Verbatim report of proceedings

Monday, 9 May 2011 - Strasbourg

22. Transitional arrangements for bilateral investment agreements between Member States and third countries (debate)

  President. – The next item is the report by Carl Schlyter, on behalf of the Committee on International Trade, on the proposal for a regulation of the European Parliament and of the Council establishing transitional arrangements for bilateral investment agreements between Member States and third countries

(COM(2010)0344 – C7-0172/2010 – 2010/0197(COD)) (A7-0148/2011).

  Carl Schlyter, rapporteur. – (SV) Madam President, this has been a complicated issue to deal with. We have over a thousand bilateral investment agreements. According to the Treaty of Lisbon, this falls within the competence of the EU. How should we handle this situation?

It is not proving to be very easy. We have had a lot of meetings and we have tried to find a common position, but without success. I might as well be honest about that. We will have to vote on it and see what Parliament’s position will be. I would have liked us to have had a position that we all agreed on in order to be better placed to enter into negotiations with the Council. We would then have been able to defend Parliament’s powers and principles as laid down in the Treaty. That was not to be, on account of the fact that this is a sensitive subject, particularly when it comes to how to deal with the old agreements. With regard to the new agreements that the Member States are continuing and are entitled to enter into, we could undoubtedly have agreed on a policy in which there is a reasonable balance between the rights of investors and other rights.

This was difficult to do with regard to the old agreements, however, and I have therefore retained the compromises that we proposed in committee, as the vote was very even. I still hope that we have a more up-to-date view of the investment agreements than was the case with many of these old agreements, where we were the ones who invested in other countries. Nowadays, we have at least as many investments coming into our Member States. We must therefore make sure that we have the necessary scope in our policy and also that investments are adapted to more developed, modern work in relation to the environment and social matters. We must defend this part of the Treaty. Investment policy cannot fail to take it into account, either. As I said, we will have to see how the vote goes tomorrow.

Another problem we have here is the fact that we cannot even use the reasoning of providing maximum protection for investments. That is not the right way to create legal certainty. Since the new trade policy is more balanced, we must also have a more balanced view of what maximum protection can entail. We surely do not want to provide maximum protection here to foreign state-owned companies, or even companies owned by dictatorships, at the expense of human rights and the environment. This is a balance that I hope we will be able to achieve. The idea is not that we should use investment agreements to achieve social objectives, but neither should they prevent us from achieving social and environmental objectives. This is a far-reaching debate.

Another important debate concerns transparency. We recognise that Parliament and the EU have been given new competences. The Commission is now responsible. Therefore, it must also have access to the documents. We must increase transparency. Many of these agreements were written at a time when there were hardly any cases of dispute settlements. Now we have more than 300 cases and ongoing procedures. This must, therefore, be opened up to better scrutiny. We cannot have this total secrecy and I very much hope that, irrespective of what we think about this link between policy and investment, when it comes to transparency, we can stand united and defend openness and the new competences bestowed on us by the Treaty. I truly hope that that will be the case. I therefore hope that Amendment 13 will receive support. Without it, we will have absolutely no democratic control over these procedures. We need this if we are to retain and defend legal certainty.

We are also seeing a tendency for many other countries, like the United States, Australia and Canada for example, to start to look at renewing their agreements. It will be good if we can agree to update the existing dispute mechanisms and judicial procedures, because these are outdated and need to be brought up to date and made more transparent. Then we will have an investment policy for the future. That will be dealt with in a different context – the debate about the future itself.

  Karel De Gucht, Member of the Commission. – Madam President, the regulation on transitional arrangements for bilateral investment treaties is an important legislative initiative. The Lisbon Treaty has entrusted the Union with a new exclusive competence on foreign direct investment.

The continued existence, since the entry into force of the Lisbon Treaty, of more than 1 200 investment-related international agreements concluded by Member States is not questioned under international law. However, it is incompatible, under EU law, with the new exclusive competence on foreign direct investment. At the same time, these agreements serve as a valuable source of legal protection for European investors operating abroad. Because the Lisbon Treaty does not contain arrangements clarifying the status of bilateral agreements, we need to establish legal certainty for investors benefiting from these agreements by authorising their continued existence.

