12 Mar 2015

Transatlantic Investment Treaty Protection

Lauge Poulsen / Jonathan Bonnitcha / Jason Yackee

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This paper presents an informal cost-benefit analysis of the inclusion of investment protection provisions, including investor-state arbitration, in an investment chapter in TTIP. The analysis is conducted from the perspective of the EU and its member states. It argues that there is little evidence to suggest that investor-state arbitration will provide the EU with meaningful benefits, such as increased foreign investment from the US. In contrast, investor-state arbitration may impose non-trivial costs, in the form of litigation expenses and reduced policy space. This is due to the huge volume of US investment that would be covered by the investment chapter, as well as the fact that an investment chapter would almost certainly give foreign investors greater rights than they currently enjoy under EU and member state law. We conclude that, from the perspective of the EU, the case for including investor-state arbitration in TTIP is weak. Although we do not conduct a cost-benefit analysis from the perspective of the US, such an analysis would likely raise similar issues.

Lauge Poulsen is Lecturer in International Political Economy at University College London. Jonathan Bonnitcha is a lawyer and Visiting Fellow at the Crawford School of Public Policy, Australian National University. Jason Yackee is Associate Professor of Law at the University of Wisconsin Law School. This paper is the third paper in the “TTIP in the Balance” project, jointly organised by CEPS and the Center for Transatlantic Relations (CTR) in Washington, D.C. It is published simultaneously on the CEPS  and CTR websites.