Today the European Parliament adopted a non-binding resolution on the trade agreement with the United States (TTIP).

Based on this resolution we could have a discriminating and expansive investor-to-state dispute settlement (ISDS) system, rigged to the advantage of the United States. A diplomatic blunder. (adopted ISDS amendment)

First, discrimination. ISDS gives foreign investors — and only foreign investors — the right to bypass local courts and challenge governments before supranational investment tribunals. Only foreign investors have access to ISDS, local investors, states and citizens don’t. ISDS is antithetical to the rule of law, to the rechtsstaat.

Second, no democratic context. Supranational adjudication, whether by arbitration tribunals or a real court, takes place above democracies. There are no voters at the supranational level. There is no parliament to adjust the rules to correct expansive interpretations. Nor will the European Parliament be able to do this.

Third, no workable instruments to correct expansive interpretations. Adjusting the rules takes the consent of all the other parties to agreements, some of which may have other interests. For instance, a state may position itself as a routing place for investments.

Fourth, specialised adjudication has a natural tendency to become expansionist. ISDS even contains perverse incentives. Expansive interpretation of foreign investors’ rights reduces the policy space of states.

Fifth, the most used ISDS forum is rigged to the advantage of the United States.

Based on this resolution we could have a discriminating, expansive, and rigged ISDS system.

A diplomatic blunder.

A court?

For the medium term some have proposed an international investment court. An ISDS agreement with the US would be a stepping stone. But why would the US accept a court if they first get a system that is rigged to their advantage?

In the long term the EU would then have a court (outside a democratic context) with other countries and rigged ISDS with the US. Multinationals would route their EU investments through the US.

A diplomatic blunder.

Submission

Some Members of Parliament noted that the EU needs a deal more than the US. With such a weak position, and no awareness in the EU that ISDS is rigged to the advantage of the US, we can make a prediction: submission to a rigged system.

We have to fight for our democracy.

See also:

Over 110 scholars: Statement of Concern about Planned Provisions on Investment Protection and Investor-State Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP)

Gus Van Harten, The European Commission’s push to Consolidate and Expand ISDS: An Assessment of the Proposed Canada-Europe CETA and Europe-Singapore FTA

Gus Van Harten, A Parade of Reforms: The European Commission’s Latest Proposal for ISDS

Gus Van Harten, A Report on the Flawed Proposals for Investor-State Dispute Settlement (ISDS) in TTIP and CETA

France proposes empty ISDS reforms