EU Tries To Put Lipstick On The Corporate Sovereignty Pig

from the not-forgetting-the-elephant-in-the-room dept

As Techdirt readers know, corporate sovereignty provisions in both TAFTA/TTIP and, increasingly, TPP, are emerging as one of the biggest stumbling blocks to public acceptance of these deals. The revolt against "investor-state dispute settlement" (ISDS), as corporate sovereignty is more officially known, began earlier for TTIP. Indeed, it was already so strong at the beginning of 2014 that the European Commission had to pull out corporate sovereignty completely from the negotiations, while it held a public consultation on the subject.

The hope was evidently that only lobbyists would bother answering the rather opaque and biased questions that were posed, but that's not how things worked out. An unprecedented 150,000 responses were received, the vast majority of which called for ISDS to be dropped. Despite that clear rejection, the European Commission signalled it would carry on anyway, but promising a "new and improved" version of ISDS.

The difficulty of addressing its flaws is evident from the fact that it is only this week that the EU's Trade Commissioner, Cecilia Malmström, was finally able to unveil a proposal that may prove the last chance for corporate sovereignty in TTIP. Even she is forced to admit that she has "concerns" about ISDS:

I have heard many concerns about dispute settlement between investors and states (ISDS) and the rules included in many of the existing agreements. To a large extent, I share these concerns, especially when it comes to the sometimes unclear definitions that leave too much room for interpretation and possible abuse, and the lack of transparency. I therefore made it one of my priorities to thoroughly modernise the traditional form of ISDS.
The full paper -- which is "without prejudice to the final position of the European Commission on the matters described within" -- runs to 12 pages, and has five basic elements (pdf). These are: a right for governments to regulate; improving the establishment and functioning of arbitral tribunals in order to increase legitimacy of the ISDS system; an appellate mechanism; addressing the relationship between ISDS and domestic courts; and moving towards a multilateral system. Malmström's own summary of the proposal is as follows:
I want to ensure fair treatment for EU investors abroad, but not at the expense of governments' right to regulate. Our new approach ensures that a state can never be forced to change legislation, only to pay fair compensation in cases where the investor is deemed to have been treated unfairly (suffered discrimination or expropriation, for example).

Our new approach also makes arbitral tribunals operate more like traditional courts, with a clear code of conduct for arbitrators. It furthermore guarantees access to an appeal system. And, as a medium term goal, it sets out to work towards the establishment of a permanent multilateral investment court.
Already, there are several analyses of why these don't address the many and deep problems of corporate sovereignty chapters. For example, there's a detailed consideration by Gus Van Harten, entitled "A parade of reforms: the European Commission’s latest proposal for ISDS", where he concludes:
the most recent proposal (a) reflects a move away from essentially fake reforms to something potentially more meaningful but (b) is insufficient to satisfy the minimum criteria of independence, fairness, openness, subsidiarity, and balance, and (c) is not reliable until it is backed by clear language and a negotiating red line for any agreement providing for ISDS.
The analysis by the Seattle to Brussels Network, a large group of development, environment, human rights, women and farmers organisations, trade unions, social movements and research institutes, is, as you might expect, rather more scathing:
The Seattle to Brussels Network is of the opinion that the Commission's proposals do not contribute to any meaningful reform of the ISDS system. They 1) ignore the outcome of the Commission’s own public consultation on the issue; 2) do very little to address the fundamental problems of the ISDS system; 3) would dramatically expand the reach of ISDS, increasing the likelihood of claims against European governments; 4) are misleading in suggesting that the ISDS system was already meaningfully reformed in the recently concluded EU-Canada trade agreement (Comprehensive Economic and Trade Agreement, CETA) and would be significantly further improved in TTIP; and 5) ignore the elephant in the room: that there is no need for ISDS.
That last point is really crucial. According to the European Commission's own figures, even without corporate sovereignty rights, the total US investment in the EU in 2013 was €1.65 trillion; from the EU into the US it was €1.69 trillion. ISDS is an irremediably flawed solution to a problem that doesn't exist.

Follow me @glynmoody on Twitter or, and +glynmoody on Google+

Hide this

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: cecilia malmstrom, corporate sovereignty, eu, eu commission, isds

Reader Comments

Subscribe: RSS

View by: Time | Thread

  1. identicon
    DavidE,.H. Smith, 7 May 2015 @ 10:58am

    CETA, TTIP, TPP & Global Treaties; 'The ILLUSION'

    CETA, TTIP, TPP & Global Treaties;
    Global Treaties Not about How Much Trade, but, How to & Who to Trade with and 'Undermine' AIIB.

    Corporate EU, EU Parliament, Investment Houses; Deluded, or, Deluding; IGNORAMUS et IGNORABIMUS?

    Just Blame & Punish/Sue Info Deprived Citizens of US, EU, Canada, et al.
    TPP, TTIP, CETA, et al, Shareholders 'Persona non Grata'; Using Shareholders' Meetings to I.D. Toxic Investment Houses, Neighbors, In-laws, et al. Time to Buy GOLD to Cool off the 'Stockbrokers' again?

    HIGHER TAXES (No “NEW” Taxes) for NON shareholders to Pay SHAREHOLDERS & CORP. EU via CETA, TTIP, et al, TRIBUNALS.


