Techdirt has been writing about corporate sovereignty for nearly two years now. The public is beginning to wake up to the dangers it poses, which means that politicians, too, are suddenly discovering that they need to have an opinion on the subject. Over in the European Union, attention is focused on the S&D (Socialists and Democrats) Group in the European Parliament. Because of the way seats were won in the recent EU elections, it is the S&D group that will make or break TTIP/TAFTA; that makes its position on investor-state dispute settlement (ISDS) crucial. This week, the S&D Group published a position paper that gives some insight into its thinking on this issue (pdf). Here’s the opening statement:
The S&D Group opposes the inclusion of ISDS in Trade Agreements in which other options to enforce investment protection are available, whether domestic or international. In agreements with countries that have fully functioning legal systems and in which no risks of political interference in the judiciary or denial of justice have been identified, ISDS is not necessary.
That seems clear enough: “opposes the inclusion,” “ISDS is not necessary.” But of course, statements from political groups are never that simple. Later on, the paper says:
The S&D Group has already on numerous occasions expressed its serious reservations concerning ISDS. In particular in the case of TTIP, we have made it clear that we do not see a need for its inclusion and have called for it to be excluded when negotiations for the investment chapter start.
Here, the S&D Group does not “see a need for its inclusion” of ISDS in TTIP, which is a rather weaker statement. The paper concludes:
We have an interest in a good TTIP that becomes a gold standard agreement. We do not want to see this opportunity jeopardized by the inclusion of provisions on ISDS which are not acceptable to the S&D Group, a majority in the European Parliament, and the general public.
Now, that could mean two different things. Either:
We do not want to see this opportunity jeopardized by the inclusion of provisions on ISDS, since these will be unacceptable.
We do not want to see this opportunity jeopardized by the inclusion of provisions on ISDS if they take a form that is unacceptable.
The first is a categorical rejection of corporate sovereignty in TTIP, the second is a rejection of certain kinds of ISDS, but not the idea itself. Clearly, then, the difference is significant: in the first case, S&D would vote against TAFTA/TTIP if it contains ISDS, while in the second, it might tolerate corporate sovereignty if certain conditions are met, and vote in favor of TTIP. That second position could well become that of the European Parliament itself. That’s because the “draft report on Parliament’s recommendations to the Commission on the negotiations for the Transatlantic Trade and Investment Partnership” (pdf), put together by the European Parliament’s Committee on International Trade, includes the following paragraph on corporate sovereignty:
Given the EU’s and the US developed legal systems, a state-to-state dispute settlement system and the use of national courts are the most appropriate tools to address investment disputes. Should ISDS provisions be included in the TTIP, it seems to be clear, that further reforms to the current model, are critical to avoid the problems that have arisen under the provisions in existing FTAs and BITs. Now that the results of the public consultation are available, a reflection processes is needed within and between the three European institutions on the needed reforms. Investors abroad have to be treated in a non-discriminatory fashion and should have a fair opportunity to seek and achieve redress of grievances. This can be attained in TTIP without the inclusion of ISDS provisions.
This notes that ISDS is not needed in TTIP, but does not go so far as to reject it outright, and even speaks of what needs to be done “should ISDS provisions be included.”
Clearly, then, the politicians are hedging here. They have noted — how could they not? — the huge rejection of ISDS by the public in the consultation carried out last year, and the 1.5 million signatures on the European petition against TTIP. But they are obviously unwilling to reject ISDS outright, not least because some MEPs, notably those from the conservative parties in the European Parliament, are largely behind TTIP, and do not want it jeopardized because of a statement that any form of ISDS is unacceptable.
What this means in practice, as in the US, is that the politicians will continue to try to gauge the public mood as they re-calibrate their responses. The latest statement by the S&D Group is part of that complex dance: an important rejection of corporate sovereignty, but by no means a definitive one.