The analysis “The hidden cost of EU trade agreements” has been prepared by Friends of the Earth Europe together with partner organizations, including “Za Zemiata” Environmental Association. The analysis shows the extent to which the inclusion of special arbitration rights in previous trade agreements has allowed companies to sue governments in secret courts. [1"> The new agreements to be signed between the EU and Canada (CETA), and the EU and the USA (TTIP), will significantly increase the risk of lawsuits and compensations paid by state budgets in cases where new laws or policies prevent return on investment. [2">
According to the survey, member states from Eastern Europe were hit the hardest by compensation claims. Poland is first in the list, 2bn euros as compensation, as a result of its agreement with Dutch insurance company Eureko. Laws related to the environment are the most attacked, making up to two thirds of the documented cases. The study covers 127 cases under bilateral investment treaties and other international agreements. Because of the secretive nature of the arbitration process, some of the information regarding claimed and paid amounts of money is not available.
Ivaylo Popov from “Za Zemiata” comments: “The secrecy around the ISDS arbitration means that these figures may be only the tip of the iceberg. The huge amount of money to be paid leavs no doubt that such special protection of foreign investors is an unreasonable burden for the taxpayers. If CETA and TTPI with such arbitration clauses are signed, we expect to see a rise in the number of claims and compensations reaching billions of euros. The citizens of the European countries will be forced to pay these sums.”
We remind that last week the European Commission published its long-awaited results of the public consultation regarding the inclusion of arbitration mechanisms in the trade agreement with the US. While the majority of the people entirely rejected the special privileges for investors, the European Commission said that the focus of the consultation was how to reform ISDS and find the right balance. More than 97% of the citizens’ responses clearly stand against the inclusion of the mechanism in the trade agreement. However, the European Commission announced its plans to continue with reforms without giving up the mechanism. [3">
Key findings in the survey include:
- A total of 127 lawsuits have been filed against 20 member states under ISDS since 1994;
- Details of the compensations claimed by foreign investors are publicly available in only 62 of 127 cases (48%) and amount to about 29bn euros;
- The largest amount paid in arbitration against the state is 553mn euros (in the case Československá obchodní Banka against the Slovak Republic);
- The agreement signed under ISDS and having the largest known compensation, 2bn euros, was between Poland and Eureko, a Dutch insurance company;
- 76% of the lawsuits (97 out of 127) were against new member states, which joined the EU between 2004 and 2007;
- 26 claims under ISDS have been filed against the Czech Republic (20% of the total), making it the member state with the highest number of lawsuits;
- 60% of the cases (75 out of 127) refer to environmental protection legislation adopted by the states.
Ivaylo Popov from “Za Zemiata” adds: “These special privileges of investors have a dangerous blocking effect on policies and legislation aiming to protect the people and the environment. That is why, 140,000 of all 150,000 citizens who participated in the public consultation on ISDS said “No to ISDS”. Commercial transactions between the EU and the US, and the EU and Canada are a Trojan horse that will threaten democracy and therefore we are against them.”
NOTES:
[1"> The hidden cost of EU trade agreements: lawsuits against member states of the EU using the mechanism for settling disputes between investors and the state. http://zazemiata.org/v1/uploads/media/ISDS-BG.pdf
[2"> The ISDS mechanism proposed in CETA does not solve the main flaws in the system and leaves dangerous loopholes, which threaten democracy and fundamental policies focused on protection of citizens and the environment. http://www.foeeurope.org/trading-away-democracy-cetas-investor-protection-rules-threaten-public-good-191114
[3"> More information can be found here: http://zazemiata.org/v1/Novini-CHetene.368.0.html?&tx_ttnews%5Btt_news%5D=234&cHash=817b405535a4e2ff18023cc95873f344
Over 3.5bn euro costs for EU countries due to mechanisms similar to those discussed within the trade agreement between EU and US
