81 Percent of U.S. Firms in the EU Could Launch ISDS Attacks with CETA Alone; U.S. Corporations Are the Most Aggressive Users of the ISDS Regime
By Public Citizen's Global Trade Watch
New analysis of data on U.S. corporations with investments in Europe reveal that were the Transatlantic Trade and Investment Partnership (TTIP) to be enacted with investor-state dispute settlement (ISDS) provisions, more than 47,000 U.S.-owned firms would be newly empowered to launch ISDS attacks on European policies and government actions. But because many of the U.S. firms operating in Europe currently also have Canadian subsidiaries, much of this unprecedented increase in European ISDS liability could still occur if only the European Union (EU)-Canada Comprehensive Trade and Economic Agreement (CETA) were enacted with ISDS. Four out of every five U.S.-owned firms operating in EU member states could gain new rights to attack European Union and EU member state policies using CETA’s ISDS mechanism at the stroke of a pen from their parent corporations. Of the 51,495 U.S.-owned subsidiaries currently operating in EU member states, 41,811 are owned by U.S. parent companies that also have subsidiaries in Canada.
Any one of these 41,811 firms could be used as the basis for an ISDS case against EU and member state policies under CETA if the U.S. parent company were simply to alter the lines of legal ownership such that its Canadian subsidiary could claim some portion of ownership of its European subsidiary. If CETA were to go into effect with ISDS, such modest changes to corporate ownership documents would allow U.S. firms to bypass domestic courts, challenge EU and member state governments before extrajudicial tribunals and demand compensation for a broad swath of environmental, health, financial and other public interest policies.
To date, the intense debate on ISDS in Europe has not focused on the reality that CETA would empower backdoor ISDS attacks by U.S. firms in Europe. Exposing European policies to ISDS challenges by U.S. firms via TTIP or CETA is particularly dangerous given the notoriously litigious nature of U.S. companies. U.S. firms have launched far more ISDS cases than firms from any other country in the world – more than twice as many as those launched by firms from the country that is the second-largest source of ISDS claims. Indeed, more than one out of every five ISDS cases in the entire history of the ISDS system has been brought by a U.S. corporation.