How do EU trade deals balance the rights of governments with those of investors?

How do EU trade deals balance the rights of governments with those of investors?

Many trade arrangements – including over 1,000 involving EU member countries – allow companies to seek compensation if they believe they’ve been discriminated against through government regulations. The 2009 Lisbon Treaty transferred responsibility for negotiating investment agreements to the EU.

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Clauses in trade agreements to protect investors are designed to give businesses the certainty they need to invest and create jobs. Public concern arose, however, when a cigarette company used these rules to sue Australia (unsuccessfully) over public health measures to tackle smoking, and a Swiss energy company sought compensation from Germany for phasing out nuclear power (the case is still pending).

Many also argued the arbitration tribunals where cases are decided give too much power to private interests without public scrutiny. After listening to these concerns, the European Commission proposed a new approach to investment protection, as well as a permanent Investment Court System with full-time judges to transparently resolve disputes.

The new rules, which were included in recent trade deals with Vietnam and Canada, define a limited set of rights for investors, while guaranteeing governments can regulate in the public interest.

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