Leaked letter: 14 ministers take on Juncker over trade Peter Spiegel Oct 23 11:17 | It started out as an internecine turf war within the incoming regime of Jean-Claude Juncker. But it is quickly metastasising into what could be one of the first international policy fights of the Juncker Commission. The dispute centres on a previously obscure trade arbitration system that allows companies that believe they can’t get a fair hearing in front of national courts to appeal to an international dispute resolution panel known as ISDS, for investor-state dispute settlement. The systems have become relatively commonplace in international investment treaties, but they suddenly – and to the surprise of many advocates – have become the single biggest bone of contention among opponents of the world’s biggest trade deal, the pact currently being negotiated between the US and EU. Opposition from social democrats in Germany, the country where ISDS was ironically invented, has put ISDS on the front-burner politically, and Juncker – urged on, officials say, by his powerful chief of staff, German lawyer Martin Selmayr – has clearly sided with the sceptics. The stance has led to an open confrontation with Cecilia Malmström, his incoming trade commissioner who supported a similar ISDS system in the just-completed EU trade deal with Canada. But as we reported in today’s dead-tree edition of the FT, free-trading countries are fighting back. A letter signed by ministers from 14 member states – including Britain, Spain, Portugal, Sweden and the Czech Republic – pointedly reminds Juncker that ISDS was included in the negotiating mandate that all 27 member states gave to the Commission last year. We’ve posted a copy of the letter here. The key paragraph is below. For the unitiated, “investor protection” are code words for ISDS, and TTIP is the acronym for the EU-US trade deal, standing for transatlantic trade and investment partnership: One of the issues that has attracted criticism is investment protection. The Commission is currently analysing the results of a public consultation on this issue and we look forward to the Commission’s response. The consultation was an important step in ensuring that we strike the correct balance to ensure that governments retain their full freedom to regulate, but not in a way that discriminates against foreign firms…. The Council mandate is clear in its inclusion of investor protection mechanisms in the TTIP negotiations; we need to work together on how best to do so. What makes the letter all the more interesting is what came before and after the countries sent it to Juncker. The issue burst into the open last month when, after what officials said was a touchy standoff between Malmström and Juncker over the ISDS issue, Malmström was forced to disavow her own written responses to the European Parliament ahead of her confirmation hearing, in which she appeared to announce that ISDS would no longer be part of the pact. After Malmström publicly announced on twitter that the ISDS sentence “was not written by me” it emerged that Selmayr was the actual author of the language, which was subsequently changed in an amending submission to the parliament’s trade committee. That appeared to be the end of things until yesterday – the day after the letter from 14 ministers was sent – when Juncker, during his address before the parliament on the occasion of the final approval vote for his full commission, announced that Malmström would no longer have final say over ISDS. Instead, it would go to Frans Timmermans, the Dutch Labour stalwart who will be Juncker’s first vice president. His announcement appeared to be a direct rebuke to Malmström: In the agreement that my Commission will eventually submit to this house for approval, there will be nothing that limits for the parties the access to national courts or that will allow secret courts to have the final say in disputes between investors and states. I have asked Frans Timmermans, in his role as first vice president in charge of the rule of law and the charter of fundamental rights, to advise me on the matter. There will be no investor-to-state dispute clause in TTIP if Frans does not agree with it too. Malmström again took to twitter to insist there were “no differences” between her and Juncker on the issue. And officials insisted that getting Timmermans on board was more a political decision than a rebuke of Malmström, since it is the Dutchman’s fellow centre-left partisans in the European Parliament (and in Berlin) who are the most likely hurdle to a trade deal. Malmström is a Swedish liberal, so her influence with that group is limited. But it is the open warfare with national capitals that could become far more problematic for Juncker. Less noticed in Juncker’s remarks was what appeared to be a direct rebuke to the 14 ministers who wrote the letter to him. While the ministers argued in the letter that the mandate given to the Commission is exceedingly clear that ISDS must be included in the EU-US pact, Juncker argued it is, in fact, far less clear: The negotiating mandate foresees a number of conditions that have to be respected by such a regime as well as an assessment of its relationship with domestic courts. There is thus no obligation in this regard: the mandate leaves it open and serves as a guide. This has all the makings of proper row that could have widespread implications. One potential casualty could well be the long-delayed Canadian deal, the first the EU has ever struck with a Group of Seven economy. The Canada deal has not been ratified by the European Parliament yet. Could it really get through the parliament with a fully-fledged ISDS system if Juncker declares they were a threat to EU courts and should be stripped from the US deal? Not likely.
Posted on: Wed, 29 Oct 2014 16:50:50 +0000
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