Will the Ombudsman rise to the occassion?

A few weeks ago I filed a complaint with the Ombudsman against the European Parliament over the secrecy of legal advice regarding ACTA. The Ombudsman replied that she didn’t want to investigate the complaint as I already got access to the documents (unofficially released versions). In a letter I ask her to reconsider the decision, as the decision seems not in line with an earlier Ombudsman decision, and, more importantly, an investigation could be of major importance.

Key paragraphs:

“The secrecy surrounding international negotiations is very problematic. For instance, the secrecy surrounding ACTA (Anti-Counterfeiting Trade Agreement) led to various European Parliament resolutions, two Ombudsman complaints and a Court case.

All these cases failed, as the “protection of the public interest as regards international relations” exception to openness has an “absolute” character. Once successfully invoked, the Institution does not have to balance it with the public interest in disclosure.

The Parliament even raised this international relations exception, that has such a devastating effect on openness, for legal advice it produced itself after the negotiations. This extends the brute force of the international relations exception beyond reasonable scope. The Parliament uses the international relations exception to negate landmark EU Court of Justice Turco case law on legal advice. In my complaint I challenge this over-extension by arguing that the Parliament erred in law. Challenging this over-extension and defending the landmark Turco case law on legal advice is of major importance.

Furthermore, I challenge the “absolute” character of the international relations exception by pointing out it is not compatible with human rights. If this reasoning finds acceptance, it may break the absolute character of the exception. It could lead to more open negotiations of international agreements. This would be of major importance too.”

The letter (pdf)

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ACTA-plus damages in EU-Singapore Free Trade Agreement

The EU and Singapore initialed and published the text of the EU-Singapore Free Trade Agreement (EUSFTA). The text contains the much criticized retail price damages, known from the Anti-Counterfeiting Trade Agreement (ACTA), the treaty the European Parliament rejected last year. On top of the retail price damages the judicial authorities have the authority to order the infringer to pay the right holder the infringer’s profits. This heightens the already very high damages.

Retail price damages in EUSFTA

Article 11.44.2 EUSFTA: “In determining the amount of damages for infringement of intellectual property rights, a Party’s judicial authorities shall have the authority to consider, inter alia, any legitimate measure of value the right holder submits, which may include lost profits, the value of the infringed goods or services measured by the market price, or the suggested retail price.” [fn 35] (pdf)

Infringer’s profits in EUSFTA

The article continues: “At least in cases of copyright or related rights infringement and trademark counterfeiting, each Party shall provide that its judicial authorities have the authority to order the infringer to pay the right holder the infringer’s profits that are attributable to the infringement, whether as an alternative to or in addition to or as part of the damages.” (emphasis added)

One of the options here is: in addition to the damages. That is above the ACTA damages.

Very high damages

Retail price damages can turn out very high. To give an example, a two terabyte hard disk can contain 540.000 songs. Imagine someone copies a hard disk full of songs. The rights holder can claim 540.000 euro, based on a retail price of 1 euro per song.

A judge may not award such damages, but the claim has a terrifying chilling effect. Who wouldn’t settle for one percent, 5400 euro? Otherwise, an infringer runs the risk of having to sell his or her house for copying a hard disk.

The threat of excessive damages payments will also have a chilling effect on Internet service providers, and so on the right to freedom of expression.

A second example. In emerging economies, including European, most people can’t afford to pay the retail price. They buy a copy, their only way to participate in cultural life – a human right.

Their enabler to the right to participate in cultural life may sell 100 illegal copies of a CD for 2 euro, the enabler then has a gross revenue of 200 euro. With damages based on retail price, the enabler may have to pay 2000 euro damages (100 x 20), ten times his gross revenue. And to add insult to injury, he may have to turn in his meager profits and may have his computer destroyed.

The secret negotiations led to ACTA-plus damages which will have a terrifying chilling effect and which will harm the right to freedom of expression, the right to participate in culture and the right to access to knowledge.

Some details

fn 35 reads: “In the case of the Union, this would also include, in appropriate cases, elements other than economic factors such as the moral prejudice caused to the right holder by the infringement.”

fn 33 reads: “A Party may exclude patents from the scope of Section C (Civil Enforcement of Intellectual Property Rights).”

