EU seeks solution to keep arbitration in U.S. trade deal

Wed Mar 18, 2015 12:20pm EDT
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By Robin Emmott

BRUSSELS (Reuters) - The EU's trade chief sought on Wednesday to overcome one of the biggest disputes blocking an accord with the United States, offering to radically change the way companies would resolve conflicts in transatlantic business.

Cecilia Malmstrom, the European Union's trade commissioner, said arbitration must be part of any EU-U.S. free-trade pact, which would be the world's biggest, but that "it has to be a different animal" from current investment courts.

"The question about investment protection is not whether we should do it but how we can do it right," Malmstrom told the European Parliament's international trade committee.

"We want the rule of law, not the rule of lawyers."

Many Europeans fear U.S. multinationals will use the so-called investor-to-state dispute settlement (ISDS) mechanism to challenge food and environmental laws in Europe on the grounds that these restrict free commerce.

Malmstrom is trying to convince a skeptical European Parliament, which must sign off on any deal, to support an accord containing investment arbitration because the United States says it cannot accept a deal without it.

An accord encompassing almost half the global economy could generate $100 billion a year in additional economic output on both sides of the Atlantic, but in Europe many feel a deal would only benefit big companies.

While sensitive issues range from genetically-modified crops to how chicken is disinfected in the United States, no other subject has united European opposition to the proposed EU-U.S. accord as much as investment arbitration.   Continued...

European Home Affairs Commissioner Cecilia Malmstrom addresses a news conference on the European Cybercrime Centre (EC3) at the EU Commission headquarters in Brussels February 10, 2014.  REUTERS/Francois Lenoir