EU US Trade Deal Should Not Allow Companies to Sue Governments

A major free trade deal should not allow US companies to sue European nations when they pass environmental laws that hurt their profits, MPs said on Tuesday.

The Transatlantic Trade and Investment Partnership (TTIP), which is being negotiated between the EU and US, may contain a mechanism called investor-state dispute settlement (ISDS). This would allow investors and companies to sue countries when they introduce laws that restrict their business practices.

A report by the UK’s parliamentary environmental audit committee (EAC) said: “EU states must retain their ‘right to regulate’, but a TTIP treaty text that enshrines such a safeguard will be meaningless if the prospect of ISDS [investor state dispute settlement] litigation produces a chilling effect on future regulation-setting.”

Joan Walley, the committee’s chair, said that once the trade treaty is signed it must include a guarantee that states could protect the environment with impunity.

“Any dispute settlement provision must unambiguously deny US companies any opportunity to sue us when we look to introduce necessary environmental or public health safeguards,” said Walley, the Labour MP for Stoke-on-Trent North.

A spokesman from the Department for Business, Innovation & Skills (Bis) told the committee these fears were unfounded: “It does not seem that [bilateral investment treaties] as a whole across the EU have had much of a chilling effect that we have been able to ascertain.”

But the University of Manchester’s Dr Gabriel Siles-Brügge, who gave testimony to the EAC, told the Guardian: “I think it’s hard to muster evidence, simply because what you’re looking for is evidence of a government or an agency not taking a decision.

via The Guardian

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza