TTIP mandate makes it through EP plenary. Investors’ protection system remains in limbo

The European Parliament finally voted on 8 July on one of the most important dossiers it deals with in this term, the Trade Agreement with the US (TTIP). As VoteWatch had predicted in an analysis published in April, a comfortable majority of Members have endorsed the continuation of negotiations conducted by the EU Executive (the Commission) with its American counterpart.

The pro-TTIP camp was formed of the People’s Party (EPP), the majority of the Socialists&Democrats (S&D), Conservatives&Reformists (ECR) and Liberal-democrats (ALDE), which gathered 436 votes (61%). The anti-TTIP camp was formed of the radical-left / communists, Greens/EFA, euro-sceptics (EFDD) and nationalists (EFN), which gathered 241 votes  (34%).

TTIP 9 July

Notably, the Socialist delegations coming from the UK, France, Austria, Belgium, the Netherlands, Poland and Bulgaria did not support the mandate for TTIP. Some German and Italian socialists also voted against.

TTIP July S&D

From among the other groups supporting TTIP, the French ALDE delegation abstained, while a few reservations were noted among the Belgian and Slovakian EPP Members. On the other hand, the Hungarian EPP delegation, who did not back TTIP at the start of the negotiations in 2013, now seems to have got back in line with the EPP position.

Click TTIP mandate final vote to see how each MEP voted.

Despite the rather vocal opposition to TTIP from some segments of the public and their corresponding political factions in the Parliament, the agreement received the backing of the large political groups. A study conducted at the end of last year estimated that a majority of the citizens in most EU member states was also supporting the deal, with the publics in Germany and Austria being the most reserved.

PEW research centre

Investors’ protection clause (ISDS) remains in limbo

After months of fierce battles and lobby on both sides, the most controversial clause of the treaty, the ISDS, remains in limbo. The push to explicitly remove the references to ISDS in TTIP were unsuccessful. As VoteWatch predicted, the Socialists were split on this matter, with the most leftist ones arguing for the complete scrapping of the investors’ protection clause, while others preferred a compromise. In a last-minute move, a new compromised amendment between the People’s Party and the Socialists was submitted to be voted upon, even after the normal deadline had expired. This change (am. 117) was harshly criticized by the Greens and the hard left, but in the end the amendment was accepted by the plenary and this ensured a relative victory for the pro free-market camp, made up of the EPP, ECR and ALDE groups, alongside the majority of the Socialists.

ISDS, 117

However, the text adopted is much different from the compromise initially passed through the international trade committee in May. It says that the current ISDS will be replaced by an entirely new system, where the public sector will have a much greater power over the private one, although the phrasing leaves much room for interpretation. See below the initial text as passed in the international trade committee in May (left side) and the text eventually agreed upon in the plenary in July (right side):

Motion for a resolution Amendment 117
(xv) to ensure the applicability of international agreements, to bring an end to the unequal treatment of European investors in the US on account of existing agreements of Member States; to ensure that foreign investors are treated in a non-discriminatory fashion and have a fair opportunity to seek and achieve redress of grievances while benefiting from no greater rights than domestic investors:

–       to build on the concept paper recently presented by Commissioner Malmström to INTA Committee on May 7 and the ongoing discussions in the Trade Ministers’ Council and to use them as a basis for negotiations on a new and effective system of investment protection, as they provide very welcome proposals for reform and improvement,

–       taking into account the EU’s and the US’ developed legal systems, to trust the courts of the EU and of the Member States and of the United States to provide effective legal protection based on the principle of democratic legitimacy, efficiently and in a cost-effective manner,

–       to propose a permanent solution for resolving disputes between investors and states which is subject to democratic principles and scrutiny, where potential cases are treated in a transparent manner by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism, where consistency of judicial decisions is ensured and the jurisdiction of courts of the EU and of the Member States is respected,

–       in the medium term, a public International Investment Court could be the most appropriate means to address investment disputes;

 

(xv) to ensure that foreign investors are treated in a non-discriminatory fashion, while benefiting from no greater rights than domestic investors, and to replace the ISDS-system with a new system for resolving disputes between investors and states which is subject to democratic principles and scrutiny, where potential cases are treated in a transparent manner by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism, where consistency of judicial decisions is ensured, the jurisdiction of courts of the EU and of the Member States is respected, and where private interests cannot undermine public policy objectives;

 

The analysis of the votes on other references to ISDS throughout the document voted by the EP plenary seems to suggest that there would have been a majority even if the provision had been more clearly phrased in the direction of including a reformed ISDS, but the pro-free market camp seems to have preferred a more vague and weaker phrasing in exchange for a broader political support. For example, amendments 29 and 72, that aimed at delegitimising ISDS by inserting into the resolution a provision that argued that a majority of the public is against it, has received the backing of only 244 and 245 Members, respectively. These amendments were rejected by a margin of 200 votes: 447 and 458 votes against.

As a result, the Commission has a mandate from the Parliament to continue the negotiations on TTIP and to propose some sort of supra-national arbitration system to handle possible disputes between investors and states, but it is not clear (to the Commission, the investors, the governments or the public) how this will look like. This room for interpretation announces the continuation of struggles and is likely to contribute to making negotiations lengthier.

Background

TTIP has generated an unprecedented lobbying activity as both the proponents and the opponents of the deal aim to form ad-hoc coalitions and rally as much support as possible among the MEPs, to ensure majorities in favour or against the most contentious provisions of the text.

Although the European Parliament is not formally involved in negotiations, the European Commission is legally obliged to keep Parliament updated, and Parliament has the power to reject the trade deal once it has been finalised. As seen in the case of the Anti-Counterfeiting Trade Agreement (ACTA), the rejection of a done deal is not only a theoretical possibility, but can turn into reality if a (political) majority of MEPs disagree with the content of the deal, or the low level of transparency of the process.

Before the actual ratification vote, the Parliament usually votes, once or more times, a non-binding resolution stating its position and the ‘no go’ zones, as is the case of the resolution currently being worked on in the international trade committee (INTA). The EP vote on 8 July 2015 is the second on TTIP, after the one in May 2013. The treaty is expected to come to EP for actual ratification in 2016 at the earliest.

Read also: The influence of EP rapporteurs on international trade dossiers is over-estimated.

For more detailed analysis and predictions of the voting trends on other clauses of TTIP (or any other subject), you are welcome to contact us at secretariat@votewatcheurope.eu.

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