25 May 2014

Dispute Resolution in the Proposed North Atlantic Free Trade Area





Although some such as George Monbiot do not approve of it (see "This transatlantic trade deal is a full-frontal assault on democracy" 4 Nov 2013 The Guardian) and many quite politically aware people are not even aware of it, negotiators from the United States and European Union have been hammering out a deal to create a North Atlantic Free Trade Area. If they succeed they will create a market of 800 million of the richest consumers on earth which should increase the GDP of all the countries in the arrangement enormously. An early discussion draft can be inspected here and news of the latest negotiations can be gleaned from the press conference above.

One of the reasons why Mr Monbiot does not like the deal is that disputes between businesses and governments will be determined not by the Court of Justice of the European Union or a national court but by arbitration as happens already under Chapter II of the North American Free Trade Agreement and a large number of bilateral investment treaties (see "Bilateral Investment Treaties: Claiming Compensation from Foreign Governments under Bilateral Investment Treaties for failing to provide adequate IP Protection" 27 July 2013). Mr. Monbiot sees that as somehow a threat to national sovereignty and even democracy. Personally I think he is wrong for two reasons. The first is that the respondent government gets to appoint one of the panel of arbitrators and secondly there is a right of appeal to the courts on a question of law (see the last 2 pages of the above draft).

Nevertheless, because of those concerns the European negotiators launched a public consultation on investor protection dispute resolution procedures on the 27 March 2014 (see "Questions and Answers: Public online consultation on investor protection in TTIP"  and the background paper "Investment Protection and Investor-to-State Dispute Settlement (ISDS) in EU agreements" published in March 2014).

I think this is a great opportunity for British business, especially our small and medium enterprises who stand to gain much from the harmonization of standards and regulatory controls and the measures to facilitate enforcement of intellectual property laws which are currently under discussion (see "The Transatlantic Trade and Investment Partnership: The Opportunities for Small and Medium Enterprises").

It is to be noted that the Transatlantic Trade and Investment Partnership is a project between the European Union and the United States only. Other countries in the European Economic Area such as Norway and Switzerland are not party to those discussions. If those countries are eventually allowed to join the free trade area they will do so on terms that they will not have helped to negotiate. Something that those who are minded to vote for UKIP or Scottish secession should think about.

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