Update

Marietje Schaake’s Parliamentary question to Commissioner de Gucht on ACTA provisions in EU-Singapore FTA text

Commission answer: http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2013-012147&language=EN

I’m not convinced by the commission’s answer. The commission writes that the overall principle is adequate damages, and “paragraph 2 of Article 11.44 of the EU-Singapore FTA only illustrates a wide range of optional methods”. Yes, but these optional methods are in my opinion above adequate, as I show above. When you give examples of adequate which are above adequate, you distort legal thinking, you mess with definitions.

Then, the article continues (see above) with “judicial authorities have the authority to order the infringer to pay the right holder the infringer’s profits that are attributable to the infringement, (…) in addition to (…) the damages.”

So this is in addition to the damages. Does the end result still have to be adequate, or can it go above that, as the text says “in addition”?

If the end result has to be adequate, just adequate without any addition would have been best. The FTA text is confusing, seems meant to create an upward trend.

The FTA exports EU law (Intellectual Property Rights Enforcement Directive (IPRED): inaudita altera parte, injunctions, etc). I’m not happy with that, as it takes away policy space needed for reform. Last year we had a consultation on reform of IPRED, the FFII argued that the EU has to bring IPRED in line with the ICESCR.

FFII, 2013, EU law and the International Covenant on Economic, Social and Cultural,
Rights (pdf)

See also: FFII, 2014, Make copyright compatible with the UN International Covenant on Economic, Social and Cultural Rights

Exporting IPRED makes that harder, and makes reform vulnerable for both state-to-state and investor-to-state dispute settlement (if the latter makes it to the agreement, there are plans to add it at some point).

Regarding Glyn’s question below, which I had overlooked (apologies): Yes, like ACTA the council and parliament will have to ratify it.

And then? Possibly the commission will propose to update IPRED, oh, it is not a change, just bring language up to date… And so the IP ratchet goes on.

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Complaint against European Parliament over secret legal advice

The European Parliament decided to keep the opinions of its legal service on the Anti-Counterfeiting Trade Agreement (ACTA) secret. I just filed a complaint with the ombudsman against the parliament over this. I argue that the decisions to keep the documents secret were acts of maladministration and a violation of the human right to participate, enshrined in the International Covenant on Economic, Social and Cultural Rights (ICESCR) and the International Covenant on Civil and Political rights (ICCPR).

ACTA is dead in Europe, this complaint is about access to documents – essential for civil society work.

In 2011 two parliamentary committees asked the parliament’s legal service an opinion on the Anti-Counterfeiting Trade Agreement. The legal affairs committee decided to release the opinions to the public. The parliament’s vice-president responsible for access to documents overturned this decision. The FFII filed an access to documents request but received almost completely blacked out documents. (Blog post with image)

EU regulation 1049/2001 on access to documents

The EU’s regulation on access to documents has a set of exceptions to openness that have to be balanced with the public interest in disclosure. Examples are the protection of legal advice and the protection of the ongoing decision-making process. The parliament raised both exceptions. In my complaint I provide counter-arguments and an overriding public interest in disclosure.

But the regulation on access to documents also has a set of exceptions to openness – with a broad discretion for the institutions – that do not have to be balanced with the public interest in disclosure. An example is the protection of the public interest as regards international relations.

If publication of documents may undermine this interest, the institutions do not have to balance this interest with the public interest in disclosure. Just a minimal undermining of the public interest as regards international relations, and secrecy is allowed, however big the public interest in disclosure may be.

This is the reason that all requests for the ACTA negotiation documents failed (FFII, In ‘t Veld, EDRi). Also in this case the parliament raised this exception that has such a devastating effect on openness. To counter this, I use two approaches: brute force and human rights.

Vienna Convention on the Law of Treaties

The parliament argued, based on Article 18 of the Vienna Convention on the Law of Treaties (VCLT), that the EU was under certain obligations concerning due and successful ratification of ACTA and that disclosure of the legal service’s opinions could undermine successful ratification in third countries, and thus harm the protection of the public interest as regards international relations.

