Veolia claim against Lithuania offers case in point for EU trade liberalisation sceptics

Last month, Veolia, a French company which owns heat suppliers in Vilnius and nine more municipalities, said it was seeking €100 million in compensation from Lithuania at the International Center for Settlement of Investment Disputes. Veolia’s claim is that legal changes in their sector have been ‘unfair’ to it, whereas the Lithuanian government blames Veolia for inflicting overly high heating costs on residents.

This case has been taken as a worrying sign by opponents of TISA, although it took place before the agreement has even been signed. Critics say that once in place, the agreement will not allow for the reversing of failed privatizations or for the protection of citizens’ interests from exploitative profiteering.

“On investment protection, we can’t accept the American way and keep paying compensation,” said Lithuanian Green MEP Bronis Ropė, whose faction strongly opposes TISA in its current form. “We propose solving these issues in courts or keeping them away from the treaty altogether. We shouldn’t solve them by international arbitrage.”

He says some American greens have warned their European counterparts against leaving state-investor disputes to arbitrage, especially for countries that lack experience and the funds for top lawyers.

The trade agreement (see overview by the European Commission) is being developed within the World Trade Organisation framework on the basis of the General Agreement on Trade in Services (GATS).

Although the EU and US are the most frequently mentioned, 23 WTO members are taking part in the TISA talks. The EU has no free trade agreements on services with Chinese Taipei, Israel, Pakistan and Turkey. The liberalization talks started formally in March 2013, but it took a while before the details were clearly explained to citizens.

According to Corporate Europe Observatory, a lobbying watchdog, actual negotiations have been going on for decades, with privileged access for big business representatives under the Transatlantic Business Dialogue, a club of policymakers and large companies.

In 2014, WikiLeaks published details of TISA, sparking discontent among anti-globalization activists and trade unions, as they fear that the lowest common denominator among diverse regions will lead to worsening labour standards and consumer protection.

What drew even more criticism was the initial reluctance to disclose the details of the agreement, as well as provisions that would give investors more rights to sue countries for unfavorable legislation.

“There cannot be a TISA without safeguards, and there cannot be safeguards without TISA,” said MEP and former commissioner Viviane Reding, who co-drafted a report on TISA at the European Parliament, which is scrutinizing the deal before it goes further.

“There will be no compromise on fundamental values,” she promised.

The European Commission is leading the negotiations on behalf of the EU. The deal encompasses various services, including finance, e-commerce, and transportation.

Critics claim that the agreement makes it easier for multinationals to shop around for favourable rules and operate with impunity even when they engage in questionable deals. Furthermore, protection of investors would make it difficult to reverse failed privatizations.

Ska Keller, a German green MEP who also co-presented the European Parliament report on TISA, told the Lithuania Tribune that there are some remaining concerns.

“We say that we want positive listing [of services to liberalize], but the Commission says it should be the opposite in order to simplify the agreement. We didn’t manage to get our changes fully into the resolution, only in sensitive sectors.”

She added that the opposition of greens against the TISA has nothing to do with fearing specifically American investment. “In financial services, it is the Commission that wants lower standards than in the US, where they learned a bit more from the financial crisis than us,” she said.

Ropė believes that additional safeguards are in the Lithuanian interest. “For example, Southern Europe has few services to privatise and they would feel changes as strongly as us.”

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The author’s trip to Strasbourg was paid by the European Parliament Information Office.