German Judges Pooh-Pooh Obama’s Sacred US-EU Trade Pact

A damning indictment.

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

This past week saw the ceremonious signing of the Trans-Pacific Partnership (TPP) in Auckland, an event whose prime purpose was to convince the world that a trade agreement that most people have not even heard of and which has so far been approved by only one (Malaysia) out of 12 elected parliaments is already done and dusted.

Even the Sydney Morning Herald concedes that it was a giant PR exercise:

It masks the fact that for Australia and most TPP countries, the public debate and parliamentary process to pass implementing legislation, leading to final ratification of the deal, is just the beginning, and it will be a rocky road.

The road will be particularly rocky in the U.S. where the treaty’s safe passage through Congress and the Senate is far from guaranteed. Indeed, the trade agreement has become so toxic with the voting public that not a single presidential contender dares to endorse it. Even the former US Trade Representative, and now Senator, Rob Portman, has come out against TPP, albeit for the wrong reasons, most tellingly the fact that he, too, is up for reelection this autumn.

However, the biggest blow to the global corporatocracy’s bloated designs did not come from the U.S. It came from Germany, where the German Association of Judges (DRB, an association that also includes prosecutors) just issued a damning indictment on the EU’s proposal to establish an “investment court system (ICS)” for the TPP’s sister treaty, the Transatlantic Trade and Investment Partnership (TTIP).

The ICS proposal was designed to placate the growing ranks of opponents of the current global investor-state dispute settlement (ISDS) system. ISDS is a vital part of any free trade agreement since it allows businesses to bypass national court systems and sue governments for past and/or future profits lost, and do so in private arbitration panels held in global capitals like Washington, Paris, London, Hong Kong or The Hague. Put simply, it is what gives trade treaties their teeth.

In Europe, public opposition to ISDS is intensifying. In 2014 the European Commission, in a rare fit of public spiritedness and accountability, ran a public consultation on ISDS. Nearly 150,000 people responded to the survey – the highest number of responses ever for an EU consultation – with the overwhelming majority (more than 97%) rejecting the inclusion of ISDS in TTIP. Since then public opposition to ISDS has snowballed, with a growing number of local and city councils – including my home city of Barcelona – refusing to honor any future TTIP agreement.

Other opponents include small and medium size businesses, in particular in Germany and France; academic experts in trade and investment law, EU law, international law and human rights; trade unions, public interest groups and half of the Commission’s own advisors. Then, in July last year, the European Parliament refused to support TTIP unless the investor-state dispute settlement (ISDS) mechanism was replaced by a more public, accountable system.

The system that EU Trade Commissioner Cecilia Malmstrom came up with was a permanent international Investment Court System – ICS – to adjudicate conflicts between international investors and host states, with real judges and slightly more transparency. As WOLF STREET noted at the time:

Instead of the prospect of having three private arbitrators (i.e. corporate attorneys) decide how many billions in taxpayer funds elected governments should pay out in compensation for daring to put the rights and interests of national citizens before the rights and interest of overseas corporations and investors, we can have a whole new, ridiculously expensive international court system, paid for by global taxpayers, dedicated to doing exactly the same thing.

This new system is currently being negotiated with trade representatives in the U.S., Japan and Canada, while Vietnam, which signed a new trade agreement with the EU in December, had little choice but to ratify the so-called investment court. In January one of Canada’s most prestigious newspapers The Globe and Mail published a ringing endorsement of the ICS proposal. Against all odds, it seemed that the Commission might actually be winging it.

But then on Thursday, the German Association of Judges mercilessly crushed the idea, with three basic arguments:

  1. There is no legal basis or necessity for such a court. The EU Commission is probably legally not empowered to simply set up a court and if it were to do so, it would undermine the sovereignty not only of EU member states but of the EU itself. The judges are crystal clear on this point: the court would be “outside the institutional and judicial framework of the Union” and would “deprive courts of member states of their powers in relation to the interpretation and application of European Union law and the court of its powers to reply.”
  2. The ICS would have no legal jurisdiction over European countries. Issues affecting the German economy should be decided on German turf. In other words, investment cases should be fought in local courts. This is a remarkable claim in a country that has been a major advocate of ISDS for decades. Indeed, the first ever bilateral investment treaty (BIT) was agreed between Germany and Pakistan, in 1959. However, attitudes toward ISDS have shifted considerably in Germany, especially since the government was sued twice for billions of euros each time – by the same company!
  3. The so-called judges of the ICS would not be independent, as the Commission claims. “The pool of judges will be limited to the circle of persons already professionally predominantly engaged in international arbitration.” In other words, the investment court would merely become a permanent version of the ISDS system that is already so deeply unpopular. Which, as Nick Dearden, the director of Global Justice Now, notes, is precisely what campaigners are worried about.