In the complaint I argue that the parliament’s interpretation of the VCLT is not conform the VCLT text, the history of the VCLT or earlier interpretations of the VCLT. The Parliament erred in law. I conclude that disclosure of the legal service’s opinions is not in conflict with the Vienna Convention on the Law of Treaties or ACTA’s final provisions.

There were of course no certain obligations concerning due and successful ratification – the parliament itself rejected ACTA later on. This is the complaint’s core argument.

Human rights

In addition I argue that EU regulation 1049/2001 on access to documents has to be interpreted in a way that is compatible with the EU’s human rights obligations. I argue that the right to participate is a human right, enshrined in the International Covenant on Economic, Social and Cultural Rights and the International Covenant on Civil and Political rights. Limitations on the human right to participate are possible, but they have to be necessary in a democratic society and proportionate. Regulation 1049/2001 may give the institutions a broad discretion, the ICCPR and ICESCR have a stricter test. The parliament’s decisions fail this stricter test.

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Investor-to-state dispute settlement: a threat to democracy

At the Dutch international camping festival for hackers and makers OHM 2013 I gave a lightning talk about Investor-to-state dispute settlement. Below the text.

Investor-to-state dispute settlement: a threat to democracy

Welcome everyone,

I’m Ante Wessels. I’m involved with Vrijschrift and the Foundation for a Free Information Infrastructure. I will give a short talk about investor-to-state dispute settlement, or ISDS. Why is investor-to-state dispute settlement important?

Investor-to-state dispute settlement gives multinationals the right to sue states before special tribunals if changes in law may lead to lower profits than expected. Multinationals can attack environmental policies, health policies and reform of copyright and patent law. This undermines democracy, the rule of law and the public interest.

I will explain:
– how the system works
– why it ran out of hand
– what we can do about it

What is investor-to-state dispute settlement, how does it work?

International trade and investment treaties contain protections for foreign investors against expropriation, above local protections. For instance, protection against expropriation of a factory. Over the years, the protection got broader and broader. It now also includes expected future profits. If changes in law threaten to make profits lower, that is seen as expropriation.

In addition, multinationals do not have to use the local court system. The cases are decided by tribunals consisting of three investment lawyers. The tribunals are placed outside and above the local court system. Above the supreme courts of countries.

Let me give some examples.

After the nuclear disaster in Japan, the German government decided to close down two nuclear reactors. The Swedish company Vattenfall now claims 3.7 billion euro using investor-to-state dispute settlement.

Second example: Australia introduced health warnings on tobacco packaging. Tobacco company Philip Morris claimed that their trade marks lost value, and sued Australia in local courts. Philip Morris lost the court case and then started an ISDS arbitration case. As a result, Australia decided not to sign treaties with ISDS clauses any more.

Third example: Canada made some minor adjustments to its patent system to ascertain better access to medicine. United States pharmaceutical company Eli Lilly now claims 500 million dollar in ISDS arbitration.

Arbitrators have enormous powers. They also have a negative incentive.

Unlike judges, they are paid by the hour or by the day, very well paid. They have an incentive to let cases drag on. And they have an incentive to make the system more important by taking multinational friendly decisions.

The negative incentive has negative consequences. The legal costs are skyrocketing, in some cases the legal costs are more than 30 million dollar. The number of cases is rising sharply. The damages are rising.

Arbitrators wear many hats. They may also act as government official negotiating investment treaties, corporate lobbyist advocating investor-to-state dispute settlement, council defending the interest of corporations, media commentator and professor. The editorial boards of key journals consist of 50 to 100 percent arbitrators.

The small community of arbitrators is a captive incrowd. A very powerful captive incrowd.

In a democracy, strong institutions are essential. But, giving a captive incrowd enormous powers undermines democracy, the rule of law and the public interest.

What can we do?

Consumer and environmental groups already did a lot of work. The European Parliament is critical about ISDS. The digital community can help to tip the scale.

Note that adding safeguards to the system is not enough. A powerful captive incrowd can always find a way around safeguards. The only solution is exclusion, no investor-to-state dispute settlement in EU trade agreements.

——————–

Some links:

Videos of the OHM 2013 talks at the Nikhef server. No video of my talk yet. When available, the filename will start with d2-t2 (day 2, track 2).

