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Why TTIP has to be rethought
The current debate about the planned Transatlantic Trade and Investment Partnership (TTIP) between the European Union and the United States concerns a number of contested areas, but the potential impact of a chapter on investment protection with investor-state dispute settlement (ISDS) is certainly the most prominent aspect of the discussions. In light of an increasing critique of investment protection in the TTIP, the European Commission held a public consultation on the subject between March and July 2014.The consultation generated almost 150.000 online contributions. The Commission still analyses the responses and will produce a report on the results of the consultation.
The EU approach towards investment protection and ISDS as described and explained in the consultation documents contains a number of improvements compared with traditional BITs, including BITs of some of the EU Member States. If one considers the system of investment protection generally to be useful and assumes that this system can be improved through reforms the EU approach should be perceived as a step in the right direction as it contains a number of useful improvements.
These improvements concern inter alia a clarification that pure letter-box companies will not benefit from investment protection; the clarification and limitation of the scope of the concepts of fair and equitable treatment and indirect expropriation; and mandatory transparency requirements for ISDS.
However, even from a perspective which considers an improved investment protection system including a reformed ISDS to be more desirable than no investment protection, the EU approach does not seem satisfying, because it fails to incorporate reform proposals which have been advanced in recent debates and treaty practice.