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Germany Reverses its Support for Investor-State Dispute Settlement in the Transatlantic Trade and Investment Partnership (TTIP)

Germany has announced that it is opposing the inclusion of investor-state dispute settlement (ISDS) in the TTIP.  Brigitte Zypries, a German junior Economy Minster, recently advised the German parliament that “special investment protection rules are not necessary” in the TTIP because “US investors in the European union have sufficient legal protection in the national courts.”  This announcement will present another complication for TTIP investment negotiators, particularly as France has previously expressed its opposition to including ISDS in the TTIP.

Germany’s announcement appears to represent a stark reversal of its long-held position in support of expansive, robust investment treaties providing for strong ISDS.  In fact, Germany has entered-into more Bilateral Investment Treaties than any other nation to date.

Germany’s recently announced opposition to the inclusion of ISDS in the TTIP contrasts with publicly expressed support from the European Commission and the Office of the United States Trade Representative (USTR).  Lead TTIP negotiators voiced strong support for ISDS at the conclusion of the most recent TTIP round earlier this month in Brussels.   ISDS also is strongly supported by both the American and European business communities, and both the American Chamber of Commerce to the EU and BusinessEurope have publicly urged that ISDS be included in the TTIP.

Germany’s announcement highlights the challenges facing TTIP negotiators, and a confrontation over ISDS is somewhat surprising in light of the strong, mutual interest of the US and EU in promoting investment protections.  Further progress in the TTIP on this issue, however, will have to wait for the conclusion of the EU pause of investment chapter talks announced in January to allow the European Commission to undertake a three-month long public consultation on the proposed investment chapter.  Because the European Commission published the public consultation questionnaire on March 27, 2014, the EU pause will last until late-June at the earliest. The U.S. business community has strongly urged the U.S. Government not to conduct a similar review in light of the Obama Administration’s three-year assessment of U.S. investment policy that produced the 2012 U.S. Model Bilateral Investment Treaty. The Office of the US Trade Representative recently acknowledged its 2009-2012 formal consultation process on investment policy and emphasized its consistent engagement with stakeholder, legislators, and the public on TTIP.