Corporate Europe Observatory, 2012, Profiting from injustice – How law firms, arbitrators and financiers are fuelling an investment arbitration boom,

Investment agreements: A new threat to health and TRIPS flexibilities? By Carlos M. Correa

FFII condemns investor-to-state arbitration in trade talks with US

Glyn Moody: TTIP Update II

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Lightning talk about investor-to-state dispute settlement @ OHM 2013

This summer there will a another international camping festival for hackers and makers, and those with an inquisitive mind, OHM 2013.

I will give a short talk about investor-to-state dispute settlement. The announcement:

Investor – state dispute settlement: a threat to democracy

Why this talk?

Consumer and environmental groups identify investor-to-state dispute settlement (ISDS) as the most important threat in upcoming EU trade agreements. Investor-to-state dispute settlement gives multinationals the possibility to sue states for special tribunals if changes in law may lead to lower profits than expected. This threatens environmental policies, access to medicines and the public interest. ISDS undermines democracy and may hamper copyright and patent law reform.

Who

In 2012 Europeans massively protested against the Anti-Counterfeiting Trade Agreement (ACTA). ACTA threatened privacy, freedom of speech and access to medicine. ACTA could have made copyright and patent law reform impossible. In July 2012, the European Parliament overwhelmingly rejected ACTA. We now have to watch out for the return of ACTA-like provisions in other international agreements. But this is not the only threat we face. Investor-to-state dispute settlement is much less well known among digital activists, but it is just as threatening. I want to make the digital community aware of ISDS.

What

A lightning talk, just 5 minutes, an introduction on ISDS. A link to further reading. An invitation to discuss the issue further at the Noisy Square village at OHM.

How

In the presentation, I will have to explain a few things. What is ISDS: special rules and special tribunals. Special rules: International agreements give extra protection to foreign investors against expropriation. Over time, the scope of protection got broader and broader, from expropriation of a factory, to law changes that may make profits lower. Special tribunals: The tribunals consist of three lawyers. These tribunals fall outside the court system, are placed above the supreme courts of countries.

There are major problems: the ISDS system is ridden with conflicts of interest. Lawyers write investment plans for multinationals one day, and the next day they are “judges” in ISDS tribunals. I will give examples showing that multinationals can use ISDS to attack laws and decisions they do not like. The number of cases is rising sharply.

This moment in history: EU member states signed many bilateral investment treaties, but since the Lisbon Treaty, the EU is competent. From now on, the European Commission negotiates, the European Parliament has a veto. The parliament is critical about ISDS. Now is the time to get it right.

A major development, a game changer: the EU and US are going to negotiate a trade agreement, they want to create a single market. The European Commission wants ISDS in the trade agreement – while both the EU and US already have excellent protection against expropriation, and both have well respected courts. There are enormous EU < -> US investments, the scale of ISDS cases may be equally enormous.

This is a time not to be naive: the European Commission is aware of problems and wants to introduce safeguards. But specialized “courts” attract and create captive in-crowds. See the European Patent Office boards, or the US Court of Appeals for the Federal Circuit. Captive in-crowds can always find ways to route around safeguards. See for instance what the European Patent Office did with the exclusion of software patents.

There is only one real safeguard: exclusion of ISDS.

In societies based on the rule of law, strong institutions are essential. Captive institutions undermine democracy, the rule of law and the public interest.

See also CEO: Unravelling the spin: a guide to corporate rights in the EU-US trade deal

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CEO goes to court over access to documents, needs support

Corporate Europe Observatory (CEO) writes:

“Appeal filed over business lobbies’ privileged access in EU-India trade talks

Lobby watchdog Corporate Europe Observatory today appealed to the European Court of Justice a ruling from the EU’s General Court over information related to the EU-India free trade talks, which the European Commission shared with corporate lobby groups but later withheld from the public.”

The FFII criticised the earlier ruling in its comment on the EU – US trade agreement, “Openness and the right to participate“. It is great to see CEO appeals the ruling.

Corporate Europe Observatory has launched a donation call to cover the legal costs of the appeal.

Openness is essential. You may like to support CEO.

