In the world of trade policy, this week felt like 2016 all over again. Back then the agenda was dominated by unsavoury acronyms such as ISDS or ICS - all shorthand for promoting the idea that the rich and powerful should not be subject to the same justice process as the rest.
Following the massive public outcry over the envisaged inclusion of such private tribunals for multinationals in TTIP, including a resounding 97% ‘nay’ to an official public consultation on the proposal, the European Commission was forced to back off when the next deal came along: CETA, the trade and investment deal with Canada. This no longer included an ‘ISDS’ but the much fancier ‘ICS’ - a botoxed version of ISDS that has not fooled any vigilant citizen.
Despite opposition from some corners of the European Parliament, including the majority of Labour MEPs, CETA passed - but that did not stop the Walloon government from taking up the fight and referring the agreement back to the European Court of Justice, as serious questions had been raised on whether ICS was actually compatible with the EU constitutional order. We are patiently waiting for the Court to rule on the matter.
But this impending judgement has not stopped the Commission from ploughing on, with its Directorate for Trade on a mission to change the world of investment dispute settlement. Sadly, the Commission is only offering a quick fix when a radical rethink is needed.
In the coming months, MEPs will be voting on an Investment Partnership Agreement with Singapore. I have tabled an amendment to reject this agreement, and this week I explained why in the international trade committee: I do not think it is right to create a parallel judicial system for powerful businesses who are the chief beneficiaries of globalisation, when we do nothing for those who have suffered the brunt of globalisation with unenforceable labour and environmental provisions.
Over the years I have asked the Commission time and again why investment protection is even needed. It is not for the economy – there is no causal link between investment agreements and investment flows. In fact, the Commission’s main argument, which was reiterated in the trade committee this week in response to my statement, was that the reformed EU-led ICS is necessary to replace outdated ISDS contained in older bilateral treaties signed by EU member states, that would continue to exist otherwise.
Clearly, ICS is better than raw ISDS - there is less room for frivolous claims, less scope for abusive interpretation and some consideration for ethics. So if the choice truly was between something terrible and something that is not as bad, then MEPs should really think hard about how to vote.
But this simply does not hold true. The argument from the Commission is at best ignorant - or worse, totally disingenuous. The way in which individual member states’ Bilateral Investment Treaties are to be phased out and replaced by EU agreements is laid down in a Regulation from 2012. The Commission would have us believe that this requires the EU to replace investor-to-state arbitration in national bilateral agreements by something equivalent but better at EU level. But this is not what the Regulation says. In fact, the only obligation is to replace the member states' investment treaties with EU investment treaties, with no indications as to what they should contain.
One could argue that investment treaty implies ISDS. But not all such treaties contain ISDS. In fact, at least one of the bilateral deals that would be replaced by the EU-Singapore agreement - the Germany-Singapore investment treaty of 1973 - does not have ISDS. So, as far as Germany is concerned, the Commission is not replacing something terrible by something merely bad - it is creating something bad from scratch. And that also goes for the 15 other EU member states that do not currently have an investment treaty with Singapore.
Another argument is that having ICS in many bilateral deals is the first step towards setting up an international court - the Multilateral Investment Court (MIC). The ogre of Trump's trade agenda casts a shadow over every EP debate on trade and investment, with any concerns slapped down by the need to defend multilateralism. It has even been suggested to me that a future MIC could in turn evolve into an instrument to enforce responsible business conduct and offer citizens access to remedies against multinationals. I am very keen on this agenda, and I have watched the Commission stall on it for the last four years. If the Commission really wanted to promote greater corporate social responsibility and citizens' rights in globalisation, it could do just that and do it now, by pressing for a negotiating mandate for the UN binding treaty on business and human rights currently under discussion in Geneva. Unfortunately, rather than show good faith EU negotiators continue to kick progressive changes into the long grass.
So here we are ahead of crucial votes in the trade committee. We’re still a long way from making globalisation work for the many and not just the few. Voting for the EU-Singapore investment agreement won’t get us any closer to it. It will lock in the privileges of international capital without obligations that investors respect the workers and communities that they touch.