Joaquín Roy

By Joaquín Roy
MIAMI, Jun 27 2016 (IPS)

The hopes of many of those who confidently expected the British electorate to vote, by a slender margin, for the country to remain in the EU have been dashed. All that is left to do now is to ponder the causes and background of this regrettable event, and consider its likely consequences, especially for relations with the United States.

In the first place one must point out and – and this is a general criticism of the present British political system – that Prime Minister David Cameron was hugely irresponsible to steer his country into this risky adventure. It has resulted in the worst calamity to befall Britain in the last half century and has inflicted severe damage not only on the EU but also on all the countries of the North Atlantic rim.

Cameron went out on a limb, thinking to secure total control over the country for his Conservative Party for the next several years. Next he pursued a surrealist referendum campaign agenda, seeking to persuade the public to vote to remain in the EU, against the Brexit proposal that he himself had engineered. He relied on the advantages and special privileges promised to the UK by the EU if the British people voted to remain.

Brussels had already warned that the EU would not grant Britain any further concessions or benefits over and above the conditions that apply in common to all EU members. It pointed out that Britain was in fact already a privileged partner, having opted out of the common currency (the euro) under a special agreement that did not even fix a timescale for its putative future membership of the euro area.

London also retains full control of Britain’s borders, having declined to sign the innovative Schengen Agreement which abolished many internal borders and introduced passport-free movement across the 26 Schengen countries.

The EU has indeed done everything in its power to keep the UK government and people happy and flaunting their prized British exceptionalism.

And now the fateful moment is at hand. The effect on Europe has been devastating. The one possible advantage for the EU – which has discreetly remained unvoiced – is that of ridding itself of an awkward partner, a dinner guest with an unfortunate habit of drawing attention to itself in negative ways. Britain slammed the brakes on progress towards fuller European integration and was a temptation to other recalcitrant EU countries to follow its bad example.

Recently concerns were raised in Washington over the Brexit referendum.

President Barack Obama himself did his best to urge Britons to stick with the EU when he visited London in April.

Cameron, and the people who voted for the UK to leave the EU, have done Obama a disservice. Britain’s image in the United States will deteriorate to unprecedented depths. The vaunted special relationship between the U.S. and Britain will no longer be an effective force underpinning one of the strongest alliances in recent history.

The first victim of the debacle may be the approval process for the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union, which is already looking shaky, at least for the immediate future.

The TTIP was meant to replicate the Trans-Pacific Partnership (TPP), an ambitious deal to cut trade barriers, set labour and environmental standards and protect corporate intellectual property. The TPP was signed in principle by twelve Pacific Rim countries including the United States, and now awaits approval by legislators in each of the countries.

The rise of populism and anti-free trade sentiment is reflected in speeches by both U.S. presidential candidates, and is likely to slow down what is now viewed as “excessive globalisation”. There is a return to a style of nationalism that exerts control over economic as well as political initiatives.

The next U.S. president will find it difficult to advance their country’s alliance with London on defence issues. The UK will have freed itself from what was already problematic military cooperation with Europe, and only its link with the North Atlantic Treaty Organisation (NATO) will endure. Some European NATO partners will be cautious about developing joint operations with a fellow member they view as uncommitted to agreements within the EU.

In the matter of trade per se, Washington will not take kindly to the new position of the City of London once it has lost its enviable status as a financial hub embedded in the EU. Siren songs from other European capitals solidly anchored in the soon-to-be expanded European community will be hard to resist, especially if European leaders adopt policies to strengthen the euro zone.

In Latin America, Brexit will be read as a confirmation that supranational practices and thoroughgoing integration are no longer a priority for the UK. The referendum result sends the message that national sovereignty is now paramount. All the time and effort the EU has spent over the years to promote the advantages of the European model of integration, based on the strength of its treaties and the effectiveness of its institutions, will be regretted as a sheer waste of time and energy.

An alternative “model of integration” based on the U.S. agenda, favouring one-off arrangements or treaties limited in scope exclusively to trade issues, will prevail over the already weakened European model.

The Caribbean region has strong historical and cultural ties to Britain. It will suffer from a less secure bond with the UK and will incline more closely to Washington.