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Openness and the right to participate

Monday the EU and US will start negotiations on a trade agreement. Today the FFII sent a comment to the EU Commission and the EU Parliament rapporteurs on this agreement, with a focus on openness and the right to participate.

See the PDF version or below.

==========

FFII Comment on TTIP: Openness and the right to participate

Introduction

The EU and US are negotiating a Transatlantic Trade and Investment Partnership (TTIP) Agreement, also known as Transatlantic Free Trade Agreement (TAFTA). This FFII comment on the agreement has a focus on openness and the right to participate.

We conclude that the negotiations will have to take place as openly as possible and as closely as possible to the citizen. Open negotiations will lead to better results than secretive negotiations. Without openness, essential aspects of regulations – legitimacy, quality and balance – are at stake. Furthermore, we conclude that secrecy of the trade negotiations with the US violates the human right to participate of about 500 million Europeans.

Legitimacy, quality and balance

The trade tariffs between the EU and US are already low, the parties will especially seek regulatory convergence. Legitimacy and quality are essential aspects of regulations. And regulations have to be balanced.

The Treaty on European Union (TEU) provides guidance on how to ensure legitimacy, quality and balance. Article 1 TEU formulates openness as an inextricable characteristic of the EU: “an ever closer union among the peoples of Europe, in which decisions are taken as openly as possible and as closely as possible to the citizen”.

Article 1 of the TEU implies the Union can not take a path that leads to confidentiality, if a path leading to openness is available. The negotiations will have to take place as openly as possible and as closely as possible to the citizen.

Openness leads to better results

Negotiations in international organisations show that openness is possible. Geist (2012) noted regarding ACTA:

“Yet a closer examination of similar international IP negotiations reveals that ACTA’s opaque approach was not ‘an accepted practice’, but rather was out-of-step with many other global norm-setting exercises. The WTO, WIPO, WHO, UNCITRAL, UNIDROIT, UNCTAD, OECD, Hague Conference on Private International Law, and an assortment of other conventions were all far more open than ACTA.”

Openness is not only possible, it also leads to better results. Geist argues that confidentiality had a negative effect on the quality of the ACTA text:

“The damage created by the lack of transparency extends beyond public distrust of ACTA. The failure to include experts throughout the negotiation process has caused significant damage to the substance of the agreement with numerous legal concerns as a result. (…) While the public concern over these provisions appears to have resulted in changes to the ACTA text, the lack of transparency associated the negotiations meant that these cases constituted the rare instance of public feedback having an impact on the final text. Had the negotiations followed more conventional global norms, it is much more likely that the final text would better account for the remaining substantive concerns.”

Flynn (2013) compares the secrecy of ACTA (“dead on arrival”) with the openness of the negotiations on the WIPO treaty for the visually impaired. In the latter case, there were ongoing releases of draft negotiating documents, WIPO webcasted negotiations, and even established listening rooms where stakeholders could hear break rooms where negotiators were working on specific issues. The openness led to the Miracle In Marrakesh. (Saez, 2013)

Discrimination leads to biased results

On the US side, KEI (2013) notes that several hundred “cleared advisors” have special privileges as regard access to the text, and that the current advisory board system focuses too much on big corporate interests, and provides almost no input from consumer and public interest groups.

KEI: “Without the text being publicly made available, it is almost impossible to provide appropriate feedback for the very proposals that will affect the general public the most. When negotiations are kept secret, the general public is denied access to important information and also denied the opportunity to effectively engage in the democratic process. The general public should not be forced to rely on leaks in order to access the text. Leaks are not a reliable or predictable source of information, and people should not have to risk jail terms or career ending sanctions just to enable to broader public debate. (…) The precise working of the provisions, references to other documents or international instruments, and cross­references throughout the text are vitally important to fully understanding the impacts of the agreement as a whole. Oral briefings, without benefit of the actual text, are therefore inadequate sources of information. The U.S. government is now ignoring the expertise of the plethora of individuals who specialize in particular areas.”

