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A Critical Opportunity to Promote Gold Standard Investment Protections

The United States and the European Union are currently negotiating a comprehensive, high standard trade agreement.  Launched in 2013, the Transatlantic Trade and Investment Partnership (TTIP) seeks to unlock economic growth by further opening the US and EU markets, addressing regulatory barriers that result in significant costs to companies operating or seeking to operate on both sides of the Atlantic, and strengthening rules-based investment.  Equally important, TTIP will hopefully serve as a template for future trade agreements and elevate global standards.

While the negotiations are still in their infancy, one issue that has become quite politicized during these negotiations is Investor-State Dispute Settlement (ISDS).  When countries devote a significant amount of time to locking in high standard rules for investment, it is critical that there are mechanisms in place to make sure these rules are enforced.   An important component of investor protections is therefore to ensure that foreign investors are protected against discrimination, arbitrary treatment, and expropriation and that they can have their claims – should any arise – heard before a neutral tribunal.

Critics are pitting investor-state protections against the right of countries to regulate in the public interest.  However, investor state dispute settlement has been a fundamental component of international trade agreements for more than half a century.  There are more than 3,000 agreements that include investor provisions globally.  EU Member States are party to at least 1400 of such agreements.  Despite the ubiquitous nature of these agreements, and little to no evidence that these agreements have curtailed a country’s ability to regulate, much ado is currently being made about whether they should be included in TTIP.

The US and EU represent the world’s largest investment relationship; that alone should be a strong enough reason to ensure high standard investor protections.  The United States and the EU are also currently seeking to secure robust investor protections in other markets.  For example, both countries are negotiating investment treaties with China.  Thus, how investor protections and ISDS are dealt with in TTIP will have significant consequences for how these parallel negotiations play out in China and other third country markets.

In March of this year, the European Commission announced a “pause” in the investment negotiations in order to launch a public consultation process on investment and ISDS in TTIP.  These comments are due on July 7.  Now is a critical time to communicate the value of strong and effective investor state provisions.  We urge companies and associations to make sure their voices are heard in this process.

© 2020 Covington & Burling LLPNational Law Review, Volume IV, Number 175

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About this Author

Gina Vetere, Regulatory and public policy lawyer, Covington
Of Counsel

Gina Vetere provides legal and strategic advice to clients on international trade and global policy matters. Ms. Vetere counsels clients on the negotiation, implementation and enforcement of bilateral and multilateral trade agreements, including in the areas of intellectual property, market access, regulatory trade barriers, online commerce, competition, and investment.

Ms. Vetere joined Covington after serving as executive director for international IP at the U.S. Chamber of Commerce’s Global Intellectual Property Center (GIPC), where she led industry efforts to...

202.662.5647
Marney Cheek, International trade attorney, Covington
Partner

Marney Cheek is co-chair of the firm’s Arbitration Practice Group. She represents both states and corporate clients in complex international disputes, drawing upon her expertise in public international law, investment, and trade matters. She handles international disputes before numerous tribunals, advises on complex commercial and investment treaty cases, and litigates international law issues in U.S. Courts. Her practice spans a range of jurisdictions and industries. She is recognized by Chambers and Legal 500 as a leading arbitration practitioner.

202-662-5267