European Commission fails to adequately address ISDS concerns
This week during the January Strasbourg Plenary the European Commission adopted its response to the public consultation conducted over the summer on the inclusion of an Investor-State Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP). The Commission acknowledged major concerns regarding its proposals for ISDS in the framework of TTIP but there was no commitment on a timetable or a policy process to rectify them. Four main areas identified as requiring further work were: protecting the right to regulate; the establishment and functioning of arbitral tribunals; the relationship between domestic judicial system and ISDS; and the review of ISDS decisions through an appellate mechanism.
ISDS is an arbitration mechanism that allows foreign investors to claim for compensation from governments in cases of expropriation or unfair treatment. With 150,000 responses, the consultation has generated great public interest and demonstrated the scale of public concern about ISDS. There has been a recent surge in cases launched by multinational corporations against sovereign states using ISDS clauses in a number of trade deals, some of which were clearly aimed at limiting the ability of governments across the world to implement important legislation such as on labour rights or public health. This has led to an unprecedented mobilisation of trade unions, civil society and citizens across Europe to oppose the inclusion of such a mechanism in TTIP.
Labour MEPs were open to looking for real improvements, but so far the potential dangers outweigh the benefits of ISDS. We believe if the Commission is not serious about thorough reform it would be best to withdraw ISDS altogether. I was extremely disappointed that after launching a civil society consultation process on ISDS, to which over 150,000 stakeholders replied, adequate solutions have not yet been provided to the shortfalls it identified.
Labour MEPs and ETUC prioritise tax fraud
The Secretary General of the European Trade Union Conference (ETUC), Bernadette Segol, has come out strongly in favour of tackling tax avoidance and evasion as a way of funding investment to boost jobs and growth. Speaking at a conference on the issue she stated: “I hear a lot of concern about jobs and growth, but I see only the same failed solutions. I do not accept that structural reforms and fiscal responsibility are paying off. Much of what has been done in recent years has increased unemployment, increased precarious work, and killed demand. The one reform that is most needed, but which no one mentions, is to crack down on tax avoidance and evasion.”
Allowing companies to escape their tax obligations is the opposite of fiscal responsibility. Labour MEPs have a long history of fighting against tax evasion and aggressive tax avoidance. It was Labour MEPs who led for the centre-left Socialist and Democrats Group in drafting last year’s European Parliament Report calling for all multinational companies to be compelled to report what they earn, where they earn it and how much tax they pay as well as a common approach to tackling the use of tax havens and a blacklist of companies engaging in tax evasion. While citizens across the European U ion (EU) continue to see public services cut and living standards slashed, tax fraud and evasion is costing Member States €1 trillion a year. According the official UK Government figures, in the UK alone £9 billion is lost every year. This money could pay for the construction of more than 600 new schools or over 50 new hospitals, or pay for the annual salaries of over 330,000 police officers. Clearly we need legislation now and must no longer turn a blind eye to this tax injustice. Labour MEPs believe the European Commission must outline the urgent action it will take to fight tax fraud and evasion and David Cameron must demonstrate his commitment to tax justice by ensuring the issue of tax havens is on the agenda of the next European Council Summit in February.
Commission must deliver reforms to stimulate growth and jobs
Labour MEPs set three key targets for Lord Hill, Britain’s nominee for the European Commission, who was cross-examined by MEPs in Brussels prior to taking up his position. It was stated that the Commissioner-designate for Financial Services must ensure legislation passed in the last mandate is implemented, without being watered down; complete banking reform to regulate ‘shadow banking’ and improve access to finance for small and medium-sized enterprises (SMEs); and be a pragmatic voice in the debate over the future development of the European Union(EU), making sure that the reforms he will oversee deliver the best outcome for the people of Scotland and the rest of the UK.
David Martin, Scotland’s senior MEP said: ‘Lord Hill has a huge and vitally important task ahead of him. We all know what happens if the financial sector isn’t regulated properly. The effects are all around us: low growth, high unemployment and businesses struggling to get on as we all try to recover from the impact of the financial crisis.
‘He needs to maintain the high level of ambition of his predecessor for lasting reform that will make the financial sector safer and more stable, stimulating growth and jobs. If Lord Hill can demonstrate in the hearing today (Thursday 2 October) that he can deliver on these priorities, he should be confirmed as the next Commissioner for Financial Services.’
MEPs reiterate demands on trade to proposed Commissioner
Labour MEPs called on Trade Commissioner designate Cecilia Malmstrom to ensure public services including the National Health Service are excluded from trade agreements like the Transatlantic Trade and Investment Partnership (TTIP) – the comprehensive free trade and investment treaty currently being negotiated between the European Union and the USA. Ms Malsmtrom was questioned by MEPs from the European Parliament’s International Trade Committee at the start of the hearings of Commission nominees.
Jude Kirton-Darling, UK MEP, and Labour’s European spokesperson on TTIP and the Comprehensive Economic and Trade Agreement (CETA) (a free trade agreement between Canada and the European Union) asked her: ‘Will the inclusion of ratchet clauses and the ISDS not fuel public fears that privatisation of public services in the EU will never be reversed, regardless of citizens democratic choices?’ She continued: ‘Can you guarantee today that public services, including healthcare, social services, education, water and sanitation will be excluded form EU trade agreements, irrespective of how these services are organised and financed?’
David Martin MEP, spokesperson on International Trade for Labour’s Group in the European Parliament added: ‘Labour MEPs have already voted for environmental, health and employment legislation to be safeguarded from corporate legal challenges. We will continue to argue against ISDS in the EU-US trade agreement. It is not necessary between two countries with developed legal systems and it has a worrying precedent of challenging health legislation. ISDS gives foreign investors the ability to challenge EU or Member States’ legislation if they believe it violates their right to fair treatment under an EU investment agreement.
Corporate dominance of EU expert groups must end
The Left in the European Parliament believes that the new European Commission needs to tackle the persistent over-representation of corporate interests in its ‘expert groups’. We have highlighted this fundamental issue with the EU’s advisory groups in response to the European Ombudsman’s pubic consultation on the topic that closed yesterday (1 October). Research shows ‘expert groups’ continue to be dominated by business interests and that this can have a damaging impact on EU decisions. European trade unions and civil society organisations have evaluated the composition of these co-called expert groups. They conclude current rules of expert groups are inadequate as they do not prevent the fundamental problem of excessive corporate involvement nor are they clear enough to ensure consistency across the different departments of the Commission. New rules must address the imbalance in their composition, the secrecy of decision-making and the unfair application process to participate in expert groups. In 2012 the European Parliament lifted its freeze on the 2 million euro expert group budget on the condition that no stakeholder should have the majority of seats. Yet corporate interests represented more than 53% of seats within the groups created in the following year, compared to trade unions that never represent more than 14%. Environmental groups are not better represented. Business interests have an undue influence over public policy-making through the unbalanced composition of expert groups. Given that corporate interests rarely conform to public interests this is especially critical.