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The European Parliament’s trade committee has signalled its opposition to an investor-state dispute settlement (ISDS) clause in the Transatlantic Trade and Investment Partnership (TTIP).
ISDS is controversial because it allows corporations to sue governments in international arbitration tribunals, bypassing national courts.
“A state-to-state dispute settlement system and the use of national courts are the most appropriate tools to address investment disputes,” according to a working documentprepared by Bernd Lange, a German Socialist and the committee chairman.
The paper will feed into a draft report of MEPs’ recommendations to the European Commission. It is subject to change, but points to the committee’s possible position on the EU-US trade deal. Lange is the lead MEP on the report.
The Socialist and Democrats are not all opposed to ISDS, although group president Gianni Pittella has called for it to be ditched. The S&D will prove influential on the final decision, as it is the second largest group in the Parliament, and its MEPs are not as entrenched in their support or opposition as the other groups.
Lange’s report should contribute to the “fresh start” in the negotiations, now that the new Juncker Commission is in place, and after the midterm elections in the US, the draft said.
If ISDS provisions were included in TTIP, “further reforms to the current model are critical” to avoid problems that have hit existing free trade agreements, the document said.
“Investors abroad have to be treated in a non-discriminatory fashion and should have a fair opportunity […] to achieve redress of grievances. This can be attained in TTIP without the inclusion of ISDS provisions,” according to the draft.
The full European Parliament will eventually vote on the TTIP. A majority of MEPs will have to back the free trade agreement for it to come into force.
Lange has called for ISDS to be dropped from TTIP. Opponents argue that the clause has a chilling effect on regulation and will whittle away standards and regulations across a range of policies from the environment to food safety to social protection.
The US is keen for ISDS to be included in the final deal. But in January 2014, the Commission took it off the negotiating table after public criticism.
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