The EU also has a system of advisors with special privileges as regard access to texts. For instance, in the context of the EU – India trade agreement, the Commission created an advisory committee to assist it in the identification of barriers to market access in India. The committee is composed of representatives of the Member States and chaired by the representative of the Commission. Representatives of trade associations or companies were involved in this process and participated, as experts, in the work of the advisory committee and of working groups established on the basis of sector-specific expertise. The Commission denied Stichting Corporate Europe Observatory access to texts distributed among trade associations and companies. The General Court (2013) in Luxembourg allowed this discrimination, and failed to provide useful guidance that could have been found in TEU articles 1, 9 and 10(3).

Identification of barriers to market access is important, but it is only one aspect of regulatory convergence. In the case of India, the EU just tries to impose it rules on India. That will not be possible in the trade negotiations with the US. In these negotiations, legitimacy, quality and balance of regulations are at stake.

If the Commission creates an advisory committee like in the case of the EU – India negotiations, the EU will discriminate against its citizens, and create a real risk that the negotiations will lead to a biased result. If the EU does not create such a committee, the US will be better organised, and multinationals will have access to information from the US. This too creates a real risk on a biased result.

If the Commission creates an advisory committee, it will have to open it for consumer and public interest groups. But then the negotiations will still not take place as openly as possible and as closely as possible to the citizen.

Openness is necessary, possible and leads to better results. A human rights analysis leads to the same conclusion.

Participation is a human right

All EU member states have ratified the International Covenant on Economic, Social and Cultural Rights (ICESCR). The EU’s obligation to respect, protect and fulfil the human rights enshrined in the ICESCR results from the constitutional traditions common to the Member States (article 6(3) TEU).

This was confirmed by the EU Court of Justice’s case law; in the case C-73/08 Bressol and Others, the Court gave a judgement on an alleged conflict between the Treaty on the functioning of the European Union and the ICESCR.

Citizens have a right to participate. Everyone has the right “to take part freely in an active and informed way, and without discrimination, in any important decision-making process that may have an impact on his or her way of life and on his or her rights under article 15, paragraph 1 (a)” of the International Covenant on Economic, Social and Cultural Rights, according to the UN Committee on Economic, Social and Cultural Rights, in its authoritative General comment No. 21. (ECOSOC, 2009)

In an answer to a European Parliament question regarding this human right, the Commission (2013) states that it attaches great importance to economic, social and cultural rights, and refers to article 11 TEU. But the Commission’s structured dialogue with civil society is seen by civil society as a waste of time, as there is only superficial information available. These meetings are neither informative, nor is this process without discrimination, as we saw above that trade associations and companies, or at least multinationals, receive more information.

Furthermore, the Commission disregards article 4 ICESCR. States may limit ICESCR rights, but only under three cumulative conditions as defined in Article 4 ICESCR:

“The States Parties to the present Covenant recognize that, in the enjoyment of those rights provided by the State in conformity with the present Covenant, the State may subject such rights only to such limitations as are determined by law only in so far as this may be compatible with the nature of these rights and solely for the purpose of promoting the general welfare in a democratic society.”

The EU meets the first condition, with Regulation (EC) No 1049/2001 regarding public access to European Parliament, Council and Commission documents the EU limits access to documents by law. But the secrecy of trade negotiations is not compatible with the human right to participate. Nor is the secrecy solely for the purpose of promoting the general welfare in a democratic society – we saw above that openness is possible and leads to better results.

We conclude that the secrecy of the trade negotiations with the US is not compatible with the ICESCR, and thus violates the human rights of about 500 million Europeans.

References

Commission, 2013, Answer to Question on EU-US trade agreement and obligations under the International Covenant on Economic, Social and Cultural Rights (ICESCR) http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E-2013-003301&language=EN

ECOSOC, 2009, Committee on Economic, Social and Cultural Rights, General comment No. 21, Right of everyone to take part in cultural life (art. 15, para. 1 (a), of the International Covenant on Economic, Social and Cultural Rights), E/C.12/GC/21, http://www2.ohchr.org/english/bodies/cescr/comments.htm

Flynn, 2013, WIPO Treaty for the Blind Shows that Transparency Can Work (and is Necessary) http://infojustice.org/archives/30027

Geist, 2012, The Trouble with ACTA: An Analysis of the Anti-Counterfeiting Trade Agreement, European Parliament Policy Department DG External Policies, http://www.europarl.europa.eu/committees/nl/studiesdownload.html?languageDocument=EN&file=73311

