30 September 2014

Malmström hearing: in-out ISDS stance fails to convince

Commissioner-designate back tracks, providing little in the way of a "new start" for TTIP talks

Simon McKeagney, Editor

Cecilia Malmström performs well under pressure. A gruelling 3 hour hearing with MEPs and a room full of cameras and journalists, the commissioner-designate kept her composure throughout. In the face of widespread discontent about investor-state dispute settlements (ISDS) in deals like TTIP, CETA, one would’ve allowed for, if not expected, some robust exchanges. 

But to the contrary, questions designed to evoke sharp responses were met with calm, calculated replies. Such diplomatic positioning is an indication perhaps that DG Trade has already been wielding its influence. A weekend of controversy surrounding an anti-ISDS misquote of Jean Claude Juncker (which seems to have been inserted by an overzealous member of Juncker's own staff) in her official written responses to MEPs should have provided some drama. The documet was re-edited and the quote omitted the next day, exposing a tug of war from inside the Commission on ISDS. But instead, Malmström swiftly poured cold water over any hopes that she represented a new departure on the issue of ISDS. With the stronger anti-ISDS stance removed, she was back to touting the usual DG Trade line.

"Too early" and "too late" to judge

Malmström’s ability to side step any strong commitments either way on this issue, leaves room for speculation. The Financial Times headline today says ‘Arbitration may be dropped from EU-US trade deal, says Malmström’. They raise the alarm bells, writing that ‘ditching arbitration would essentially mean a deal would not cover investment.’ But the Greens are more cautious in their analysis of this.

Malmström knows her audience. She has also anticipated the public anger. An outright ‘yes'' to ISDS would be a political misstep, guaranteed to release the hounds. After all, what she actually said was: “Will it stay in [TTIP]? I don’t know. Maybe not. But it is too early to judge on that.”

“Too early to judge on that” was coupled earlier with too late to act on CETA. The ISDS clause for that agreement, she maintains, should remain. Reopening CETA to remove ISDS would be “a mistake” she said. In that sense, it is worth considering that either “too early” or “too late” is a nice way of her saying ‘I have no intention of rocking the boat on this issue’. At the very least, she has back tracked on a clear commitment from Juncker's quote to remove ISDS. At most, she is supportive of it, meaning she could be in direct conflict with the future President of the Commission.

Unsolved case of track-changes 

Malmström apologised for sending the wrong version of her written responses to MEP questions. Though some media platforms reported this to be a “leak”, it was in fact, a final version sent to all MEPs. The only difference to the redrafted document sent 24 hours later was the edited Juncker quote which included, mistakenly, the track changes of a Commission official, Martin Selmayr, Juncker’s new chief of staff. The how and why of this story remains unanswered. Did Juncker’s staff put pressure on Malmström to have a stronger anti-ISDS stance? Who edited Juncker’s original quote to explicitly call for the removal of ISDS from TTIP? Who forced a recall of the document and why?

What we do know is that in the end, Malmström held the DG Trade line. She didn’t deviate from the pro-ISDS script, as much as perhaps she (or others) wanted to. Her belief is that ISDS, whether we like it or not is a reality in many trade agreements, and so needs to be tackled and defined to ensure there are “crystal clear limits to investor abuse”. CETA was a good agreement regarding this, she claims. 

But there are good reasons to be skeptical about the Commission's “reform” plans with ISDS. And it is good to separate the PR-spin from the facts of a system that inherently does not allow equal access to justice. 

Managed transparency

A final note on Malmström’s hearing was her cautious language surrounding her transparency plans going forward. While she said she would do her best to allow all MEPs to gain access to key negotiation texts (currently locked away in secure reading rooms for designated-eyes only) she was less specific on what she would do to ensure the public were informed and involved in the proceedings. 

Speaking about the need to release “more documents” is not the same as releasing the documents that matter, such as key negotiating texts, or the negotiating mandates of both the EU and US. After months of botched pseudo-transparency efforts, from a public consultation which discounted public opinion, to a rejected ECI, the public are frustrated and rightfully distrustful of vague commitments to do better. In short, Malmström needs to prove to us she'll do better, not tell us she will. 

Malmström has stepped into a debate that has been raging long before her appointment. She may rely on DG Trade to set (or keep) the course until she finds her feet. But considering it "too early" or "too late" to discuss the key sticking points of these deals only delays the inevitable. If she really wants a new start, the time to do it is now. 

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