EU Commission's Consultation On Corporate Sovereignty Ignores Key Issue, But Shows That Real Transparency Is Possible

from the close,-but-not-close-enough dept

One of the most dramatic developments in the negotiations for TAFTA/TTIP was the announcement that the European Commission would be holding a consultation on the corporate sovereignty chapter. That was a result of the growing concerns about placing corporations on the same level as nations, and allowing the former to sue the latter for alleged loss of future profits caused by policy changes, for example. Here's what the European Commission has to say on the consultation's home page:

The European Commission is consulting the public in the EU on a possible approach to investment protection and ISDS in the TTIP. The proposed approach contains a series of innovative elements that the EU proposes using as the basis for the TTIP negotiations. The key issue on which we are consulting is whether the EU's proposed approach for TTIP achieves the right balance between protecting investors and safeguarding the EU's right and ability to regulate in the public interest.
It's deeply troubling to see the European Commission admitting that it will trade off the EU's right and ability to regulate in the public interest in order to protect investors, when the former should always be paramount.

The good news is that anyone can submit their comments, and that they have until June 21 to do so; the bad news is that the consultation is purely about the "modalities for investment protection and ISDS in TTIP" -- not about whether it should be present at all. That's particularly surprising given that most of the document is a litany of ISDS's problems (pdf): lack of clarity, uncertainty, opacity, inconsistency, capricious decisions, biased arbitrators, conflicts of interest, frivolous claims, no possibility for appeals -- the list goes on and on. Even though the consultation seeks input on solving these many and serious problems, the overriding impression is that ISDS is a dangerous and irremediable mess.

However, the consultation document does bring one unexpected bonus: official versions of the equivalent sections of the Canada-EU trade agreement (CETA). The Introduction to the consultation explains why:

Each issue is illustrated using reference texts as examples, taken from other investment agreements and from the approach developed in the EU - Canada (CETA) negotiations, which is the most recent text negotiated by the EU.
The implication is that CETA represents the latest thinking of the European Commission on the subject of corporate sovereignty, and that it will form the basis for its approach in TAFTA/TTIP. But there's a big problem with that. As we reported a few weeks ago, the ISDS chapter in CETA is riddled with problems, some extremely serious.

Of course, the European Commission will probably reply that the consultation is designed to rectify problems that people find. Although that's a fair point, it misses a larger one: that you don't bother fixing problems in something you don't need, and the European Commission has failed to make the case that corporate sovereignty is necessary. It's not needed because both sides have extremely well-established and effective legal systems. And it's not needed because even in its absence, transatlantic investment is already taking place on a massive scale -- as the Commission's own page on trade between the US and EU makes clear:

Total US investment in the EU is three times higher than in all of Asia.

EU investment in the US is around eight times the amount of EU investment in India and China together.

EU and US investments are the real driver of the transatlantic relationship, contributing to growth and jobs on both sides of the Atlantic. It is estimated that a third of the trade across the Atlantic actually consists of intra-company transfers.
Specifically, the US has invested 1.344 trillion euros in Europe, while EU companies have invested 1.421 trillion euros in the US. ISDS is not necessary, because there is simply no problem that needs solving here.

Since the European Commission's consultation fails to explore the central question, it is largely a waste of time. However, it does have the huge virtue of showing that transparency is possible: despite this unveiling of the EU's strategy in the area of investment, the sky is not falling. It thus makes clear why openness can and should be extended to all of TAFTA/TTIP, with the possible exception of a few areas where specific figures would need to be withheld for negotiating purposes. Ironically, the consultation document even explains why transparency is vital:

