The new study, authored by Professor Markus Krajewski, looks in particular at the modalities for investment protection and Investor-State Dispute Settlement in TTIP from a trade union perspective. By investment protection is the possibility for foreign investors to sue the host government of the investment on the grounds that certain government measures may violated the terms of the agreement.
For trade unions, the study refers to the potential for collective bargaining to fall under areas where governments may be at risk of being sued. Although not technically a government measure, in many countries measures agreed by social partners can then be rolled out and expanded to cover an entire sector. This statement by a government would then be considered a government measure which would then fall under the investment protection clause.
The mechanism proposed for the TTIP, and currently in place for the Canada-EU and Singapore-EU trade agreement, for investment protection is an Investor-State Dispute Mechanism or ISDS as it is more commonly referred to as. ISDS would see foreign investors given the possibility to take action against governments, not in domestic legal setting, but using ad hoc tribunals for arbitration on a case-by-case basis.
The main issues surrounding the ISDS clause in the TTIP rest on two areas: fair and equitable treatment of investors and legitimate expectations of the investor.
Would investors be treated fairly? There would be a difference between the rights of foreign investors and domestic investors. Foreign investors have a de facto choice of using the domestic legal system of the host country or by using the ISDS mechanism. This is choice not given to domestic investors.
The debate on legitimate expectations is far more nuanced. The Commission recognises the need to provide further clarification of what is meant by legitimate expectations, the danger being that if a company does consider that the standards it thought would be in place during an investment agreement at one point fall short, the host government could end up being forced to pay compensatory damages.
According to the author of the study, Professor Markus Krajewski, in a trade union context this may mean that legitimate expectations could be as simple as a government official giving assurance to a potential investor that trade unions will not take industrial action. In the event of a strike or difficulty with worker’s representatives, this company may have legitimate grounds for action through the ISDS.
There is clear cause for concern until these issues are clarified, concerns which CESI was not alone in raising in its answer to the Commission’s public consultation. CESI raised a number of concerns in its response to the consultation. In answering, CESI stated that by including the ISDS mechanism in the TTIP, the EU risks discriminating domestic business and putting foreign investor and foreign business above the law. This risks creating a judicial system not granted to domestic investors, with the inherent discrimination making the TTIP with an ISDS provision difficult to support.
The lack of transparency in the negotiation process is a serious cause for concern for CESI, who has tried to promote an open and inclusive process, not just for trade unions but also for civil society. The EU should be against the principle of creating fears and must not be afraid to open up the negotiating process in order to alleviate these fears.
For CESI, the public good must remain at the heart of negotiations. The public interest (especially social protection, labour standards, health, and environment and consumer protection) as well as Services of General Interest must remain established, monitored, controlled and protected by local, regional, national and European legislative and judiciary powers. These are not be open for negotiation.
The full study on Modalities for investment protection and ISDS in TTIP from a trade union perspective from the Friedrich Ebert Stiftung can be read here.