The European Union’s proposals to change investor-protection mechanisms in free-trade deals may hurt small companies, according to the BusinessEurope employers’ federation.
Under the EU plan, arbitrators would be selected by countries alone instead of the current system that gives a say to companies, said Luisa Santos, director of international relations at the industry association. This means EU firms might be at a disadvantage when trying to protect their interests overseas, and it also means small companies might lose out because they wouldn’t be big enough to justify state-to-state complaints at the World Trade Organization, she told reporters in Brussels on Tuesday.
The European Commission last month announced plans to replace the controversial Investor-State Dispute Settlement mechanism that formed part of a proposed trans-Atlantic free-trade deal. The ISDS proposal will be discussed within the 28-nation EU before it’s presented to trading partners.
EU and U.S. negotiators are trying to finish the Trans-Atlantic Trade and Investment Partnership by the end of next year. Santos said the EU needs to balance the need for public dialogue with the need to close deals “in a reasonable period of time,” so that EU exporters don’t lose out to competitors in countries that can strike trade deals faster.