The proposal is a permanent trade court between the EU and the US, with public proceedings and an appeals process to replace the existing system of arbitrary panels settling fights on a case-by-case basis.
Critics, among the loudest coming from within Germany, say the current so-called Investor State Dispute Settlement (ISDS) scheme lacks independence and lets companies attempt to overrule democratically-passed laws.
The issue is proving a major sticking point in the negotiations on the Transatlantic Trade and Investment Partnership, the trade deal backers say will boost economic growth by cutting trade barriers and streamlining regulations between the EU and US.
German trade minister Sigmar Gabriel is pushing the alternative. The social democrat is expecting support from his colleagues from France, the Netherlands, Sweden, Denmark and Luxembourg, after they gave an informal nod to the initiative at a meeting in Madrid in February. Austria sees the plan as “principally positive,” according to an official in the economics ministry in Vienna.
The proposal responds to the critique that the current draft in the trade deal operates outside the rule of law, Markus Krajewski, a professor in international law who drafted the 30-page document for Gabriel, told POLITICO.
The court would consist of at least six judges, chosen by the EU and USA for a four year term. Krajeswki said: “They need to be absolutely independent.” Contrary to the current investor dispute set-up in TTIP, “no lawyer can be nominated that has already consulted a company in similar lawsuit,” to prevent conflicts of interest, he said. All court documents will be public and an appeals mechanism with five judges will be established — two elements also missing from the current system.
To file a suit, a company needs to have a subsidiary in the EU or the US, with a certain number of employees and financial investment, which differs by industry. Sheer holding or letterbox companies are excluded from the right of action.
The concept was introduced to EU Trade Commissioner Cecilia Malmström, who met the US chief negotiation Michael Froman in Washington on Monday. “The idea of creating a permanent court is one of the avenues contemplated by the Commission,” her spokesperson Daniel Rosario said.
So far, the US side has not commented on the proposal.
Mixed reactions in ParliamentMalmström will also speak in the European Parliament’s International Trade Committee (INTA) on Wednesday.
Whereas the panel chair Bernd Lange from the Progressive Alliance of Socialists and Democrats told POLITICO he backs the proposal of his party colleague Gabriel, other parliamentarian groups are divided.
MEP Manfred Weber, head of the European People’s Party in the Parliament, welcomed Gabriel’s proposal as “a step forward to our position on the improvement of investment protection,” he told POLITICO.
MEP Yannick Jadot of Greens/European Free Alliance, a vice chair of the international trade panel, called it “a good idea,” as his group opposes the current draft ISDS scheme.
MEP Alexander Graf Lambsdorff of the Alliance for Liberals and Democrats for Europe, however, said the proposal goes too far.“We speak of an minor number of possible investment-dispute cases between the EU and US,” he said. “To employ fully paid judges on a permanent basis is bureaucratic and economic nonsense.” Still, Lambsdorff generally approved of the concept of an open selection of judges and public proceedings.
ALDE member Marietje Schaake was less skeptical, but noted that such a trade court would take “time and money to establish.” Gabriel’s proposal will have a rough ride in convincing those left-leaning critics and nongovernmental groups, who believe that a EU-US trade deal doesn’t need any dispute settlement mechanism at all.
Gabriel Zimmer, president of the United European Left/Nordic Left group in the Parliament, said it is “intolerable” that private investors could sue states in private courts. “An EU-US trade court does not change this. Foreign investors can also invoke national or European courts, which are already good enough for European citizens or companies,” Zimmer criticized.
Even law expert Krawejski, the author of Gabriel’s proposal, said that in his personal opinion “TTIP won’t need any investment protection mechanism at all. But since this opinion has no majority in the EU, the trade court provides a middle course.”
´A red herring´ me thinks !!
THE OTIUM POST