European Trade Union Institute, ETUI.

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20 January 2015

EU-USA trade negotiations: Europeans refuse bargaining over legally enshrined rights

Some 150,000 citizens and organisations took part in the consultation on the Transatlantic Trade and Investment Partnership (TTIP), announced the European Commission on 13 January. The vast majority of respondents registered their opposition to the investor-to-state dispute settlement (ISDS) mechanism. This is the most controversial aspect of the negotiations insofar as it would allow companies to initiate proceedings against legislative provisions – social, environmental, consumer protection, etc. – judged by them to run counter to their own economic interests.

‘The consultation clearly shows that there is a huge scepticism against the ISDS instrument’, said Cecilia Malmström, Commissioner for Trade, in a comment. In response to the citizen mobilisation against the TTIP, the Commissioner for Trade sought to adopt a reassuring stance by stating that ‘the European Commission would never even consider an agreement which would lower our standards or limit our governments’ right to regulate’.

The negotiations between the Commission and the United States have been suspended pending a decision on the fate of the ISDS. This mechanism could allow a company to initiate a legal claim for damages in cases where it considered that legislation ran counter to its interests. Similar mechanisms already exist in other international trade agreements and have led to States being sentenced to pay astronomical sums in damages.

In a recent publication, Aida Ponce, researcher at the ETUI, provides several examples. Under the terms of the North American Free Trade Agreement (NAFTA), Ethyl Corp was able to bring proceedings against Canada after the adoption of legislation that, on grounds of public health, banned one of the company’s products used as an additive in petrol. The American chemicals firms claimed 251 million dollars in damages. The Canadian government finally retracted the ban and went so far as to adopt a statement recognising that the additive in question represented no risk to either health or the environment.

It is accordingly not hard to understand why European NGOs and trade unions have mobilised since the launching of the TTIP negotiations in 2013. According to press reports, France and Germany are considering, as a means of unblocking the discussions, a proposal that would make inclusion of the ISDS conditional upon simultaneous provision for a mechanism of appeal against court decisions.

It is foreseen for the time being that, over the next three months, the Commission will consult the member states, the European Parliament and the national parliaments, as well as NGOs and the two sides of industry. Time is short because the Europeans have committed to conclude the TTIP before the end of 2015.

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