While it is important to authorise existing investment agreements, it is also important to foresee the possibility of taking action in a cooperative manner to address important issues that could arise with regard to the content of the agreements and their interaction with EU investment policy. We have to reserve appropriate mechanisms for Union action to permit the development and implementation of the policy at EU level. I understand that, in relation to the Commission proposal, the scope for such action is the most difficult issue – for Parliament and even more so for the Council.

So the challenge we have here is to find a solution that safeguards the principles I have just outlined and is acceptable to both Parliament and the Council. We realise, in this respect, that there are still some considerable gaps to be bridged between the institutions but, at the end of the day, we will have to find a compromise in the interests of the EU and of its investors.

We believe that the amendments adopted by the Committee on International Trade constitute a basis for finding such a solution. They maintain fundamental trust in the Commission’s proposal but, at the same time, seek a potential compromise. We note with satisfaction here that Articles 5 and 6 would still leave the Commission the power to review investment agreements and withdraw authorisation should such agreements create major problems.

Given the positions of the main protagonists in this process, we will all have to show some level of flexibility. The Commission is ready to play its part, to be flexible and to facilitate an agreement between Parliament and the Council, but this cannot be at any cost. We will be vigilant on the basic principles of our proposal. The existence of the bilateral investment agreements needs to be safeguarded but, at the same time, we cannot unconditionally bless agreements if they create significant problems.

The Commission fully shares Parliament’s sentiment that the competence on investment should be exercised primarily at EU level, and we support the objective of Europeanisation of investment negotiations. However, I need to make clear that the Commission will not be able to negotiate with all countries targeted for investment protection by Member States. Our Member States have investment treaties with more than 100 countries. Replacing those will be a very gradual exercise, taking years. That is why it is important to create an effective mechanism empowering the Member States, under certain conditions, to continue negotiating and concluding bilateral investment agreements. Such a mechanism should respect the procedures and prerogatives of the institutions involved.

Finally, it needs to be emphasised that we are approaching a decisive stage of the legislative process, and time is becoming a major factor. It is important because the longer the adoption of the regulation takes, the longer the limbo period lasts, with the potential to create legal uncertainty for investors. I hope that, after the vote, Parliament and the Council can sit down together to find an early agreement on this issue. We are ready actively to support them in that endeavour.

  Paweł Zalewski, on behalf of the PPE Group. – (PL) Madam President, I would like to begin by thanking Mr Schlyter, who, as the main rapporteur, created the appropriate framework for the committee’s work in building a majority, in order to draw up a proposal which will achieve – and has achieved – a committee majority. As Mr Schlyter said, whatever happens tomorrow – the voting results are anyone’s guess – I hope they will reflect what has been done by the committee. Creating a common investment policy for the European Union is a very important step forward in the integration of the European Union. If firms within the European Union compete jointly within the same framework, on the same principles, the same should be true externally; they should have the same system of legal protection.

I also agree with Mr De Gucht. I am very pleased that he is supporting the proposal negotiated by the committee, because it really is a very good compromise between various standpoints: a compromise between the Commission’s standpoint, on the one hand, and the opinions presented by the Member States, and, on the other, it is compatible with investors’ interests, but most of all, it opens up good prospects for the Union’s investment policy in the future, serving the Union as a whole. It is very important that we are creating a new system, beginning by establishing a solid legal basis created by the agreements currently in force, and which were negotiated by Member States so that a common system of protection for the entire European Union could at last be established. It is important that the resolution which will be voted on tomorrow should be quickly agreed with the Council. This is something which is very important. I hope it will happen this year, with the active participation and support of the Commission.

  Monika Flašíková Beňová, on behalf of the S&D Group. – (SK) Madam President, Commissioner, ladies and gentlemen. In the era of the globalised economy, the European Union’s common commercial policy seems quite natural to us.

