Mr. Colin Brown:

I thank the committee for the invitation to make these comments and I thank it for the extensive work it has done on the TTIP negotiations. Commissioner Malmström has appeared before the committee. Investor-to-state dispute settlement, ISDS, is an important matter and I am happy to address that. I will make introductory remarks and then give an overview of the current state of play on this part of the negotiations.

First, I should recall what is investment protection and ISDS. Investment protection is a set of basic substantive rules comprising protection against discrimination, expropriation without compensation and unfair or inequitable treatment. These types of rules are commonplace in international economic law. The foundation, for example, of the World Trade Organisation, WTO, is its rules preventing discrimination. ISDS is a dispute settlement mechanism which allows the effective enforcement of these rules and it only applies to these limited rules. Investment protection and ISDS is not a new feature of international agreements. There are at least 3,200 agreements in existence which have these features. Some are larger agreements, where this forms a chapter and others are narrower agreements only dealing with this issue. EU member states are party to approximately half of these agreements. Ireland itself is party, via its membership of the EU, to one such agreement – the energy charter treaty.

Modern free trade agreements extend beyond border tariffs and include such behind the border disciplines. If members look around the world today at the ongoing negotiations, they will see similar disciplines being negotiated in many international agreements. When it came to TTIP, member state governments agreed with the Commission that the negotiations should also cover these matters. Investment protection and ISDS was thus included in list of subjects mentioned in the negotiating directives handed to the Commission in June 2013.

Negotiations are currently suspended on this part of the agreement. Concerns have been raised by the public regarding ISDS tribunals on the states’ right to regulate. As a result of these concerns, the Commission suspended the negotiations on investment protection with the US in January 2014 and organised in 2014 a public consultation to collect views from the wider public on how the EU could further improve its policy approach. In the consultation, the Commission presented the approach on investment protection and ISDS taken in the Comprehensive Economic and Trade Agreement with Canada, CETA. Negotiations there are complete. This agreement introduced significant reforms on investment protection, which tackled a number of the problems which have been raised. For instance, we clarified key legal concepts and made significant changes to the operation of tribunals. We required full transparency, a mandatory code of conduct and other procedural changes, which are designed to ensure that the ISDS procedure is not abused.

The consultation brought to light four areas where further clarifications could be explored.

On 5 May 2015, Commissioner Malmström, made public a concept paper on investment protection and investor-to-state dispute settlement, ISDS, in TTIP and beyond. The concept paper outlines concrete ideas on how to reform investment protection and ISDS in TTIP and in other EU trade agreements. The orientations set out in the concept paper respond to the four areas for further reflection identified by the public consultation and incorporates many of the views on this issue conveyed in recent months by the European Parliament, member states and EU stakeholders. The paper sets out how the Commission will provide clarity on how the right to regulate is not undermined by these rules. It will ensure a move away from the current ad hocarbitration system to a more court-like system by assimilating the qualifications of the arbitrators under TTIP to those of national judges and the creation of an appellate mechanism in TTIP. Commissioner Malmström has also put forward the concrete proposal that the EU should work towards the establishment of a multilateral investment court and appellate mechanism.

The Commission’s goal for TTIP and beyond is a reformed investment policy which ensures that the goal of protecting and encouraging investment does not affect the ability of the EU and its member states to continue to pursue public policy objectives. The Commission is now discussing these proposals with EU member states and the European Parliament. Following these discussions, the Commission hopes to be able to resume negotiations with the US on this matter.

I thank members of the committee for their attention. The Commission very much welcomes the input of national parliaments on these matters. I am aware that the committee is also working on a paper on ISDS.