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How Labour & Social Democrat MEPs are fighting for the millions who oppose ISDS

No TTIPJude Kirton-Darling, Labour MEP for the North East of England and European Labour Party spokesperson on TTIP writes in response to Professor Keith Ewing and John Hendy QC

In an article published last Friday by the Morning Star and Institute of Employment Rights, Professor Keith Ewing and John Hendy QC accused Labour and Social Democrat MEPs of backing a “shabby” compromise on TTIP: the Transatlantic Trade and Investment Partnership currently being negotiated between the EU and the US. As a Labour MEP for North East England, and the European Labour’s spokesperson on TTIP, I have been closely involved in drafting the European Parliament’s resolution on TTIP. I am firmly opposed to ISDS, and have repeatedly stated that I will oppose TTIP if it threatens our public services, our standards or our democracy. I voted according to these principles last week, and will certainly be guided by them in the vote on the resolution in plenary this Wednesday. In this piece I will attempt to set the record straight in this response to Professor Ewing and John Hendy’s criticism.

Their argument sadly lacks crucial elements of context that are needed for citizens to make sense of last week’s vote, and indeed next Wednesday’s. While the European Parliament operates in full transparency, with all documents and meetings online and streamed, our national media’s reporting on EU affairs is unfortunately lacking when it comes to shining a light on how the parliament works and how decisions are achieved. It is therefore necessary to explain this context.

First, the European Parliament is composed of a relative majority of conservative and liberals MEPs: together, MEPs from the right and centre-right are only 14 votes shy of an absolute majority.  Both political groups’ leaderships firmly defend ISDS; both are reluctant to set any red-lines for the TTIP negotiators. Second, a large block of Eurosceptic MEPs tend to vote against every single text, making it nearly impossible to build alternative majorities on any issue.

While policy-making in Westminster follows a simple majority rule in which the party in government imposes its will on the opposition, the process is far more open in the European Parliament. With hundreds of national parties from 28 countries represented, one must be prepared to make compromises in order to achieve results. Far from being a disappointment, I regard this parliamentary culture – based on consensus rather than tribalism – as highly positive and much truer to basic democratic principles.

Ad-hoc majorities have to be built for every resolution. Despite being a smaller parliamentary group, the Socialists and Democrats (S&D) – to which Labour belongs – manage to influence the outcome of most debates through hard work and sheer conviction. But while no text can be adopted without the support of conservatives, these conservatives do not necessarily need the support of socialists to adopt resolution. This means S&D MEPs are constantly faced with a binary choice. We can grandstand, refuse to influence events in the European Parliament and simply say ‘no’. Or we can engage in debate, and negotiate the terms of our support with the other groups. I believe I was elected to make a contribution, not a statement, and I therefore chose to make the best of an unfavourable political situation.

There is an added hurdle. All parliamentary resolutions adopted by the plenary of the European Parliament must first be debated and adopted by the relevant committee. If a report fails in committee, then the Parliament as a whole cannot adopt any position on the matter.

In the case of TTIP, the relevant committee is the International Trade Committee (INTA). It could be argued that the 41 members’ of the INTA Committee are the most neoliberal of all parliamentary committees: virtually every conservative and liberal in INTA fully supports ISDS, while this is not the case in the plenary of the European Parliament. As a result, there was no majority in INTA for an outright rejection of ISDS, as we found painfully in the committee vote on 28 May. But there could be one in the Parliament as a whole, and we are about to find out on 10 June.

The decision to compromise in committee last week was dictated by what was effective blackmail from conservative and liberal MEPs: had any text opposing ISDS been adopted, an unlikely alliance of progressives, Eurosceptics and fascists, conservatives and liberals would have voted down the whole resolution – thus stopping the process.

We would have lost this vote on the text as a whole for a simple reason: while UKIP or National Front MEPs might have supported our anti-ISDS amendment, they would have voted against the entire resolution regardless of the report’s content on ISDS. To put it another way, had we succeeded in passing an anti-ISDS amendment, S&D MEPs would have been the only INTA members to support the resolution, with most other groups having already stated that they were voting against the resolution for different reasons.

The most important thing at this stage was to survive the committee phase, so that we could get the TTIP debate onto the plenary agenda. We had to make a compromise to reach this outcome, and no matter how much abuse I have received from ill-advised campaign groups, I believe I voted for the right thing in INTA. Professor Ewing and John Hendy QC should at the very least acknowledge in their paper that it is thanks to Labour and Social Democrats that we have a shot at making our opposition to ISDS the official line of the European Parliament next week. If we had followed the Greens and Radical Left’s strategy of not compromising and voting against the text, we would have lost not just the battle but the war as well.

But did we actually lose this battle? Was the compromise we accepted “shabby”, as claimed by their article?

The argument developed by Professor Ewing and John Hendy QC is based on a misunderstanding of the issue at stake. It confuses investment protection and Investor-State Dispute Settlement, which are very different indeed.

