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Will the next US-EU trade pact prevent Brussels acting against US tech giants?

'It's not a question of whether, but of how much'

Internet Security Threat Report 2014

The European Union government in recent years has proven to be perhaps the most willing to take on the world's major tech companies over digital rights and wrongs. But that could come to an end if planned measures allowing companies to sue governments for lost profits are implemented as part of the next EU-US trade agreement.

A controversial chapter of the agreement currently being negotiated would give multinationals the right to sue the government concerned if new laws lead to lower profits. So if, for example, a new law caused Apple’s profits - or Google’s, or Samsung’s, or Amazon’s, or any of a thousand others - to drop sharply they could take the government to tribunal.

Such an action could have followed such previous events as the EU forcing Microsoft to institute browser choice, or the recent ECJ "right to be forgotten" ruling, which could end up throwing a significant administration burden on Google and other search engines. It might stymie ongoing moves by the EU to enforce stricter intellectual-property compliance on the internet giants, too.

Digital civil liberties groups have reacted with horror to the suggestion that investor-to-state dispute settlement (ISDS) will be enshrined in the Transatlantic Trade and Investment Partnership (TTIP) agreement being negotiated in Brussels this week.

Since last year, groups such as EDRi, La Quadrature du Net and Transatlantic Consumer Dialogue, have been banging a drum to get ISDS thrown out of agreement altogether. However these hopes were dealt a blow on Tuesday when the EU’s Trade Commissioner, Karel de Gucht, told the European Parliament that it’s not a question of if ISDS will be in the agreement, it’s what sort of ISDS Europe and the USA will get.

The 6th round of talks finished today in Brussels with little movement on the issue. In response to the civil liberties outcry, the European Commission held a public consultation, which closed on Sunday. They apparently received more than 150,000 responses, but the vast majority of these were cut-and-paste replies drafted by lobby groups rather than original responses, according to one Brussels insider.

Dutch MEP Marietje Schaake told the Register she was unconvinced of the need for ISDS in TTIP at all:

“There are many concerns with ISDS, which already exists in many of the approximately 1400 bilateral agreements between the EU and third countries already. However, I believe we need to take the many submissions seriously.”

She added that she would push the Commission to work as fast as possible to make an assessment of the public consultation. But this is not likely to be fast enough for any any concrete proposals to make it to the next round of negotiations in the US in September.

Another big concern with the ISDS process as set out is that the judges are independent arbitrators who are paid by the day. They therefore have a clear interest in dragging out cases as long as possible and, since companies are the ones who initiate cases, to give them the incentive to keep doing so by awarding large payouts.

A growing number of civil society groups see ISDS as a threat to democracy, which would prevent any form of effective government action against large companies in general and the web giants in particular. The campaigners are particularly concerned that anything in TTIP will end up becoming de facto EU law - not an unreasonable position since it is practically impossible to withdraw from trade agreements.

Ante Wessels from the Foundation for a Free Information Infrastructure (FFII), says ISDS has “all the characteristics of a rigged system”. Multinationals will be able to challenge reform of copyright and patent law, intellectual property rights and consumer privacy, he said. ®

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