UN Independent Expert Alfred de Zayas recommends abolishing currentregime
In a report circulated on August 5, 2015, UN Independent Expert on the promotion of a democratic and equitable international order, Alfred-Maurice de Zayas, recommended that states abolish the existing investor–state dispute settlement (ISDS) system. The full text of the report is contained in UN document A/70/285.
The expert suggests replacing the ISDS regime with an international investment court, state–state settlement before the International Court of Justice, or litigation before domestic courts following due process standards established under international human rights law. Existing investment agreements would have to be modified or terminated accordingly.
Zayas also recommends conducting human rights, health, and environmental impact assessments before and after concluding investment agreements. Furthermore, he calls on states to suppress economic crimes, banking speculation, and corruption, and to adopt a legally binding convention covering corporate social responsibilities.
Investment Court System proposed by European Commission
On September 16, 2015, the European Commission published its proposal on Investment Protection and Resolution of Investment Disputes and Investment Court System. While aimed primarily at the –U.S. negotiations for a Transatlantic Trade and Investment Partnership (TTIP), the proposal would replace the investor–state dispute settlement (ISDS) mechanism in all ongoing and future EU investment negotiations.
The system would be composed of a first instance tribunal and an appeal tribunal. Among the elements of the text are safeguards to states’ right to regulate, transparency of proceedings, and high qualification requirements for judges. The system would also bar forum shopping, parallel proceedings, and frivolous claims. The Commission hopes to build trust in the dispute resolution system by embedding in its proposal the inputs received through the public consultation on ISDS.
After discussing with the European Council and Parliament, the Commission will present the proposed text to the United States. It has also committed to working with other countries on establishing a permanent International Investment Court to replace all ISDS mechanisms in trade and investment agreements, both within and outside the EU context.
Deal reached on Trans-Pacific Partnership
On October 5, 2015, trade ministers reached agreement on the Trans-Pacific Partnership (TPP). The trade and investment agreement includes 12 countries, representing 40 per cent of the global economy: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, United States, and Vietnam. Published on November 5, the text is available at http://www.tpp.mfat.govt.nz/text.
Tariff reduction schedules had already been set for hundreds of items. The final round of negotiations started in Atlanta, United States, on September 30, and centered on the more politically charged issues. The negotiating partners finally reached agreement on issues involving sectors such as biologic drug developers, dairy farmers, and auto producers. Minimum standards were also agreed on regarding environmental, labour, intellectual property, and other matters.
As reported by , Australia had indicated in one of these texts that the investor–state dispute settlement (ISDS) mechanism under TPP would not be available for use by Australian investors or against Australia, except under “certain conditions.” The text seems to have given Australian Trade and Investment Minister in MayAndrew Robb enough confidence to state that “Australia will be able to ensure that tobacco control measures are never open to challenge.”
EU–U.S. negotiations: ISDS on hold and controversy on a leaked EU proposal for the sustainable development chapter; secrecy in TTIP negotiations still a concern
From October 19 to 23, 2015, EU and U.S. officials conducted the 11th round of TTIP negotiations in Miami, United States. The agreement, in negotiation since 2013, aims at liberalizing trade and investment between the two parties, which encompass 850 million people and over half of the world’s economy.
Negotiators said “substantial progress” was made in Miami, particularly in reconciling positions on tariffs and regulatory cooperation. Investment protection standards have not yet been discussed. U.S. negotiators insist that the deal must include an ISDS mechanism, which remains controversial in public debate, particularly in Europe. The European Union’s investment court proposal has not yet been brought to the negotiation table.
A draft EU proposal for the Trade and Sustainable Development Chapter was leaked on October 23 by The Guardian. The newspaper criticized the text for containing “only vaguely phrased and non-binding commitments,” despite earlier promises by the European Union to “set high levels of environmental and labour protection.”
Secrecy in the negotiations continues to be a concern. Publishing all key negotiating texts—in TTIP as well as other negotiations—is one of the pillars of the European Commission’s new strategy, “Trade for all: A more responsible trade and investment policy,” published in October 2015. European politicians expect reciprocity from their U.S. counterparts. In an interview on September 28, French Foreign Trade Minister Matthias Fekl threatened pulling France out of TTIP negotiations if U.S. negotiators fail to be more transparent.
Both parties are intensifying the pace of negotiations. U.S. officials are pushing to conclude the agreement before the end of President Barack Obama’s term in January 2017, while EU officials foresee that negotiations may take longer. The next formal round of negotiations is scheduled for February 2016.