In this light, an initiative for the European Union to coordinate investment policy seems just as normal. The current system, relying on Member States’ numerous overlapping, and sometimes conflicting, bilateral investment agreements, should be replaced within a reasonable timeframe by a new framework of European Union investment agreements consistent with the horizontal objectives of EU policies. Personally, I would be in favour of placing the main emphasis on development policy. I agree with the rapporteur that the transition to the new regime should not take place overnight but should play out within a predetermined transitional period, the duration and rules of which should be established in advance so as to avoid any legal uncertainty. Without such a timeline, the regulation would allow parallel, potentially incompatible investment schemes to emerge.

A sufficiently long transition is needed to make the open-ended duality in EU investment policy unacceptable for Parliament, as the Treaty on the Functioning of the European Union states that investment policy is fully within the competence of the European Union.

  Niccolò Rinaldi, on behalf of the ALDE Group. – (IT) Madam President, Commissioner, ladies and gentlemen, I am grateful to Mr Schlyter for his excellent report on a sensitive issue on which a great deal of common sense is needed. Not all investment agreements can be replaced by European agreements, but not even the Commission can ignore agreements that infringe European provisions, and we agree with the rapporteur about placing the emphasis on transparency.

Ideally, we should have a clause that automatically repeals the 1 200 agreements currently in force. Unfortunately, however, that would mean legal uncertainty for investors and too much work, perhaps, for the Commission. Our amendments in the Committee on International Trade have been successful, firstly, in ensuring that the Commission’s powers are fully respected and, secondly, in stating that legal certainty should be guaranteed.

Some of the amendments on which we will be voting tomorrow in plenary may now alter this compromise and balance, and I call on my fellow Members, and the rapporteur and the shadow rapporteurs in particular, to come up with a balanced measure that is acceptable to all.

  Helmut Scholz, on behalf of the GUE/NGL Group. – (DE) Madam President, Mr De Gucht, ladies and gentlemen, I would also like to thank the rapporteur, Mr Schlyter, for his hard work and for trying, in the spirit of the European Parliament, to find a satisfactory compromise for all sides, and looking for the best solution and developing this on a cooperative basis. This is not a simple issue.

It involves a common European Union investment policy in the context of international trade policy with all their concomitant effects on the situation in the EU and the Member States with regard to social, economic and employment policy, weighing up the interests of financial groups, big business and economic enterprises, on the one hand, and those of the trade unions and workers on the other.

That is why it is important that such an agreement should be reached on a democratic basis and that citizen’s should remain confident in the controlling role of Parliament. For this reason, I hope that tomorrow’s vote will show that the compromise that has been sought is supported by Parliament.

  William (The Earl of) Dartmouth, on behalf of the EFD Group. – Madam President, the Lisbon Treaty is normally regarded as having been constitutional in its scope; but what we have here is an example of how the Lisbon Treaty will impact, and impact adversely, on the commerce of Member States. I know we are discussing transitional arrangements but what matters is that the Lisbon Treaty has removed from Member States the right to negotiate bilateral investment treaties.

Some time in the future, and it is still not clear when, bilateral investment treaties will fall under the Commission. Because of Lisbon, investment treaties can become an instrument for the Commission’s political objectives – and not just the Commission’s: we can be absolutely sure that the Greens will try to advance their political programme, and we have seen that in the trade treaties time after time. Attempts will be made to tack on to every investment treaty the full Green agenda.

Now the Greens are talented politicians – and I say this in admiration. They will often succeed, and in consequence, investment and hence commerce in all Member States will be hamstrung and hobbled. By contrast, countries outside the EU will not be subject to the Greens’ Pantomime of the Ents, if you remember those characters in the Lord of the Rings. It is all very, very depressing.

  Daniel Caspary (PPE). – (DE) Madam President, the security of investments both at home and abroad is of key importance for economic development both in Europe and in the relevant partner countries. The only way to secure existing jobs or to create new employment is by safeguarding investments.

That is why there are two things that I regard as being important. Firstly, the over one thousand agreements already in existence must be retained. It makes no sense to cast investors, Member States and others into a state of legal uncertainty.

