Ars Technica UK
EU arts policies could lead to ISDS lawsuits, admits German government
"Trade" agreements could have a big impact on European culture, too.
By Glyn Moody
2 June 2015
The German federal government has admitted that an EU country’s arts policies could lead to it being sued by foreign corporations before investor tribunals under trade agreements being negotiated with Canada and the US. Both the Comprehensive Economic and Trade Agreement (CETA) and the Transatlantic Trade and Investment Partnership (TTIP) currently include the investor-state dispute settlement (ISDS) mechanism, which allows foreign investors to claim millions of pounds from governments for "indirect expropriation" such as an alleged loss of future profits.
Replying to a question from the left-wing parliamentary group, the German government confirmed that the supra-national ISDS tribunals could be used to claim compensation from the public purse for what investors saw as "unreasonable adverse effects on existing investments in the audiovisual sector." The comment, reported by Die Zeit, referred to the ISDS provisions in CETA, but would also apply to TTIP if it retains the planned ISDS chapter, which will be based on the EU trade agreement with Canada.
Although the German government went on to say that things like arts subsidies would not be affected, Die Zeit points out that ISDS tribunals are not bound by what national courts might rule, and have interpreted investor protection in trade agreements extremely broadly in the past. This underlines the fact that including ISDS in trade agreements creates a parallel legal system over which governments have no control. The threat to arts organisations—Die Zeit mentions publishers and museums as likely objects of interest for foreign investors—also underlines how CETA and TTIP go far beyond ordinary trade issues, and could affect key cultural aspects of life that have traditionally been decided democratically, not by lawyers in secret tribunals.
The cultural sector was one of the most controversial aspects of TTIP when the idea of a massive trade agreement was first raised. In the end, France managed to obtain a slightly ambiguous concession that excluded the audio-visual sector from the initial TTIP negotiations, but left open the possibility that it could be added in later. However, even if the arts are not included directly in the TTIP agreement, they could still be subject to any ISDS chapter.
That’s because the mandate (PDF) given by the European Commission to its TTIP negotiators does not exclude any sector, but says: "the investment protection chapter of the Agreement should cover a broad range of investors and their investments, intellectual property rights included." This means that planned changes to EU copyright law could potentially give rise to ISDS lawsuits from US companies if they feel that their European investments are harmed by modifications to EU law in this area. Similarly, even if the UK’s NHS is excluded from TTIP, re-nationalisation of privatised health services by a future UK government could still give rise to ISDS claims for billions of pounds from US companies that have invested in this sector.