Transparency is essential to ensure the legitimacy and accountability of the system. It enables stakeholders interested in a dispute to be informed and contribute to the proceedings. It fosters accountability in arbitrators, as their decisions are open to scrutiny.
Exactly the same could be said about TTIP, which means that the European Commission's proposals to increase transparency for the corporate sovereignty chapter should also be applied to the entire agreement:
The EU will include provisions to guarantee that hearings are open and that all documents are available to the public. In ISDS cases brought under TTIP, all documents will be publicly available (subject only to the protection of confidential information and business secrets) and hearings will be open to the public. Interested parties from civil society will be able to file submissions to make their views and arguments known to the ISDS tribunal.
If transparency is essential to ensure the "legitimacy and accountability" of ISDS, it's even more vital for TAFTA/TTIP. The release of this consultation on corporate sovereignty is a welcome first step, but it is only that: the US and EU must routinely release negotiating documents -- at the very latest, as they are tabled, and ideally, before that. Failure to do so simply undermines TTIP's "legitimacy and accountability" and means that the widespread and growing rejection of ISDS could well spread to the rest of the agreement.

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Reader Comments (rss)

(Flattened / Threaded)

  1. icon
    Anon E. Mous (profile), Apr 2nd, 2014 @ 1:36am

    The bad thing is that if TIPP/TPP get's pushed thru by the politicians in some back room deal, their won't be any Back to The Future moment after this.

    The corporations and various goverments will fight tooth and nail to thwart any changes to the agreement, so there will be no going backwards in time to change the events of the future and no Marty McFly to save the day.

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

  2. identicon
    Anonymous Coward, Apr 2nd, 2014 @ 2:33am


    Indeed. Shadowrun is a dystopian satire of corporate personhood.

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

  3. icon
    Ninja (profile), Apr 2nd, 2014 @ 3:18am

    This consultation is basically a variation of "We are going to screw the citizenry. So how you, a citizen, would rather be screwed?" as far as I could understand. Then people vote on the least damaging option and they go like "See? People vote, they support ISDS!".

    Honestly, I've seen it too many times here in politics. This is what it's about. If it will work THIS time it's another story.

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

  4. identicon
    Anonymous Coward, Apr 2nd, 2014 @ 4:21am

    the best, easiest and quickest way of solving this problem is to get rid of the European Commission completely! it was responsible for trying to sail the EU down the ACTA river and has absolutely no interest in the EU at all, doing whatever it can to aid the USA in becoming the 'top dog' in USA/EU dealings. as long as de Gucht is anything to do with the EU, it is going to be a disaster for it! the EU should already know this and it seems strange that nothing has been done up til now to solve this, seeing as how it is the biggest problem!!

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

  5. identicon
    Anonymous Coward, Apr 2nd, 2014 @ 7:01am



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

  6. identicon
    Anonymous Coward, Apr 2nd, 2014 @ 7:54am

    I'm sick and tired of governments giving a select few everything they want. Corporations get 95+ year copy protection lengths with retroactive extensions, they get ridiculous patent collections that they get to use to stifle competition, they get govt. established broadcasting and cableco monopolies, taxi cab monopolies, secretly negotiated agreements with politicians where only industry interests are invited, etc.. What more do they want? No matter how much politicians give they always want more and if politicians want something in return (like revolving door favors) it's not enough to just maintain what has already been taken from the public but politicians must give corporations even more.

    Governments are supposed to represent the public. Not investors but the public. It's bad enough that corporations have bought and paid for our politicians to get their laws passed. Now they want to extort politicians into passing more bad laws or else the government will face a huge array of expensive corporate lawsuits. Pass their laws and corporations will give politicians nice revolving door favors. Don't pass their laws and corporations will sue the state bankrupt. Your choice.

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

  7. identicon
    Anonymous Coward, Apr 2nd, 2014 @ 8:01am


    and the reason this is suddenly being pushed so hard is because SOPA failed due to public outrage and so the politicians don't want to try their hand in IP so much for the time being. but to get something in return politicians must give corporations something. So now they are trying a new angle in trying to find something else to give to the corporations and hopefully the public won't notice.

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

  8. icon
    That One Guy (profile), Apr 2nd, 2014 @ 1:22pm

    Would you like fries with that?

    So they're open to comments and concerns, just as long as they don't involve actually fixing the main problem, the corporate sovereignty clauses themselves.

    They're pretty much telling the public that they will be serving them up a shit-sandwich, but in the interests of 'transparency' they're willing to let the public comment on which garnishes they want with it.

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

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