and ÖGB

Sign now: Protect human rights – Stop group actions! STOP ISDS