    “But, WILL CHINA, the Muslim World, et al, SUPPORT PUTIN (BRICS, et al); The WHITE KNIGHT”?

    It will be good for, not only the NON shareholders of the enterprises that will be generated by the on-going global "cooperation" of corporate treaties, agreements, partnerships, et al, including the China - Canada Investment Treaty, The Trans Pacific Partnership, the EU - Canada CETA,
    for the potential shareholders, as well,
    who are quite interested to know if President Xi Jinping (China) will support Russia as a co-member of B.R.I.C.S. when President Putin uses his potential role as "The White Knight".

    And, while President Putin's potential support as “The WHITE KNIGHT” in the development of the CETAgreement, et al, litigation below can dramatically off-set the hundreds of billions of dollars due to the present & future sanctions leveled by American led, et al, corporations & financial institutions via their governments' signing their global corporate economic treaties/”arrangements”,
    and the potential for making trillions of dollars for the Russian economy over the next 30 - 40 years & beyond,
    are the citizens (SHAREHOLDERS & NON shareholders) of Germany & JAPAN just being prudent in wanting to wait for the outcome of:
    1) the submission to The SUPREME COURT of CANADA & the highest court in Germany, et al, to make their findings regarding “The Submission”:
    "The SHAREHOLDERS & Corporations of AMERICA, et al
    the harmless Canadian NON shareholders, et al"?

    2) "The MERKEL (Chanc. Germ.) Letter; To Sue, or, Be Sued”?
    (see; )

    Have the federal representatives of the nations that are the potential signatories of CETA, TPP, et al, willingly provided the NON shareholders of China, Canada, Europe, the Trans Pacific nations, et al, with the aforementioned information? Are the federal representatives, et al, depriving the NON shareholders of Canada, et al, of the due diligence information that enables the family of the NON shareholders of Canada, et al, to make informed decisions regarding their financial planning?

    And, would a reasonable person conclude by a preponderance of the evidence, &/or, beyond a reasonable doubt, that these documents, et al, demonstrate that the SHAREHOLDERS of AMERICA, CANADA , the EU & Trans Pacific nations, et al, really do not care which NON shareholders pay them the punitive penalties, etc., by way of their secret (“Death-Star Chamber”) TRIBUNALS, as long as its not the SHAREHOLDERS who pay & not their corporations regardless of which country the corporations:
    1) operating from,
    2) maintain their headquarters,
    3) use to do their cyber banking, accounting, "taxation", etc.
    4) et al?

    And, re; the CHINA – Canada Investment Treaty, is it understandable why the “coveted” Hong Kong investor & his associates are “concerned” with the aforementioned findings of The SUPREME COURT of CANADA, et al, & the effects of the findings, et al, on the EU, AMERICA, the Trans Pacific nations, et al, treaties with CHINA, et al?

    In regard to arms sales; how about the sale of arms (non nuclear) in general in regard to the "trade" treaties that are continuing to be secretly negotiated and how will the Tribunals, both; B.R.I.C.S. & non BRICS, adjudicate, decide & penalize the NON SHAREHOLDERS for the sale of legitimate, semi- legitimate & "illegal" sales of arms within the signatories nations & the those of others, &/or, unaligned? Of particular, interest is China, which does have an treaty with Canada, which puts China "at odds" with other arms manufacturing & nuclear powers that it (China) does not have any "arrangements" with.
    Are these types of questions that your politicians & the corporate lobbyists calls "forget-me-nots" ("Buyer Beware") that will be (maybe) worked out after the fast tracked signatures are obtained?

    And, what do you think is the significance of the line in The Submission to The Supreme Court of Canada “...And, lest one forgets that the revelation of the present perilous international treaties/”arrangements” began with the regard for the rights of Native Canadians as per the Treaties/”arrangements” that corporate Canada & the Government of Canada have “foisted” upon Native Canadians...”? What are the various ways that this line will cost the SHAREHOLDERS, et al?

    On the other hand, it may be worth repeating yet again,
    "What the TREATY of VERSAILLES was to the 20th century PALES in COMPARISON to the TPP, CETA, C-CIT, NAFTA, et al, in the 21st".

    And, how will YOUR submission to YOUR highest court IMPROVE upon The Submission that is presently before The Supreme Court of Canada?

    David E.H. Smith
    - Researcher
    - “Qui tam..."
    For more Information & Questions re; The Relationship between Human (Nature) Rights & Economics by way of the TTIP, the CET Agreement, TPP, C-CI Treaty, et al, and The WAD Accord
    Please consider sharing the enclosed information & questions with 10 friends who will share it with 10 others...

Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here

Subscribe to the Techdirt Daily newsletter

Comment Options:

  • Use markdown. Use plain text.
  • Make this the First Word or Last Word. No thanks. (get credits or sign in to see balance)    
  • Remember name/email/url (set a cookie)

Follow Techdirt
Sponsored Promotion
Public Money, Public Code - Sign The Open Letter at
Essential Reading
Techdirt Deals
Report this ad  |  Hide Techdirt ads
Techdirt Insider Chat
Recent Stories

This site, like most other sites on the web, uses cookies. For more information, see our privacy policy. Got it

Email This

This feature is only available to registered users. Register or sign in to use it.