Yves here. The US media has given considerably more attention to the TransPacific Partnership, the western sister of an ugly multinational-enrichment-scheme-billed-as-a-trade-deal called the Transatlantic Trade and Investment Partnership. The comparative silence about the US-European deal has led many observers to assume that it is more or less on track.

Maybe not.

The most galling feature of these pending pacts is what is called the investor-state dispute settlement mechanism. They are a fixture in recent trade deals, but their power and scope would be increased greatly under the TransPacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP). Consider this description from a July presentation by Public Citizen:

What is different with TAFTA [now called the TransAtlantic Trade and Invesment Partnership] (and TPP) is the extent of “behind the border” agenda • Typical boilerplate: “Each Member shall ensure the conformity of its laws, regulations and administrative procedures with its obligations as provided in the annexed Agreements.” … • These rules are enforced by binding dispute resolution via foreign tribunals with ruling enforced by trade indefinite sanctions; No due process; No outside appeal. Countries must gut laws ruled against. Trade sanctions imposed…U.S. taxpayers must compensate foreign corporations. • Permanence – no changes w/o consensus of all signatory countries. So, no room for progress, responses to emerging problems • Starkly different from past of international trade between countries. This is diplomatic legislating of behind the border policies – but with trade negotiators not legislators or those who will live with results making the decisions. • 3 private sector attorneys, unaccountable to any electorate, many of whom rotate between being “judges” & bringing cases for corps. against govts…Creates inherent conflicts of interest…. • Tribunals operate behind closed doors – lack basic due process • Absolute tribunal discretion to set damages, compound interest, allocate costs • No limit to amount of money tribunals can order govts to pay corps/investors

• Compound interest starting date if violation new norm ( compound interest ordered by tribunal doubles Occidental v. Ecuador $1.7B award to $3B plus • Rulings not bound by precedent. No outside appeal. Annulment for limited errors.

Yves again. Germans are particularly aware of the dangers of these foreign investor panels due to payments the German government has been forced to make. Vattenfal, a Swedish company, is a serial trade pact litigant against Germany. In 2011, Der Spiegel reported on how it was suing for expected €1 billion plus losses due to Germany’s program to phase out nuclear power:

According to Handelsblatt, Vattenfall has an advantage in seeking compensation because the company has its headquarters abroad. As a Swedish company, Vattenfall can invoke investment rules under the Energy Charter Treaty (ECT), which protect foreign investors in signatory nations from interference in property rights. That includes, according to the treaty’s text, a “fair and equitable treatment” of investors. The Swedish company has already filed suit once against the German government at the ICSID. In 2009, Vattenfall sued the federal government over stricter environmental regulations on its coal-fired power plant in Hamburg-Moorburg, seeking €1.4 billion plus interest in damages. The parties settled out of court in August 2010.

What is particularly galling about these agreements is that they give investors the right to sue over lost future profits.

A report in the UK website Vox Political suggests that Germany has figured out what the TTIP is really about and isn’t about to be snookered. Germany’s willingness to defy the US may be part of the fallout of revelations of the amount of “Five Eyes” snooping that goes on in the Eurozone, and may also reflect discomfort with US escalation of hostilities with Russia, when it is not to Germany’s advantage to participate in economic brinksmanship. One writer predicted that the events of the last year had triggered the start of a divorce of Germany from the US, although it will take a generation for it to be completed. Whether or not that forecast proved to be accurate, this diss of the TTIP is proof that Germany is willing to defy the US more openly than in the past.

Key parts of the post:

[Incoming European Commission president] Mr [Jean-Claude] Juncker said the Investor-State Dispute Settlement scheme – a part of the proposed Transatlantic Trade and Investment Partnership agreement that critics say would make it possible for corporations to sue national governments for damages if new legislation was likely to affect their profitability – would be reviewed… “My Commission will not accept that the jurisdiction of courts in the EU Member States be limited by special regimes for investor-to-state disputes. The rule of law and the principle of equality before the law must also apply in this context… 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.” He said he had taken control over the ISDS [Investor-State Dispute Settlement] process away from Trade Commissioner Cecilia Malmström and handed it to Frans Timmermans, the incoming, and first, Vice-President in charge of the Rule of Law and the Charter of Fundamental Rights. “There will be no investor-to-state dispute clause in TTIP if Frans does not agree with it too,” he said. The Financial Times has reported that Juncker made his decision “largely at the behest of Germany, which has turned sour on ISDS”….. “Germany’s misgivings have in turn fed into a more generalised distemper with global trade across the EU, encompassing the French far right and fringe parties elsewhere. They claim ISDS has morphed into a tool of multinational companies that use the arbitration panels to circumvent, or even alter, national laws at their whim,” the paper reported. This is exactly what has caused hundreds of thousands of people to complain to the European Commission after details of the TTIP proposals were leaked from secret meetings.

This does not mean the TTIP is dead, but it is a serious blow. And it is important to get the word out in the US, since one of the tricks of negotiators is to create a sense of inevitability to push the various parties into acting. This deal is not near completion and is losing momentum. Alert your Congressman that the Germans and the European Parliament are against the TTIP, and they should oppose it as well.