22 October 2014

Juncker speech: new Commission President outlines opposition to investor privileges but passes the buck

Vice-President Frans Timmermans appointed to accept or reject ISDS

Simon McKeagney, Editor

Incoming Commission President Jean Claude-Juncker added a further twist to the on-going saga as to whether or not ISDS will be removed from the EU-US trade deal. In a broad ranging speech to the European Parliament in Strasbourg today, Juncker clarified his earlier statements on his stance on the controversial mechanism: 

Investor-to-state disputes

'I took note of the intense debates around investor-state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP) negotiations. Let me once again state my position clearly, that I had set out on 15 July in front of this House and that you will find in my Political Guidelines: My Commission will not accept that the jurisdiction of courts in the EU Member States be limited by special regimes for investor-to-state disputes. The rule of law and the principle of equality before the law must also apply in this context.

The negotiating mandate foresees a number of conditions that have to be respected by such a regime as well as an assessment of its relationship with domestic courts. There is thus no obligation in this regard: the mandate leaves it open and serves as a guide.

I had thought my commitment on this point was very clear but I am happy to clarify and reiterate it here today as a number of you have asked me do so: In the agreement that my Commission will eventually submit to this House for approval there will be nothing that limits for the parties the access to national courts or that will allow secret courts to have the final say in disputes between investors and States. 

I have asked Frans Timmermans, in his role as First Vice-President in charge of the Rule of Law and the Charter of Fundamental Rights, to advise me on the matter. There will be no investor-to-state dispute clause in TTIP if Frans does not agree with it too.

I am confident that – with your support – we can negotiate an ambitious trade agreement with the U.S. along these lines, with full respect of European interests and the rule of law.' 

Timmermans holds the cards

The revealing aspect of his speech was the absence of any mention of the new Trade Commissioner Cecilia Malmström. Whether that indicates that she is still at odds with Juncker over removing ISDS, as earlier rumours suggest, remains to be seen. That didn’t stop journalists connecting the dots.

Instead, Dutch politician and new First Vice-President of the Commission, Frans Timmermans (AKA Juncker’s right hand man) has been crowned the decision-maker on the matter. As a former Labour politician, the S&D group in the European Parliament, who have expressed their opposition to ISDS, may hold some sway. And with Timmermans' portfolio including "better regulation", perhaps he could be moved to reject it. 

Either way, Juncker has managed to pass the time-bomb, and so removed himself from the political storm. But he's also left enough space to ensure ISDS has an easy-passing, if it should go the other way. For instance, when he says 'my Commission will not accept that the jurisdiction of courts in the EU Member States be limited by special regimes for investor-to-state disputes' the issue is not that national courts will be limited by ISDS, but that multinational companies will be granted extra-privileges in the form of a private arbitration system, which others cannot access.

Secondly, in his line:'or that will allow secret courts to have the final say in disputes between investors and States' if the emphasis on the word secret, then it may pass, as the ISDS mechanism setup in CETA is based on the new UNCITRAL transparency rules which render ISDS arbitrations public as regards composition of panels and rulings. TTIP's ISDS is likely to follow the same example, thus the 'secret' nature of the private courts becomes obsolete.

And so, despite Juncker's obvious reservations, his passing of the buck may leave ISDS with enough space to squeeze through in the end. All heads now turn to Timmermans... 

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The entire "trade deal" process is broken and needs to be junked.
There is an urgent need for people to understand that by allowing these deals to go forward, they are endorsing a system whose core goal is the dismantling of an entire spectrum of important gains made by the people of all the EU nations and the US in the late 20th century, and their replacement with an amoral agenda that is those of multinational corporations, with the goal of a supranational veto power over governmental action that has a chilling effect on governments abilities to adjust to changing situations. As such it could even be described as a coup against democracy on a supranational level. Nothing less.

Most media criticism of ISDS misses that most important point!

ISDS did not emerge out of thin air, it is part of an entire ecosystem of changes that use trade as a pretext for a massive power grab by corporate interests that has the effect of nullifying the ability of democratic governments to function.

That said, one could easily make more granular criticisms of these documents. A number of well written critiques of a Dutch government study on ISDS itemize the problems with media coverage of the ISDS issue well, but don't really make this important larger point as well as they should.

Still, they are a good starting point for those wishing to draw up lists of specific problems with the ISDS approach.

Another thing which I think is a huge mistake is borrowing or inclusion by reference of previous agreements such as the WTO General Agreement on Trade in Services. <cite>This necessitates that a reader have an understanding of GATS -and its many, intentional, calculated ambiguities- in order to understand the goals of the current documents.</cite> That is an intolerably vague and difficult situation for anybody who is attempting to ascertain the scape of these documents. Additionally, people seem to be ignoring the fact that GATS, a pre-existing FTA, is already in effect and was able to create a number of changes which are largely being ignored, which casts a dark cloud over an honest evaluation of the effects of TTIP, TISA, etc, if we cannot be honest about what GATS may have already done to effectuate privatization - The lack of national informed consent there- should be casting doubt on the legitimacy of the entire system.

Dspite the fact that GATS is two decades old the interpretation of GATS is still an exercise in frustration, that is basically making a clear, unambiguous reading of the TTIP and TISA goals quite disturbing - One would be too kind to call this just ambiguous.

For that reason, I think the process urgently needs to dump those references and instead, lay out whatever it wants to say in plain words, without borrowing entire concepts, goals or interpretations.

Critiques of a recent Dutch ISDS study may be useful as a starting point for analyzing the shortcomings in 90% of biased EU government analyses of these things. (US analyses are even less willing to admit the great many points of controversy)

Flawed Dutch government study on ISDS (25.06.2014)

The Impact of Investor-State Dispute Settlement (ISDS) in the TTIP (24.06.2014)

ISDS: A rigged system, avoid lock-in (25.06.2014)

Matthew Rimmer of the Australian National University College of Law has written a critique "Trojan Horse Clauses" and a supplement to update the work, that are available for free in PDF form at .

That may help give readers an idea of the large scope of the problems.

Don't underestimate the danger these things pose to our democracies.


"with Timmermans' portfolio including "better regulation", perhaps he could be moved to reject it. '

Timmermans (a.k.a. Bought Frans), -in the local media- already hinted at going to use this better regulation as an excuse to tailor European law to corporate needs and wishes.

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