Even The German Government Wants Corporate Sovereignty Out Of TAFTA/TTIP

from the well,-at-the-moment dept

As we've noted, if there's one aspect of TAFTA/TTIP that practically everyone agrees is a bad idea, it's corporate sovereignty. Even against that background, it's still slightly surprising to read in the well-regarded German newspaper Die Zeit that the German government too wants it out of TTIP (via @FSchweitzer, original in German):

The German federal government rejects special rights for corporations in the free trade agreement between the EU and the USA. "The federal government is doing all it can to ensure that it doesn't come to this," said the Secretary of State in the Federal Ministry of Economics, Brigitte Zypries, on Wednesday during question time in parliament. "We are currently in the consultation process and are committed to ensuring that the arbitration tribunals are not included in the agreement," said Ms Zypries.
The Secretary of State then went on to make a point many others have emphasized:
"The German federal government's view is that the U.S. offers investors from the EU sufficient legal protection in its national courts," said the SPD politician Zypries. Equally, U.S. investors in Germany have sufficient legal protection through German courts. "From the beginning, the federal government has examined critically whether such a provision should be included in the negotiations for a free trade agreement," Zypries said.
Corporate sovereignty measures were added to earlier bilateral agreements when the legal systems of the country receiving foreign investment raised issues about their independence or where there was a fear that local governments might expropriate property with impunity. Neither can seriously be considered a risk in the case of the EU and US, and so investor-state dispute settlement (ISDS) is redundant, as the German government recognizes here.

If this really is Germany's view, it will have major consequences for the negotiations, since the European Commission won't be able to get TAFTA/TTIP accepted by the EU without Germany's full support. There remains some room for doubt, though, as the German Secretary of State also said:

arbitration tribunals of this kind should only be brought in as a last resort after exhausting all legal remedies brought in national courts.
If ISDS is excluded from TTIP, then that comment makes no sense, since there won't be the option to turn to supra-national tribunals after exhausting the legal process in national courts. So maybe Germany expects to be "persuaded" by concessions from the European Commission to change its mind at some point. But even if the German government is not totally abandoning the idea of corporate sovereignty, the fact that a senior politician is prepared to go on the record with the comments quoted above is significant. Germany's leaders obviously feel the need to distance themselves from ISDS, which is fast turning into a serious political liability.

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Reader Comments (rss)

(Flattened / Threaded)

  1. icon
    That One Guy (profile), Mar 17th, 2014 @ 3:22am

    Maybe it's my cynicism speaking...

    ... but before putting too much weight into their sincerity, might be worth checking if there's any, say, elections in the near future.

    Claiming that corporate sovereignty* provisions are unneeded and shouldn't be in the 'trade agreement' on one hand, while stating that they should only be a 'last resort' sounds like nothing more than political posturing, something that sounds good in at first glance, but which leaves the door wide open for corporate sovereignty clauses to be slipped in anyway, 'just in case'.

    *Originally I went with the shorter, 'ISDS', but then figured that that bit of PR/lying is bad enough when they do it themselves, no need to help. Such clauses deserve to be called as what they really are, legalese giving companies equal, and in some cases greater power, than national governments.

    reply to this | link to this | view in thread ]

  2. identicon
    Anonymous Coward, Mar 17th, 2014 @ 4:23am

    Re: Maybe it's my cynicism speaking...

    This is clearly a move to appease as you say, but at the same time I think they are desperate to get a real bilateral trade agreement between USA and EU. They have sacrificed much of the maneuvering in terms of audiovisual IPs and has excluded online legislation. Since ISDS is the only universally critisized part left in the talks, it is what the politicians are willing to sacrifice. ACTA made a very deep impression on particularly the parliament and since this deal has to pass there, the companies and negotiators involved are willing to sacrifice the most controversial bits to at least get something through.

    reply to this | link to this | view in thread ]

  3. identicon
    Anonymous Coward, Mar 17th, 2014 @ 4:37am

    Lets look at ISDS logically; if a country has a functioning government and court system, they allow companies to overrule the government; if the country is non functioning they are useless for protecting investors. Therefore they are simply a way of giving companies sovereignty over countries where it is safe to invest.

    reply to this | link to this | view in thread ]

  4. identicon
    Anonymous Coward, Mar 17th, 2014 @ 4:40am

    Yeah, let's allow multinational corporations to dictate policy to governments everywhere. Screw the people, they're just wage slaves anyways. This will require a rather large and brutal police force, but I'm sure the people will be taxed sufficiently to fund such a necessary force.

    reply to this | link to this | view in thread ]

  5. identicon
    Anonymous Coward, Mar 17th, 2014 @ 5:30am


    Already have a large tax funded police force, that protects businesses. They are already equipping with military grade weapons and vehicles. The brutal parts only appear in random spurts but give it some time.