General Court, 7 June 2013, Case T‑93/11, Stichting Corporate Europe Observatory versus European Commission http://curia.europa.eu/juris/document/document.jsf?text=&docid=138132&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=665977

KEI, 2013, Comments on the Administration’s Intention to Enter Into Negotiations for the Transatlantic Trade and Investment Partnership (TTIP) Agreement http://keionline.org/node/1718

Saez, 2013, Miracle In Marrakesh: “Historic” Treaty For Visually Impaired Agreed http://www.ip-watch.org/2013/06/26/miracle-in-marrakesh-historic-treaty-for-visually-impaired-agreed/

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FFII condemns investor-to-state arbitration in trade talks with US

FFII press release:

Brussels, 14 June 2013 — The Foundation for a Free Information Infrastructure (FFII) condemns the inclusion of investor-to-state dispute settlement in the mandate for trade talks with the United States. Investor-to-state dispute settlement gives multinationals the possibility to sue states for special tribunals if changes in law may lead to lower profits than expected. This threatens democracy, the public interest and copyright and patent law reform, according to the FFII.

Today the EU Council is expected to grant the Commission a mandate to open trade negotiations with the United States.

During the discussions on the Anti-Counterfeiting Trade Agreement (ACTA), civil society groups warned that ACTA would make it impossible to reform dysfunctional aspects of copyright and patent law. A trade agreement with the US containing investor-to-state dispute settlement would have the same effect. One of ACTA’s most harmful aspects may return in an EU – US trade agreement.

Multinationals will be able to use billion euro claims to stop law changes in order to protect old or even harmful business models. After Germany decided to shut down older nuclear reactors Swedish energy group Vattenfall claimed 3.7 billion euro from Germany using investor-to-state dispute settlement. U.S. based pharma corporation Eli Lilly uses investor-to-state dispute settlement to challenge Canada’s patent law.

Multinationals will not have to use the well-functioning European court system to sue states. The special tribunals for multinationals will be placed above the high courts of the EU and the US. This is a fundamental design flaw, according to the FFII.

FFII analyst Ante Wessels: “Special interest tribunals above the European Court of Justice will distort the trias politica, the very foundation of our democracy. Naive politicians created a euro with design flaws, will equally naive European politicians hand over our democracies to multinationals? This is the most important question in the trade negotiations.”

Background information

The latest leaked draft mandate includes investor-to-state dispute settlement:

blogs.ft.com/brusselsblog/2013/06/france-films-foreign-trade-the-leaked-mandate/ and
http://blogs.r.ftdata.co.uk/brusselsblog/files/2013/06/TTIP-Rev-2-Mandate.pdf

See also Inside U.S. Trade – 06/07/2013: “In the June 5 meeting, other member states expressed reservations about the May 29 draft mandate, but it does not appear that they will oppose the entire mandate based on their positions, according to these sources. For example, Germany at the meeting this week said it is still not convinced that investment protection needs to be part of the trade agreement and that an investor-state dispute settlement mechanism is not needed in an agreement between two developed trading partners. However, sources said Germany seems willing to move past this reservation.”

Links

Friends of the Earth Europe, the European Consumers’ Organisation (BEUC) and Eurogroup for Animals, 2013, Warning sounded ahead of EU-US trade negotiations
http://www.foeeurope.org/warning-ahead-EU-US-trade-negotiations-110613

IP out of TAFTA – Civil Society Declaration signed by over 45 organisations
http://www.citizen.org/IP-out-of-TAFTA

Kelsey and Wallach, 2012, “Investor-State” Disputes in Trade Pacts Threaten Fundamental Principles of National Judicial Systems,
http://tpplegal.files.wordpress.com/2012/05/isds-domestic-legal-process-background-brief.pdf

Democracy Center, 2013, Unfair, Unsustainable, and Under the Radar – How Corporations use Global Investment Rules to Undermine A Sustainable Future,
http://democracyctr.org/new-report-unfair-unsustainable-and-under-the-radar/

