TTIP, CETA and ISDS Introduction by Christoph Lechner Member of the EESC, Group 2 E.o. meeting of...

TTIP, CETA and ISDS

Introduction by Christoph LechnerMember of the EESC, Group 2

E.o. meeting of Employees Group 4/12/2014, Bxl

• „Transatlantic trade relations and the EESC's views on an enhanced cooperation and eventual EU-US FTA”,

EESC opinion, 4/6/2014, REX/390,rapporteurs Jacek Krawczyk, Sandy Boyle

• „Investor protection and investor to state dispute settlement in EU trade and investment agreements with third countries”,EESC opinion in process, REX/411, rapporteur Sandy Boyle

• Legal opinions on ISDS in CETA (TTIP), Prof. Fischer-Lescano and Prof. Krajewski

Overview:

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1.1 Committee believes that a successful TTIP could be a significant factor in creating real growth and optimism.

1.5 Benefits of TTIP must be spread evenly throughout the business community, workers, consumers and citizens.1.18 Strong and robust Sustainable Development Chapter must be an essential component in the agreement. Essential components: Parties must reaffirm their obligations arising from membership of the ILOThe 8 core ILO Conventions must set the minimum basisCommon commitment to enforce legislation and initiatives in the area of environment

EESC opinion on „TTIP“

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1.24 Ability of EU Member States, regional and local authorities, to pursue their own democratically agreed social and environmental policies.

1.22 Specificity of the public services must be preserved in accordance with the obligations of the TFEU.

1.25 Promotion and protection of consumer interests is paramount to achieve a broad based public support.1.26 Existing EU agricultural and agri-food criteria must be taken into account, as well as respect for the precautionary principle enshrined in the Lisbon Treaty. 14. No diminution of standards of protection in regulatory field and guarantee of the same level of data protection.1.29 Strong joint civil society monitoring mechanism 1.31 Trans-Atlantic Labour and Environmental Dialogues must be activated.

EESC opinion on „TTIP“

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Definition of ISDS:3.1.3 Investment treaties enable companies to sue states at international tribunals. This remedy is only available to foreign corporations or to transnational corporations using a cross-border subsidiary.

Affected communities, citizens, domestic entrepreneurs and governments cannot make use of the same mechanism.Arbitration tribunal:3.1.4 Arbitrators are not tenured judges with public authority as in domestic

judicial systems. The extrajudicial tribunals are comprised of three private attorneys who sit in closed session, are appointed on an ad hoc basis, and are unaccountable to any electorate. Their decision is final and not subject to any appeal process.

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EESC opinion on „ISDS“ in process

3.3.1 Treaty based arbitrations reach 568 by the end of 2013 and actions cover in sum 200 billion $3.5.1 Average cost of an arbitration case is 8 Mio $.5.9.4 Foreign direct investments are over 1.5 trillion € between the EU and

the US without an ISDS mechanism.3.2.6 No EU OECD member state has signed a ISDS with the US.

Czech Republic, Estonia, Poland and Slovakia do have BITs with the US before they joined the EU.

5.1 Business communities in US and EU strongly support ISDS.

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5.2 On both sides of the Atlantic, strong opposition by • consumer organisations (including BUEC and the Transatlantic Consumer

Dialogue), • trade unions (including ETUC, AFLCIO and ITUC), • environmental organisations and • numerous NGOs.

5.1 EC's Public Consultation on ISDS received 150.000 submissions, the vast majority of which are opposed to ISDS.

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5.3 ISDS elevates transnational capital to a legal status equivalent to that of the sovereign state and mushrooms into an undemocratic mechanism:

•fundamentally shifts the balance of power between investors, states and other affected parties;•prioritises corporate rights over the right of governments to regulate and the sovereign right of nations to determine their own affairs;•discriminatory mechanism favours foreign investors above their domestic counterparts.5.8.1 ISDS bypasses national legal systems demanding taxpayer compensation for public interest policies e.g. in health and environmental protection.

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5.8.2 High profile cases:• tobacco giant Philip Morris is suing Uruguay and Australia over health warnings on cigarette packets due to its investment in trademarks and other intellectual property;• Swedish company Vattenfall sues for 4.7 billion € from Germany due to decision to phase out nuclear energy;• Lone Pine is suing Canada for 250 million Can$ after imposing a moratorium on fracking • French company Veolia is suing the Egyptian government after increasing

the minimum wage;•US Occidental Oil Company gets from Ecuador 1,77 billion € for termination of an oil concession despite possibility in contract.

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5.9.1 Investors have mature and robust legal systems in the EU and USA , also in Canada and Japan.

5.10.5 President Juncker wrote in his political guidelines for the next EC: "As Commission President I will also be very clear that I will not sacrifice Europe’s safety, health, social and data protection standards or our cultural diversity on the altar of free trade. Notably, the safety of the food we eat and the protection of Europeans’ personal data will be non negotiable for me as Commission President. Nor will I accept that the jurisdiction of courts in EU Member States is limited by special regimes of investor disputes. The rule of law and the principle of equality before the law must also apply in this context."

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• Legal opinion „European- and constitutional legal guidelines for the Comprehensive Economic and Trade Agreement of the EU and Canada (CETA) by Prof. Dr. Andreas Fischer-Lescano, Bremen, October 2014

• „Modalities for investment protection and Investor-State Dispute Settlement (ISDS) in TTIP from a trade union perspective“ by Prof. Dr. Markus Krajewski, Friedrich-Alexander-Universität Erlangen-Nürnberg, FES October 2014

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Legal opinions on ISDS in CETA (TTIP) byProf. Fischer-Lescano or Prof. Krajewski

Significant problems with EU-Treaty law and constitutional laws in the MS: •Jurisdictional monopoly of the European Court of Justice and the ordinary jurisdictions in the Member States are questioned •Possibility of mandatory examination by the ECJ and the High Courts in the MS in the ordinary jurisdiction are missing.•EU trade policy is bound to the principles in Art. 3 TEU, EU Charter of Fundamental Rights and other EU legal norms.

Hand over jurisprudence to private arbitration, which would not be bound to EU law and may therefore pass EU unlawful sentences, would be a significant excess of authority (ultra vires).

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Legal opinions on ISDS in CETA (TTIP) by Prof. Fischer-Lescano or Prof. Krajewski

• ISDS bypasses the jurisdiction of the ordinary courts in the MS through investment actions by private arbitration.

That can contravene against the subsidiarity principle, because MS are already able to decide investor lawsuits legally compliant.

• Proposed improvements in the CETA draft over the previous ISDSs in BITs have not eliminated these concerns in core.

• ISDS obviously is introduced in a mixed agreement, therefore the approval of all 28 parliaments of the Member States is required.

• Ultimately European Parliament has to decide to reject a free trade agreement with ISDS as a whole or not.

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• Due to these problems with EU legal conformity, the EU Commission, the European Parliament and the MS have the option to apply to the ECJ for a legal opinion.

• Subsidiarity action could be requested by the MS or their parliaments before the ECJ.

• Affected communities or affected EU citizens or legal persons as domestic firms because of discrimination of residents can bring an Action for annulment under Art. 263 TFEU to the ECJ .

• It is absolutely necessary before decision making and before the (provisional) entry into force, to perform a formal request for a legal opinion to the ECJ on the examination of the EU legal conformity.

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Thank you very much for your interest!

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TTIP, CETA and ISDS Introduction by Christoph Lechner Member of the EESC, Group 2 E.o. meeting of...

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