Secondly, and this is particularly important for us: in future, we will have to have many common European agreements that apply to all 27 Member States and investors from these Member States if we are also to have a uniform level of protection within the European internal market.

For this reason, I am very grateful to my fellow Members – Mr Schlyter, as well as Mr Zalewski, Mr Sturdy and Mr Rinaldi – because they have tried and succeeded in finding a broad consensus. I think it would be a good thing if the other groups would reconsider this issue and recognise that the compromise on the table is actually a very good solution that tries to cater to all needs.

For my own group, I would like to state clearly once again that we want a good solution for investors, workers and Member States. We are looking for speedy negotiations with the Council, so that this issue is not put on the long finger, but that a solution is found soon.

On account of the differences between the groups, my group favours completing the first reading this week. Finally, I would like to add that we would be very open to finding a swift solution in the second reading – and we would be very grateful if this were possible – in other words, we would suggest that, rather than following the normal procedure of the second reading, we should try to find a so-called early second-reading agreement.

Once again, I would like to thank all those involved. I think that by adopting this legislative process, the Committee on International Trade is showing that we are capable of dealing with complex issues and complex dossiers within a reasonable timeframe.

  George Sabin Cutaş (S&D). – (RO) Madam President, since 2009, commercial policy has come under the exclusive remit of the European Union and we must now find a common denominator for a large part of foreign investment policy.

There will therefore be a transition period during which the competences relating to bilateral investment agreements between Member States and third countries will be transferred at EU level. In this situation, I believe that adopting an EU-level procedure for verifying and reviewing bilateral investment agreements is preferable to a formal intergovernmental arrangement. The role of completing the implementation of the changes must be given to the European Commission and not to Member States, so as to ensure protection of the common interest.

This is why the European executive has to guarantee both legal certainty for the investors due to be affected by the transition process and equivalent investment conditions for companies from all the European Union’s Member States.

  Bastiaan Belder (EFD). – (NL) Madam President, the Netherlands, my native Member State, has been a trading nation for centuries, and the Commissioner ought to respect that, because we have formed a single country through working together. The Dutch business community is amongst the largest investors worldwide. Indeed, the Netherlands has entered into 98 bilateral investment agreements with a very high level of protection.

The proposed authorisation system gives the Commission overly extensive powers to withdraw approval from current investment agreements and too little certainty for these. The threat that Member States might have to cancel their current bilateral investment agreements at the Commission’s instigation before the EU enters into a new agreement with an equivalent level of protection is unacceptable. Authorisations should only be withdrawn when the EU has negotiated a new agreement with an identical level of protection.

  Godelieve Quisthoudt-Rowohl (PPE). – (DE) Madam President, there are four issues I would like to address very briefly. The first is that this project should come under an enormous banner guaranteeing security and reliability for investors who wish to invest in the EU, as well as investors in the EU who wish to invest elsewhere. Both groups must be able to rely on the support of the existing contracts.

Secondly: while we should be very grateful to the rapporteur for his truly comprehensive work, we should avoid trying to pack too much into trade agreements. I must contradict the rapporteur because this is quite a typical process for dealing with differences of opinion at committee or parliamentary level and not everything can be accommodated by compromises. Accordingly, I should like to thank the rapporteur for his fairness in our cooperation. Let us wait and see how the vote goes tomorrow.

Thirdly, I welcome Mr De Gucht’s statement that the Commission was not questioning the existing agreements. This does not mean that the EU should not quickly conclude new agreements now that the Union has been reconstituted under the Treaty of Lisbon. However, if Mr De Gucht believes this to be the case, he will certainly agree with the significant weakening of the instrument for examining existing agreements, which we voted on in an amendment, and with the limitation of the reasons for withdrawing approval to four clear criteria.

Which brings me to my final point: it has been made quite plain in these discussions and during the committee’s work that there are different interests at stake here, depending on how many bilateral agreements one’s own country has concluded. That is why it is a good thing that a transitional period is clearly defined in this directive.