Henning Grosse Ruse – Khan, 2012, Investor–State Arbitration to Challenge Host State Compliance with International IP Treaties?
http://worldtradelaw.typepad.com/ielpblog/2012/12/investor-state-arbitration-to-challenge-host-state-compliance-with-international-ip-treaties.html

Corporate Europe Observatory, 2012, Profiting from injustice – How law firms, arbitrators and financiers are fuelling an investment arbitration boom,
http://corporateeurope.org/publications/profiting-from-injustice

Permanent link to the press release:
http://press.ffii.org/Press%20releases/FFII%20condemns%20investor-to-state%20arbitration%20in%20trade%20talks%20with%20US

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EU Court allows more access to documents for companies than for citizens

Corporate Europe Observatory writes (CEO):

“Court ruling fails to stop business lobbies’ privileged access in EU-India trade talks

In a ruling delivered today following a lawsuit by lobby watchdog Corporate Europe Observatory, the EU’s General Court in Luxembourg concludes that the European Commission did not violate EU rules when withholding information about the EU-India free trade talks from the public, even though it had already shared the information with corporate lobby groups. Corporate Europe Observatory warns that this decision risks deepening the secrecy around EU trade negotiations and legitimises the Commission’s practice of granting corporate lobby groups privileged access to its policy-making, at the expense of the wider public interest.”

See CEO’s press release and the ruling.

The Court notes that “an advisory committee was created to assist the Commission in its task and, more specifically, to assist it in the identification of barriers to market access in the third State concerned and of measures capable of eliminating those barriers.”

The Court ruled that by sending documents to experts, including to trade associations with many members, the documents did not enter into the public domain.

The Court also ruled that CEO was not an invited expert, so discrimination was allowed.

I note, regarding expert groups:

- secrecy of negotiations is not full, experts can receive information,

- market access is not the only interest the EU has, there is room for more expert groups, for instance to assist the Commission in the identification of barriers to access to medicines, or to assist the Commission to better safeguard the public interest.

- in the European Parliament only the trade committee has access to documents, while there is essential expertise in other committees as well, and there is essential expertise outside the parliament. As the Commission can make an expert group, couldn’t the Parliament do that as well? (The Commission’s expert group is based on a Council decision.)

But expert groups are not the real answer. Citizen participation will lead to better results, and is a human right. Everyone has the right “to take part freely in an active and informed way, and without discrimination, in any important decision-making process that may have an impact on his or her way of life and on his or her rights under article 15, paragraph 1 (a)” of the International Covenant on Economic, Social and Cultural Rights.

The EU should respect our human right to participate.

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Positions on investor-to-state dispute settlement

Dutch newspaper De Volkskrant today opens with an article on investor-state dispute settlement (ISDS), stating that ISDS can have far-reaching effects on EU environmental laws. De Volkskrant writes it has a leaked draft of the EU – Canada trade agreement.

Jan Kleinheisterkamp of the London School of Economics says the concerns about ISDS are not unrealistic. He points to the Vattenfall – Germany case, involving a 3.7 billion euro claim against Germany.

Judith Merkies, MEP, S&D, says ISDS compromises the member states sovereignty.

Marietje Schaake, MEP (ALDE) finds the critique understandable, investment funds can fight, delay or influence new laws. But, she says, the critique shouldn’t be exaggerated. ISDS creates guarantees for companies and can help to stimulate investments.

I find Schaake’s position rather problematic. There are serious concerns that ISDS may undermine democracy and our ability to regulate for the public interest. This may be a defining moment. Just stating that concerns shouldn’t be exaggerated is too simple. And Brazil, the country attracting most foreign investments, does not sign ISDS clauses. Schaake’s reasoning fails.

According to De Volkskrant, the Netherlands is in favor of including ISDS in trade agreements, while Germany and France would show some hesitations.

See also:

Vrijschrift Foundation rejects EU – US trade mandate http://acta.ffii.org/?p=1903

Update:

See also: A Response To The Critics Of “Profiting From Injustice” http://kluwerarbitrationblog.com/blog/2013/01/02/a-response-to-the-critics-of-profiting-from-injustice/

The right to say no – EU-Canada trade agreement threatens fracking bans
http://www.tni.org/briefing/right-say-no

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