Investment protection in trade deals is a set of substantial elements aimed at offering a set of legal safeguards, so as to create incentives for investment. In practice, it consists of a set of rules, the most important being the right for investors to be treated in a non-discriminatory fashion (“fair and equitable”) and to be compensated if they are expropriated.

Both of these rights are already granted to EU investors in the EU: the EU single market is based on the idea that a German investor should not be treated by the UK government any differently from a UK investor. And if a UK company is expropriated by the UK or German government, it has the right to seek compensation from the government. This is fair application of the rule of law.

However, these rights are not automatically granted to foreign investors operating in the EU, as international law lacks any such provisions. Likewise, EU investors in the US also face this unfavourable situation.

I support the rule of law, and this implies that anyone should be able to seek redress in open court. It is then up to the courts to assess the legitimacy of each claim. Corporations should not have greater rights than anyone else, but they should not have lesser rights either. This is why I am not opposed to well-defined investment protection rules that aim at granting foreign investors similar rights to those of domestic investors. The compromise adopted clearly states that foreign investors should have no greater rights than domestic ones, and this is an important achievement.

ISDS is different. It is a specific procedure through which investment protection rules are enforced in thousands of international agreements, using private arbitration tribunals as means of resolving claims. Rather than relying on normal judicial procedure, ISDS is based on the principle that a different judicial system should apply to multinationals. In this sense, ISDS can be understood as an alternative to national or international public courts.

I see no justification for ISDS in TTIP, and share many of Professor Ewing and John Hendy’s specific concerns. Since ISDS relies on private arbitration – a system in which judges are appointed by the parties to the cases – rather than public courts, it is at much higher risk of conflicts of interest and cannot be trusted to deliver judgements that balance the private actor’s interests with the public’s. Unlike the International Court of Justice or the European Court of Human Rights, ISDS tribunals are not part of our normal, democratically scrutinised, judicial order.

ISDS also defeats its own purpose by introducing discrimination between domestic and foreign investors: only the latter have access to it, while the former can only seek redress of grievance through normal public courts or other domestic remedies.

Most importantly, ISDS can limit local, national and EU authorities’ right to regulate by its mere existence. A pending ISDS case in Australia over cigarette plain packaging actually led neighbouring New-Zealand to postpone plans for introducing similar measures. The existence of this regulatory chill is all the evidence that I need to oppose ISDS.

The compromise adopted by the INTA committee does not support in any shape or form such a system. It supports balanced, non-discriminatory investment protection rules, and it clearly calls on negotiators to “trust national courts” to enforce them. This implies that they should not trust ISDS.

However Labour and Social Democrats acknowledge that the compromise adopted last week is insufficient, which is why we are seeking to amend it on 10 June.

The compromise does not explicitly reject ISDS private arbitration. It also opens with a statement endorsing Commissioner Malmström’s latest proposals for a reform of investment protection. As the Commissioner’s paper is based on ISDS, this reference in the compromise is ambiguous and should be scrapped.

As such, the S&D Group tabled a set of amendments (114-115) to strengthen the compromise: if adopted, they would remove the reference to the Commissioner’s paper and add the words “without the use of private arbitration”. In addition, I have tabled an amendment (27) with the support of 135 MEPs from all progressive political groups that simply calls on the Commission to “oppose the use of ISDS in TTIP”. All those concerned with ISDS should contact their MEPs and encourage them to support these amendments.

I would like to conclude in responding to an important point raised in the Institute of Employment Rights’ paper concerning workers’ rights. As the paper rightly argues, workers should be given rights in TTIP. The authors lament that the US has not ratified all 8 fundamental ILO conventions, and I join them in their implicit defence of an ambitious labour and human rights agenda for global trade. What the authors fail to mention is that the compromise report adopted last week contains extremely positive elements in this regard. Notably, it requests the US to ratify ILO conventions. It also calls for negotiators to make labour and human rights enforceable in TTIP, by placing them under the general (State-to-State) Dispute Settlement of the agreement. This is a long-standing demand of the trade union movement, and it is the first time it has been endorsed by the INTA Committee.

Professor Ewing and John Hendy QC may believe, as they write, that the EU will never be able to force this upon the US. But based on this premise, why bother with anything in the resolution at all? By the same token, we would never be able to impose anything on the US regarding ISDS either.

I believe we can make a difference, and this is why this resolution matters. We will need MEPs who are critical of TTIP to support the resolution if we want our voices to be heard by the negotiators. I sincerely hope that all of us pushing for a re-regulation of globalisation and a fairer society will pull in the same direction on this matter.

2 Comments

  1. David Pavett says:

    I had a sense that Keith Ewing and John Hendy showed less than the level of diligence required in their article on TTIP/ISDS. I commented to that effect. So I am glad to see this corrective by Jude Kirton-Darling MEP.

    I regret only that this article also fails to give any links to the document(s) at issue in the exchanges. Is it so difficult to do this? Is doing so not a basic democratic requirement? It is the best way to encourage people to read the documents in contention and make up their own minds.

  2. L J Liburd says:

    I’m so glad you’re fighting your corner, Judith! Keep it up. It must be difficult being attacked by those on the right and undermined by those to your left.

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