TTIP receives a lot of criticism. But it is by far not the only free-trade agreement in the world. In fact our much acclaimed EU started as a free-trade agreement.

E.g. people worry about the arbitration courts (ISDS). However I do not know if this is anything special, or just something that tends to be part of a free-trade agreement. Is this something, that is unique to TTIP?

Likewise for the other arguments, like negotiations being held in secret. Are free-trade agreements usually negotiated in public? I don't recall much public debate about the free-trade aspects of the EU, but I may be wrong.

Obviously the fact the this is a free-trade agreement between the EU and the USA makes it unique, but other than that, what is there that smells more funny than free-trade agreements usually smell?


After asking a couple of friends and reading the comments here, the following peculiarities are on the table:

  • The parties of TTIP are extraordinarily diverse, particularly when it comes to liability issues. While the EU bets on tight "preventive" regulations, the US tends to sue companies after the fact. However, this may just be the usual mud you have to wade through when you negotiate a free-trade agreement.

  • The negotiations are not performed by politicians but by businessmen. Not sure if this is really unusual. Some people are afraid of giving "the industry" too much power over polititicans, though IMHO this gives politicians and regulators more credit than they deserve.

I don't know if any of that is really unusual, because I don't know the details of the roundabout seven other free trade agreements in the world.

ISDS appears not to be special at all. It seems obvious that you cannot settle investor state disputes within the jurisdiction of the offending country, though maybe there are better ways than how TTIP's ISDS is currently designed.

And personally, I don't buy the "chlorine washed chicken" story as anything unusual.

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    The primary reason for TTIP to be criticized now is that it is in negotiation now. Other trade agreements would have to be renegotiated to be changed. TTIP could be rejected or modified before being ratified.
    – Brythan
    Aug 10, 2016 at 1:24

1 Answer 1


ISDS is not unique to TTIP, and ISDS is not new. It is also contained in CETA, NAFTA, TPP, and many bilateral trade agreements. However, not all free trade agreements include ISDS, and countries like Brazil refuse to sign treaties of which ISDS is a component.

ISDS is criticised by many, including by The Economist (not your average socialist magazine):

ISDS first appeared in a bilateral trade agreement between Germany and Pakistan in 1959. The intention was to encourage foreign investment by protecting investors from discrimination or expropriation. But the implementation of this laudable idea has been disastrous. It has become so controversial that it threatens to scupper trade deals the European Union is negotiating with both America and Canada.

The number of cases has increased dramatically in recent years, as has the nature of the cases. This has led to increased criticism.

There are several reasons for the sharp rise in contentious arbitrations, says Lori Wallach of Public Citizen, a watchdog group. Companies have learnt how to exploit ISDS clauses, even going as far as buying firms in jurisdictions where they apply simply to gain access to them. Arbitrators are paid $600-700 an hour, giving them little incentive to dismiss cases out of hand; the secretive nature of the arbitration process and the lack of any requirement to consider precedent allows plenty of scope for creative adjudications.

ISDS within TTIP and CETA would cement ISDS between EU and USA for decades to come, at a time that many are increasingly critical of ISDS. ISDS-cases have existed in Europe, such as Vattenfall vs. Germany suing for damages following Germany's exit from nuclear power (compare views by Vattenfall, and views by Friends of the Earth). Many criticise that the definitions of when companies can sue is too vague and fear that TTIP and CETA would open up to many, many more cases than are currently happening.

Other examples of ISDS cases include governments limiting the use of dangerous chemicals or the advertising of tobacco. One can find some examples at Wikipedia. Philip Morris sued Uruguay for anti-tobacco legislation. In this case, ICSID ruled in Uruguay's favour, but many would argue international courts have no business to tell countries to pay damages to compensate foreign companies for losses in profits, where those are the consequence of protecting health, environment, labour, or other externalities.

Another example, quoted from the aforementioned Wikipedia article:

Between 1995 and 1997 the Canadian government banned the export of toxic PCB waste, in order to comply with its obligations under the Basel Convention, of which the United States is not a party. Waste treatment company S.D. Myers then sued the Canadian government under NAFTA Chapter 11 for $20 million in damages. The claim was upheld by a NAFTA Tribunal in 2000.

In other words: Canada met treaty obligations by protecting the environment, but was then sued because environmental regulation caused economic losses for the waste treatment company. Canada lost.

Personally, I believe ISDS in its overly broad and vague form is incompatible with democracy and a threat to freedom and democracy in countries around the world. It's one thing to protect companies against unlawful expropriation, it's an entirely other thing to protect companies against a projected loss in profit due to changes in legislation designed to protect real externalities.

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    That's a pretty bad example of ISDS, because it's a case which the company lost because Uruguay didn't violate the treaty. ISDS is about discriminating against products from other countries, and is a way to enforce the treay when you can't trust national courts to be independent of the government (which you often can't). Using a case which did not fall within the treaty as your example of what ISDS does is giving an extremely biased and inaccurate perception.
    – cpast
    Aug 9, 2016 at 12:18
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    @cpast ISDS is not about discriminating against products from other countries. ISDS is about companies suing countries when governments take decisions that threaten the investment position. There are plenty of other examples, including where the company did win, as the Wikipedia article shows. I can replace it with an example where the company won, if that makes you happier.
    – gerrit
    Aug 9, 2016 at 13:56
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    @gerrit my question was not whether ISDS is good or bad, but if there is anyrthing special about TTIP. From your answer I would conclude that there is nothing special, except that meanwhile the number of people who are unhappy with ISDS (possibly for good reasons) has reached a critical mass. Aug 9, 2016 at 16:46
  • @MartinDrautzburg Whether ISDS is good or bad is subjective, but the criticism that ISDS has faced as part of TTIP sets TTIP apart from many other trade deals.
    – gerrit
    Aug 9, 2016 at 16:58

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