The continent of the Americas, which is closest to Britain from the point of view of history and culture as well as in political and economic terms, will thus find itself further apart from Europe than before.

Joaquin Roy is Jean Monnet Professor and Director of the European Union Centre at  the University of Miami.  jroy@Miami.edu

Translated by Valerie Dee

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By Martin Khor
GENEVA, May 12 2014 (Columnist Service)

The tide is turning against investment treaties and free trade agreements that contain the controversial investor-state dispute system, which allows foreign investors to take up cases against host governments and claim compensation of up to billions of dollars.

Recently, Indonesia has given notice that it will terminate its bilateral investment treaty (BIT) with the Netherlands, and says it will cancel all of its 67 bilateral investment treaties.

Indonesia joins South Africa, which last year announced it was ending all its BITS.

Several other countries are also reviewing their investment treaties. This was prompted by increasing numbers of cases being brought against governments by foreign companies which claim that changes in government policies or contracts affect their future profits.

Martin Khor

Many countries have been asked to pay large compensations to companies under the treaties. The biggest claim was against Ecuador, which has to pay a U.S. oil company 2.3 billion dollars for cancelling a contract.

The system empowering investors to sue governments in an international tribunal, thus bypassing national laws and courts, is a subject of controversy in Malaysia because it is part of the Trans-Pacific Partnership Agreement (TPPA) which the country is negotiating with 11 other nations.

The investor-state dispute settlement (ISDS) system is contained in free trade agreements (especially those involving the United States) and also in BITS which countries sign among themselves to protect foreign investors’ rights.

When these treaties containing ISDS were signed, many countries did not know they were opening themselves to legal cases that foreign investors can take up under loosely worded provisions that allow them to win cases where they claim they have not been treated fairly or expected revenues have been expropriated.

South Africa had been sued by a British mining company which claimed losses after the government introduced policies to boost the economic capacity of blacks to redress apartheid policies.

India is also reviewing its BITS, after many companies filed cases when the Supreme Court cancelled their 2G mobile communications licenses in the wake of a high-profile corruption scandal linked to the granting of the permits.

But it is not only developing countries that are becoming disillusioned by the ISDS. Europe is getting cold feet over the investor-state dispute mechanism in the Transatlantic Trade and Investment Partnership (TTIP) it is negotiating with the U.S., similar to the mechanism in the TPPA.

Several weeks ago, Germany told the European Commission that the TTIP must not have the investor-state dispute mechanism.

Brigitte Zypries, a Parliamentary State Secretary at the Ministry for Economic Affairs and Energy, told the German parliament that Berlin was determined to exclude arbitration rights from the TTIP deal, according to the Financial Times. “From the perspective of the [German] federal government, U.S. investors in the European Union have sufficient legal protection in the national courts,” she said.

The French trade minister had earlier voiced opposition to ISDS, while a report commissioned by the United Kingdom government also pointed out problems with the mechanism.

The European disillusionment has two causes. In first place, ISDS cases are also affecting EU countries.

Germany has been taken to the International Centre for Settlement of Investment Disputes (ICSID), an international arbitration institution that is a member of the World Bank Group, by the Swedish company Vattenfall which claimed it suffered over a billion euros in losses resulting from the government’s decision to phase out nuclear power after the Fukushima disaster.

And the European public is getting upset over the investment system. Two European organisations last year published a report showing how the international investment arbitration system is monopolised by a few big law firms, how the tribunals are riddled with conflicts of interest, and the arbitrary nature of tribunal decisions.

In January, the European Commission suspended negotiations with the U.S. on the ISDS provisions in the TTIP, and announced it would hold 90 days of consultations with the public over the issue.

In Australia, the previous government decided it would not have an ISDS clause in its future free trade agreements and BITs, following a case taken against it by Philip Morris International which claimed loss of profits because of laws requiring only plain packaging on cigarette boxes.

So far the U.S. has stuck to its position that ISDS has to be part of the TPPA and TTIP. However, if the emerging European opposition affects the TTIP negotiations, it could affect the TPPA as this would strengthen the position of those opposed to ISDS.
(END/COPYRIGHT IPS)

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