14th November 2014

Some minor changes to ISDS in CETA possible, Commissioner Malmstroem says

At a press conference with the German Economic Affairs Minister S. Gabriel on 10 November, the European Commissioner responsible for trade Cecilia Malmstroem indicated that some small changes to the investor-to-state dispute settlement mechanism (ISDS) clauses in the EU-Canada Comprehensive Economic and Trade Agreement (CETA) were possible. She added that any changes will be made very transparently, allowing public control. Germany is one of the countries which oppose the ISDS the most. ISDS is intended to be a powerful investment protection mechanism for investors against possibly damaging legislative actions by states. Investment-protection action would be initiated by the company and would be brought before an independent international arbiter. Germany, and many others, however, fears that the mechanism could be abused and could effectively limit the states in legislating in legitimate public interest. Proponents of ISDS claim that the mechanism is a standard tool and is enshrined in many investment-protection treaties the EU members signed in the past, without causing much controversy. Also the German industry supported ISDS. Now the German minister Gabriel conceded that the mechanism will stay in CETA and will not be changed substantially – concerns of more actors than just Germany must be taken into account, he stated. Supporters of CETA fear that ISDS controversy could lead to abandoning the already concluded treaty and, much more seriously, could limit the prospects of concluding the EU´s free trade flagship, the TTIP agreement with the USA. Online consultations on ISDS in TTIP have been in progress and are not yet finished. During her confirmation hearing, Commissioner Malmstroem promised to work towards an acceptable compromise on these matters, with transparency being among top priorities.

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Members of the American Chamber of Commerce in the Czech Republic