EU-Japan Trade Deal: We’ve not won yet on multinationals’ privileges

08 August 2017

If you’ve been campaigning against TTIP and CETA get ready for JEFTA - the upcoming EU trade deal with Japan. But this time, there may be a twist as JEFTA could come without a secret tribunal for multinationals.

Over the last three years, the European Parliament’s International Trade Committee in which I sit has been the political venue à la mode. Trade deals, an issue that used to be largely overlooked in the public debate, have regained significance thanks to massive controversies over EU negotiations with the US and Canada.

Both trade deals - one still in the making and one concluded this year - share a particularly loathed feature: special courts for multinationals.

These are known as “investor protection” clauses and come in two forms: and old version called ISDS (for Investor State Dispute Settlement) and a new version labelled ICS (or Investor Court System).

The latter - which was introduced in the EU-Canada CETA deal - is slightly more transparent than the former. But in essence it remains a privileged judicial system only accessible to foreign investors. With both systems, multinationals can challenge public decisions like environmental, health, food safety or even minimum wage regulations, and sue governments for millions. Companies don’t always win, but the very fear of litigation has proven in the past to be a major hurdle for governments.

I have been actively campaigning against both ISDS and ICS, in line with the position of the Labour Party.

In fact, it was the opposition to ISDS by all progressive forces within and outside the European Parliament that led the European Commission to drop its old model and come up with a new one. This minimal reform was deemed good enough by some, but not by North East Labour MEPs.

Albeit small, this change of position by the European Commission has nonetheless led to a very significant development in another trade negotiation. JEFTA, a trade deal between the EU and Japan to be concluded in the coming months, does not contain either ISDS or ICS.

Japan has been pushing for the inclusion of the old-fashioned ISDS in the deal, but the Commission cannot accept anything else than ICS. The reform was the main condition for securing parliamentary support for CETA, and the Commission knows it would be in trouble with any deal featuring the old ISDS.

So as it stands there is not investment protection clause in the EU-Japan deal. Public pressure has effectively removed investment protection from the negotiating table and this is exactly where we want it to be.

This can turn out to be a great victory for trade campaigners and progressive politicians, because JEFTA without ISDS or ICS could actually be a good deal for UK consumers, workers and businesses.

This goes to show that getting involved in trade talks - whether by engaging in the European Parliament, demonstrating in London or writing to your MEP - can actually work. But negotiations are not over yet, and one of two sides may very well prevail. In one scenario, the less likely, Japan would prevail and we would end up with the old ISDS. Should this happen, we can count on a majority of MEPs to oppose the deal. But in the other scenario, the Commission would get its way on ICS and we would need all the brunt of public opinion in Europe to fend off what would turn out to be a bad deal.

Before you ask, this matters to us a great deal regardless of Brexit. The EU and Japan are the most important trading partners for the North East, and whatever they agree between them will impact us in one way or another. We are still full members of the EU until we leave. We must get these trade deals right while we can.

Originally posted on HuffPost blogs.

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