The European Parliament (EP) descended into disarray earlier this week as MEPs failed to speak with one voice about the way negotiations on the Transatlantic Trade and Investment Partnership (TTIP) are being handled by the European Commission. A key discussion and vote on the controversial trade agreement between the European Union (EU) and the United States (US) had been scheduled for midday Wednesday 10 June but Parliament President Martin Schultz announced late the night before that this would be postponed.
Following months of debate within the EP political groups a common position was due to be adopted but has fallen apart as divisions in the Socialist and Democrat (S&D) party risked the collapse of the consensus. The primary sticking point has been and remains the Investor State Dispute Settlement (ISDS) mechanism. This would allow individual corporations which have invested in a given country to sue that country’s government for anticipated harm to speculative investment; for instance, if a policy to protect public health by banning alcohol advertising were shown to damage alcohol company profits, the company would be able to claim financial compensation. Notable cases that have been launched under current ISDS mechanisms include Phillip Morris v Australia, where the tobacco giant is contesting the introduction of plain packaging laws, Phillip Morris v Uruguay, where the same corporation is suing for profits lost in light of legislation requiring health warnings on tobacco products, and Achmea v Slovakia, where the company investing in health system privatisation sued the government for its lost profit as a result of renationalisation.
ISDS foresees that cases such as these should be dealt by a private arbitration tribunal, overseen by high-level lawyers agreed by the parties, rather than by a national or international court, without judicial review, circumventing the authority of national and EU legal systems and giving preferential legal treatment to foreign investors. MEPs, civil society and the general public have expressed significant reservations about ISDS but the US and the European Commission continue to insist upon its inclusion.
The draft resolution which was due to be voted on by the EP plenary in Strasbourg this week contained a compromise text in favour of a cosmetically reformed version of ISDS. The S&D group, the second-largest political group in the Parliament, is opposed to the ISDS provision but the final compromise that it reached at committee level supported the inclusion of a ‘reformed’ ISDS. A group of unhappy S&D MEPs joined with colleagues in the Green (Greens/EFA), European United Left (GUE/NGL), European Freedom and Direct Democracy (EFDD) and EPP groups to table a stronger amendment, excluding the ISDS mechanism completely. This split the S&D party line and presented the wavering plenary consensus with a choice between different ISDS positions. On Tuesday night it became apparent that holding the vote would risk rejection of the full resolution and the president took the decision to postpone. Shortly after the announcement the two biggest groups, S&D and EPP, took to Twitter to blame each other for the breakdown.
Within the rest of the EP, support for ISDS hangs in the balance. Politico reported on Wednesday that the EPP, the Alliance of Liberals and Democrats (ALDE) and the European Conservatives and Reformists (ECR) had been prepared to veto the whole resolution if the anti-ISDS amendments were included. However, there are sceptical MEPs in most groups and five of the 13 Committees which have offered opinions on the resolution have included provisions to limit or exclude ISDS, including the Legal Affairs (JURI) Committee. To compound the issue, the European Ombudsman, Emily O’Reilly, published a report in January which heavily criticises the Commission’s conduct in the TTIP negotiations, denouncing the lack of transparency and public access to documents, meetings and information about lobbying activity. Public opinion is also overwhelming against inclusion of any form of ISDS. The Commission received over 150,000 responses to its public consultation on ISDS and TTIP in mid-2014, the most ever received for a consultation of this kind, and more than 97% of the contributions rejected ISDS. Many civil society organisations have criticised the Commission for obscuring the extent of this opposition and ploughing ahead with its commitment to inclusion of the mechanism.
Negotiations between US and Commission officials are ongoing based on the negotiating mandate given by the Member states and continue behind closed doors. In the EP, the file has been sent back to committee level so is now unlikely to be agreed before the next plenary session in July, meaning that it will be September before a plenary vote is held. This adds considerable pressure, since TTIP is high on the agenda for President Obama and his administration are eager to finalise before the US elections in November 2016.