  John Bufton (EFD). – Madam President, out of some 2 500 bilateral investment treaties in the world, 1 500 concern EU Member States. Outside trade and investment are essential for economic recovery. I doubt whether many external markets trust trade packages with the EU in the light of the failing euro and the Commission’s botched attempts to save three of its Member States’ economies. What sort of effect will EU exclusive competency on bilateral investment have on Member States?

The UK has a trade deficit with the EU and relies on negotiations with third countries, many of which have been in place for years and relate to our Commonwealth of Nations.

I am appalled that the EU is seeking to implement a device to proffer national packages at Union level by majority voting, undermining the ability of individual Member States to gain or maintain advantages that may substantially support domestic economies. I would like to ask the Commission whether it actually recognises pacta sunt servanda in international law.

  Georgios Papastamkos (PPE). – (EL) Madam President, the adoption of a common foreign investment policy which safeguards equal treatment for all European investors is a very important move. However, until such time as it is possible to conclude investment agreements at Union level, a legal vacuum – the legal uncertainty referred to by Mr Caspary – needs to be avoided and the necessary security of law must exist for European investors. I would point out that the legislation of the Member States of the Union, in conjunction with unifying legislation, provide every guarantee needed for third country investors. On the other hand, if a high level of protection is to be safeguarded for Europeans investing in third countries, the current bilateral agreements executed by individual Member States of the Union need to remain in force.

The draft resolution does not, in my opinion, safeguard the necessary security of law in any way whatsoever. I refer, in particular, to the points relating to: firstly, the Commission’s discretionary powers to withdraw the authorisation to maintain existing agreements or to approve new negotiations to amend current or execute new agreements; secondly, the provision to review the legal framework within five years; and thirdly, the extremely time-consuming procedures for executing new agreements. The amendments adopted by the Committee on International Trade are, in my view, a move in the right direction. I repeat, the objective should be to maintain existing and simplify the procedure for executing and applying new bilateral agreements.

  Elena Băsescu (PPE). – (RO) Madam President, Member States’ investment policies must be harmonised at EU level as part of a common commercial policy. Member States should ensure that bilateral investment agreements are compatible with the Union’s development policies. The Commission must gradually replace existing agreements with new ones which will offer an ideal system for protecting investments. Due to the risky nature of direct foreign investments, a high level of legal certainty must be guaranteed during the transition period.

In this regard, I welcome the approach adopted by the Commission and rapporteur, based on coexistence. It is vital for bilateral agreements to remain in force and for Member States to be able to finalise negotiations or initiate new ones. Finally, I support setting a timeframe with a deadline for the transition from Member States’ bilateral agreements to EU international agreements.

  Jaroslav Paška (EFD). – (SK) Madam President, Commissioner, the protection of EU Member States’ cross-border investments has become an extremely complex and delicate issue following the adoption of the Treaty of Lisbon.

More than 1 200 bilateral investment agreements concluded by Member States under different, frequently incompatible, legal regimes need to be placed comprehensively under the auspices of the European Union without impairing the rights of the parties involved. The only possible way out of the legal stagnation brought about by transferring Member States’ powers to the European Union would appear to be a principle allowing both sets of agreements to coexist over a transitional period, in order for Member States to renegotiate existing bilateral agreements or, in line with EU investment policy, to complete negotiations on agreements under preparation.

Even so, proper cooperation between the Commission and Member States must be maintained throughout this process, so that there is absolutely no loss of legal certainty for investors and contracting parties.

  Karel De Gucht, Member of the Commission. – Madam President, I would simply like to touch upon the question that has been raised by several Members of this Parliament on compatibility with EU policies. We aim to be flexible and to achieve a good compromise for the transitional regulation.

These amendments go even further than the Commission’s initial proposal for the regulation, as they considerably expand the scope of the review and withdrawal mechanisms which are already a source of major concern for Member States and many Members of Parliament. These new criteria, relating to incompatibilities with established policies of the Union or general principles of the Union set out in Article 21 of the Treaty, could be regarded as opening the door to all sorts of additional requirements that existing investment agreements should meet. I believe such an approach would be strongly opposed by Member States as considerably increasing the level of legal uncertainty for investors benefiting from these agreements.

