Investor-State Dispute Settlements, or ISDS, are special tribunals included in trade deals for investors to seek redress from States. The problem is not that they give companies the possibility to sue states: this can already be done under national law. Everyone should be able to have access to justice. It is up to the judicial system to rule out whether a claim is justified or not, regardless of where it comes from.
The problem with ISDS is that it is a para-judicial mechanism separated from normal judicial procedures. ISDS is only available to foreign investors. It is based on arbitration, in which judges are not independent but appointed by the parties to the case. Transparency is optional and conflicts of interest are rife. ISDS have led to horrendous abuses. To mention but a few: in Egypt, French utility company Veolia is suing the government for increasing the minimum wage; in Germany, Swedish energy giant Vattenfall is asking for compensation through ISDS because the country banned nuclear power. If an ISDS tribunal rules against a State, then hefty fines are awarded at the expense of the taxpayer. But even regardless of the outcome of the proceeding, the very threat of litigation has proven to create a regulatory “chill”. New Zealand has put on hold its project to introduce cigarette plain packaging, because neighbouring Australia is currently facing an ISDS judgement from Philip Morris for doing so.
The desire of the European Commission to include an ISDS in the Transatlantic Trade and Investment Partnership (TTIP), a massive trade deal currently being negotiated between the EU and the US, has generated widespread opposition across the UK. This opposition, conveyed by Labour MEPs in Brussels, has already led the European Commission to revise its initial plan and propose instead a reformed ISDS, with fewer loopholes and possibilities for abuse, but still granting privileges to multinationals.
Labour is opposed to any type of ISDS as long as it grants greater rights to some, and we have therefore opposed the latest Commission proposal. But how can a group of 20 MEPs turn this opposition to ISDS into a majority of opinion in the European Parliament?
Our goal is simple: to make sure that there won’t be any ISDS in TTIP. This entails that we ensure that there will be a majority to vote TTIP down if it contains ISDS. Or that we manage to get rid of it during the negotiations.
There are a number of things the European Parliament cannot do: it cannot send representatives to the TTIP negotiations, it cannot stop the negotiations, and it cannot amend any concluded deal. In fact, the European Parliament’s only formal power is the power to veto a final text. This can only be done once negotiations are over, when a final agreement is tabled for ratification.
To build any political strategy, you need to start from the political reality. The European Parliament numbers 751 MEPs. Conservatives and liberals are 361, just 15 short of an absolute majority. Labour belongs to an EU-wide grouping known as the Socialists and Democrats (S&D), which counts 190 MEPs. If you add to the S&D tally the Green and radical left MEPs, the total number for the broader Left is 291. Other MEPs are notoriously unreliable since they belong for the most part to eurosceptic movements, such as UKIP or the French National Front, and simply don’t engage in policy debates.
Looking at these numbers, a strategy to get rid of ISDS that relied simply on waiting for the final ratification vote, in the hope that a majority would emerge to veto TTIP, is simply not realistic. Unfortunately that is precisely what the Green Party is doing, and what organisations such as War on Want are advocating. We simply do not have the numbers to achieve this. If we had, there would be no need for an anti-ISDS campaign: the Commission would simply not bother trying to force ISDS through Parliament.
So, responsible MEPs who favour achieving results over grandstanding are left with trying to remove ISDS from TTIP while the negotiations are ongoing.
To do that we have been pushing to get a motion on TTIP on the agenda of the European Parliament in which we can set out our priorities and redlines. The conservatives and liberals were reluctant at first, as they just want TTIP regardless of what it contains. But they had to cave in thanks to public pressure.
The motion serves two purposes. First, it is a way to send messages to the European Commission, which leads the negotiations for the EU. The Commission has an obvious interest in paying close attention to what the Parliament requests, as it will need Parliament’s support to ratify final deal. Second, the process to draft and adopt the motion is a means of raising awareness within the European Parliament on the issue, and to engage with MEPs from across the political spectrum in order to broaden the opposition. When you are 70 fewer than the other side, you need to win over at least 36 of them. The only way to do that is to engage with them.
So we have engaged in this debate, contributed in committee meetings and tabled dozens of amendments, including an amendment against ISDS for which we gathered the support of 66 S&D MEPs.
The Trade Committee of the European Parliament is made of 41 MEPs, selected by their political groups on the basis of the individual members’ interest and expertise. This resulted in making the Trade Committee a somewhat more neoliberal forum than Parliament overall. As a result, there is no majority for an outright rejection of ISDS in the Trade Committee.
Motions such as the one on ISDS must first be adopted by the Committee in order to be then debated and voted by the whole Parliament in the plenary. We therefore needed to reach a compromise on ISDS in the Trade Committee, in order to be able to secure a broader debate in the plenary.
On 28 May, we succeeded in reaching such a compromise. The text covers a number of aspects related to TTIP and reflects well on the concerns we have raised on behalf of our constituents. If adopted as such by the plenary of the European Parliament, the motion will send strong messages to the Commission. One such message is: exclude all public services, or face rejection down the line by the European Parliament.
But haven’t got all we wanted on ISDS yet; we only got enough to move to the next stage. The conservatives effectively blackmailed us by threatening to vote down the motion if any stronger language was adopted. The compromise adopted does not endorse ISDS, and it states that we trust national courts. Between the lines, this means we don’t want special private tribunals.
We need to make this message much more explicit. Ahead of the plenary vote on 10 June we will table an unambiguous amendment to reject ISDS. We stand a better chance of getting it adopted, and we will use the time before the debate to try to broaden the opposition to ISDS in the European Parliament.
If we win, the Commission will be under immense pressure to revise its plans. But even if we lose, we will be closer to forming a majority of MEPs against ISDS. Even if it is just by an inch, it’s well worth the trouble.
Jude Kirton-Darling is Labour MEP for the North East of England