    I can't remember the article that basically admitted it, but more members of law enforcement look for IP (Imaginary Property) infringement than they bother looking for kidnapped children.

    reply to this | link to this | view in thread ]

  6. identicon
    Drizzt, Mar 17th, 2014 @ 5:36am

    This corporate sovereignty stuff sounds like Shadowrun

    This whole "corporate sovereignty" stuff sounds a lot like coming out of a Shadowrun source book (there it's called "extraterritoriality" and goes a bit further). And while I like playing Shadowrun, I don't want that kind of system in reality. Though, honestly, some parts of it are already here.

    reply to this | link to this | view in thread ]

  7. identicon
    Anonymous Coward, Mar 17th, 2014 @ 5:53am

    Without taking sides on this issue, it may be helpful to note that resort to courts is oftentimes resort to a venue that crawls along at a pace that makes a snail look like a NASCAR race car. In many business arrangements time is absolutely of the essence, and inordinate delays cut against the grain that businesses thrive in a stable business/political/economic environment.

    These types of alternatives proliferate in business contracts, and are generally referred to by title as "Alternate Dispute Resolution" procedures (most typically arbitration and mediation).

    A government may well be a sovereign (which gives it a significant leg up in any legal contest), but it cannot be denied that it can also be a party to private contracts.

    My point is that such arrangements are not a priori bad and to be avoided at all costs because some business deals will never come to fruition if a private actor's downside risk far and away exceeds its upside benefit.

    reply to this | link to this | view in thread ]

  8. icon
    scotts13 (profile), Mar 17th, 2014 @ 5:58am


    '...some business deals will never come to fruition if a private actor's downside risk far and away exceeds its upside benefit."

    And, of course, every single business deal MUST come to fruition? The whole point is not shackling the hands of citizens and governments to protect corporations. Let 'em evaluate risk, and accept or reject it, the old fashioned way.

    reply to this | link to this | view in thread ]

  9. identicon
    Anonymous Coward, Mar 17th, 2014 @ 6:04am

    you can bet without doubt that if it is left as is, after going through all courts, and i assume that includes the highest EU court as well, there would be very little to then discuss in 'Arbitration'. whatever road is taken though, you can bet that if any company corporation or industry went to sue the US government under these terms (or any other terms!) the 'arbitration' would be kicked out completely, or moved into the US favor. for all other disputes, the US would expect it's companies etc to win! this whole 'Deal' is designed to give the USA a lot more power, particularly over countries, industries and people in the EU, in the run up to it being regarded as the USA's world! i would really like to see it try the same threatening tactics with the likes of China, Russia or N.Korea!

    reply to this | link to this | view in thread ]

  10. icon
    Namel3ss (profile), Mar 17th, 2014 @ 10:36am

    It's a sad day...

    when Germany stands up for the individual over the corporation before our own US does.

    (been watching way too many shows/movies about WW2 lately)

    /jadedness /cynicism

    reply to this | link to this | view in thread ]

  11. identicon
    Anonymous Coward, Mar 17th, 2014 @ 1:30pm


    As fair as that is to investors, it is problematic in terms of how leveraged investors become compared to everyone else in negotiations (they are already gods to the specific project!). As much as mediation could be a valid improvement, ISDS is arbitration. That much power given to third-parties with very limited legal restraints doesn't sit right with me. Quis custodiet ipsos custodes etcetera.

    You could argue the countries voluntarily make the rules in the agreement, but as opposed to national legislation, it is hard to change and less jurisprudence in the international arena, makes the effects of the deal a lot more unpredictable.

    Going through WIPO and WTO is one thing. Those are relatively transparent and open processes. Propping up non-transparent bilateral agreements with extra protection of the select few already consulted on the agreement beforehand is a different beast.

    reply to this | link to this | view in thread ]

  12. identicon
    A. Lauridsen, Mar 26th, 2014 @ 6:00am

    Referendum required

    Although IANAL, from the descrition it sounds as if "Corporate Soverignty" requires that individual EU countries yields judicial soverty to a legal system outside the auspices of the EU.

    If that is the case then such an agreement would require a referendum in my country, and probably in a lot of other EU countries as well.

    Generally the EU council tries to avoid anything - unless absolutely unavoidable - which requires approval in each individual member country.

    reply to this | link to this | view in thread ]

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