To return to the next steps in this procedure, I believe that tomorrow’s vote will be an important signal for all stakeholders in this process, and most notably also for the Council as regards the legislative procedure. The outcome of tomorrow’s vote will be discussed with the Ministers during the public debate next Friday. Next Friday, we have a Foreign Affairs Council on trade, and this will be one of the topics that we will discuss.

I hope – and I am confident – that your votes will provide the basis for an agreement. I understand that tomorrow, there will be a vote on the amendments and on the report as a whole but – as Mr Caspary, among others, has said – I hope that this will not hinder us from reaching an early agreement at second reading.

  Carl Schlyter, rapporteur. − (SV) Madam President, I would like to thank everyone who has participated in the debate. It has been difficult. Some points that were taken up by Mrs Quisthoudt-Rowohl and others relate to security and fairness. That is precisely what we are all agreed on: investments must be fair, people should be treated fairly and we must have a reasonable level of security. At the same time, we cannot over-protect them like molly-coddled infants. It is like a minefield sometimes; we take hits occasionally and we develop our awareness. On the other hand, the risks must be reasonably predictable and we must be able to understand what risks we are taking. If we are too over-protective, we will retain our old industries and miss out on the change and renewal that we need because we do not dare to take new decisions. That would be unfortunate. Therefore, I do not quite understand the Commissioner’s criticism of some of the compromises that are being tabled again here, as we refer to the Treaty and you are the ones who interpret how it is to be applied. We are very well aware that you cannot review every single agreement and query everything, but can only look at serious violations.

It is also good that we are in agreement that Articles 5 and 6 should be retained. It would be unfortunate if the Commission’s only means of querying an agreement were to be to take the matter to the European Court of Justice. If an agreement is called into question and the European Court of Justice says that the agreement is invalid, hundreds of agreements would suddenly become invalid without warning. That would certainly not be a practice that would result in legal certainty. It is important for Articles 5 and 6 to be retained.

I completely agree with Mr Caspary that our negotiations should be conducted quickly. Irrespective of how the vote goes tomorrow, it is important that we conduct the negotiations quickly. I have already spoken to the Hungarian Presidency and it is ready and willing to deal with this matter as soon as we have voted. It could also conceive of a decision at first reading, but it does not look as if that will be the case here.

I do not think that the Earl of Dartmouth need worry that the Greens will take over investment policy. There are many forces that wish to keep it precisely as it has been for the last 50 years. I have to say that even if you admire our political capability to get proposals through, please do not exaggerate it. For my part, I admire your rhetorical skills. With their help, perhaps we could get even more green policy through.

As I have already said, we will have to vote this week and see how it goes. I would like to thank those involved and also the Hungarian Presidency, which I have met with on a number of occasions.

  President. – The debate is closed.

The vote will take place on Tuesday, 10 May 2011.

Written statements (Rule 149)

  Andreas Mölzer (NI), in writing. – (DE) An attempt has been made at both WTO and OECD level to introduce comprehensive multinational regulations for foreign direct investment, or FDI, that would apply to all economic sectors. The legal protection offered by the bilateral investment treaties (BITs) is important in ensuring that businesses are encouraged to take the step of investing abroad, which can cost many millions. The EU is both a recipient and provider of foreign direct investment. It remains to be seen whether a move to coordinate the good 200 BITs in operation in the European Union can finally resolve the problem whereby binding BIT arbitration judgments based on international law entail commitments to investors by Member States that give rise to EU Treaty infringement proceedings. Direct investment is certainly not the miracle cure claimed during the economic transformation of Central and Eastern Europe, for example. Although greater predictability in relation to FDI opportunities for EU investors is something to be welcomed, the potential negative aspects of investment policy, for example, the fear among the local population of redundancies and wage cuts due to outsourcing and the relocation of production, should not be swept under the carpet. Likewise, we need to make it clear to developing countries that FDI can only improve living standards if the fundamental institutional requirements are met, such as clear property rights, the independence of the legal system, and political stability. I believe there is a lack of honesty in relation to this pseudo-humanitarian development aid.