TTIP and CETA
The Transatlantic Trade and Investment Partnership (TTIP) is negotiated between the US and the EU; the Comprehensive Economic and Trade Agreement (CETA) has been concluded between Canada and the EU. They have caused massive opposition on both sides of the atlantic (even though in the US the TPP (Transpacific Partnership) between the EU and a number of Asian countries was more in the focus. In Thursday’s class, we will look at a specific aspect of the discussion, namely ISDS/ICS. However, here are some sources that will be helpful to understand why TTIP and CETA are so controversial:
- Here you can find the main arguments forwarded by the European Commission in favor of CETA (which, by extension, apply also to TTIP). Don’t expect a balanced discussion of pro’s and con’s here.
- Here you find a report by the Corporate Europe Observatory, which rebuts some of the central claims made by the EU Commission in favor of CETA.
But don’t assume the conflict is between “economic” objectives (more trade, investor protection, etc) and “non-economic” objectives (environment, etc) on the other. Rather, many economists argue that the global economy is already so deeply integrated that further liberalization measures (such as TTIP and CETA) will have few economic benefits, while the negative effects of such agreements increase:
- Dani Rodrik, trade economist at Harvard’s Kennedy School of Government, warns of the adverse effects of “hyperglobalization” in this NYTimes piece. He argues, for example:
“We need to rescue globalization not just from populists, but also from its cheerleaders. Globalization evangelists have done great damage to their cause not just by underplaying the real fears and concerns on which the Trumps of this world thrive, but by overlooking the benefits of a more moderate form of globalization.
We must reassess the balance between national autonomy and economic globalization. Simply put, we have pushed economic globalization too far — toward an impractical version that we might call “hyperglobalization.”
The new model of globalization stood priorities on their head, effectively putting democracy to work for the global economy, instead of the other way around. The elimination of barriers to trade and finance became an end in itself, rather than a means toward more fundamental economic and social goals. Societies were asked to subject domestic economies to the whims of global financial markets; sign investment treaties that created special rights for foreign companies; and reduce corporate and top income taxes to attract footloose corporations.”
You will find similar statements from many other economists, including the Nobel prize laureates Paul Krugman and Joseph Stiglitz.
→ please post additional resources that you find helpful in the comments!
ISDS/ICS
In the public debate on TTIP and CETA, the investor state dispute settlement (ISDS) system became a central point of criticism (if you don’t know what it is, you might want to google it). In response, an alternative system was introduced in CETA, namely an “investment court system” (ICS — again, google for info; here you find a graphic made by the Commission on ICS, and jokes made by trade lawyers about the graphic).
One particularly important argument is that ISDS/ICS are illegal under EU law. Please read the following article by Laurens Ankersmit (a PhD graduate from the VU), which is available via the VU library. The article is very easy to read (guiding questions below).
These questions will guide you through text:
- What is Investor-State-Dispute-Settlement (ISDS)?
- Why is ISDS problematic from an environmental perspective? — 47
- Why did ISDS now become an issue of contention in European discourse? — 47
- What changed in the EU’s competence that made this possible? — 47
- What is the TTIP?
- What is the new “Investment Court System”? — 48 (since the article has been published, it became part of the CETA agreement)
- how do judges feel about ISDS and the Investment Court System? — 48
- What’s the article’s research question? — 49
- Why does the article talk about the “unique judicial system” and the “supranational nature” of the EU? What is the purpose of this? — 49
- Can the EU — within the current Treaty framework — subject itself to judicial review from other international courts? — 50
- Why is the CJEU’s Opinion on the accession to the ECHR, or to the European Patents Court relevant? — 50
- What does the CJEU object to in these opinions? — 50
- What would ISDS allow individuals and companies to do? — 50 and 51
- Why does ISDS affect the preliminary reference procedure? — 51
- Why does the article argue that ISDS is not compatible with the preliminary reference procedure? — 52
- Will the limitation of the ICS jurisdiction solve the problem? — 53
- What would happen if arbitration tribunals breach EU law? — 55
- Which powers of the CJEU does ISDS and ICS challenge? — 55
- Why is the CJEU Opinion on the Accession to the ECHR relevant here? — 56
- How did the Commission try to solve this problem in the EU-Vietnam FTA — 57
- Do investment agreements usually have direct effect? — 58
- What is Article 340 TFEU about, and why could ISDS/ICS be a problem? — 59
- Describe how the CJEU approaches non-contractual liability of the EU (e.g. for legislative actions) differently than an ISDS/ICS tribunal? — 60–61
- what is “regulatory chill”? — 61
- What does the author propose as an immediate procedural step? — 63