The DRB’s ruling could be a game-changer for two reasons.

First, anybody who knows anything about the new generation of trade treaties like TTIP, TPP and TiSA knows that they pose a direct threat to national sovereignty, but this is the first time that public fears have been confirmed by the legal authorities of a signatory nation. And not just any signatory nation: as home to the largest economy in Europe which is effectively backstopping the cratering economies on the periphery, Germany wields more influence over EU decision making than any other Member State. What’s more, small and medium-size businesses — the backbone of its economy — are also bitterly opposed to ISDS.

Second, it leaves the Commission’s trade representatives stuck in no man’s land. Having as good as abandoned ISDS and bet all its horses on ICS, it now has to find a third way that not only placates European policy makers who oppose ISDS but also appeases the demands of its negotiating partners, the U.S. and Canadian governments, and the corporate behemoths that have been pushing for this deal. And that is not going to be easy. By Don Quijones, Raging Bull-Shit.

Prelude to a nightmare? Read… Four Things that Keep Spain’s Senior Bankers Awake at Night

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  27 comments for “German Judges Pooh-Pooh Obama’s Sacred US-EU Trade Pact

  1. jan frank says:

    Is this the first glimmering of a “checks and balances” system in Europe?

    • Vespa P200E says:

      Unlike US where emperor ObaMao over-rides the court and congress with his joke executive actions/orders on immigrations and guns.

      Hoax and change for the worst we can all believe in

      • walter map says:

        And let us not forget The Audacity of Hype.

        If there’s anything Transnational Corporatists need it is more regulation, up to and including prison time for executives and death sentences for corporations.

        • Vespa P200E says:

          ObaMao collected $1 mil from Government Sacks alone and had frequent private dinners with LLoyd and Jamie which begs the questions of why other than nicely extort more $$$ for his pals.

          Only “casualty” to see jail time was Angelo from Countywide who no doubt failed to bribe the socialist emperor.

        • joe says:

          Name-calling removes any potential merit from your arguments, except -of course- for those few who already agree with you.

        • Chip Javert says:


          Sounds like you’re rather supportive of major decisions being forced upon a population by an unaccountable executive. For the USA, this was tried by good ole King George, and it didn’t end well for the Red Coats.

          Vespa may indeed be doing some name calling, but it does not detract from the substance of the argument. Cram-downs by unaccountable executive authority is generally bad; one of these days, the unaccountable “EU executive authority” may actually realize this fact.

  2. John Doyle says:

    The sheer fact the Treaty is not free to read and judge, but concealed and not explained even to governments, is enough reason to blot it out of existence. It’s supposed to streamline trade but these sorts of benefits are always oversold. There are other ways to achieve decent results directly, transparently and don’t require a 6000 page treaty to effect.
    I hope the German judges words affect the TPP as well as TISA and the TTIP.

  3. jsmith says:

    Once the payola is upped for the ‘holdouts’, then it is its a done deal.

    • Nicko says:

      Indeed, and sooner the better. TPP and US-EU trade pact are the only mechanisms that will allow the democracies of the world to compete with an increasingly aggressive China.

      • Yoshua says:

        What if Germany and the EU decides to leave the TTIP deal and instead make a deal with the Eurasian Union to secure its energy needs and take part in the New Silk Road project which would unite the Eurasian continent in an enormous trade region connected by high speed rail ?

        If a Brexit comes true then the rest of Europe might start to look towards the East.

      • Chip Javert says:


        Well you’re ignoring the fact China wages are beginning to exclude them from some manufacturing markets plus China has yet to demonstrate they can innovate (as opposed to steal) intellectual property.

        We won’t even talk about the “geriatric population” bomb currently exploding in China (same phenomena has not working well for Japan).

        China’s window for misbehaving is closing…

  4. Ptb says:

    I’ve said it before, who ever wants to hide good news?

  5. OutLookingIn says:

    The entire new treaty was written by the global corporatocracy, for the global corporates and pushed by bought/paid for corporate mouth pieces.

    As Nancy said; “We have to pass it, to find out whats in it”!

    The previous neo-con Harper government of Canada was all for it.
    Not so any longer with “Trudeau the Younger” as new captain of the ship.
    The new teams position is one of re-consideration, which means stalling until the entire rotten so-called “treaty” corpse starts really stinking up the public space.

    This onerous/odeous and elitist piece of maladjusted, fraudulent, corrupt and perverse piece of corporate written vomit is going no where.

  6. RD Blakeslee says:

    Commentary from an individual – me.

    I am personally adversely affected by the corporatocracy’s conspiracies (excuse me “treaties”).

    As a U.S. consumer, I am not allowed to know the country of origin of the packaged beef I buy at the supermarket.

    • Petunia says:

      It isn’t even beef.

    • nick kelly says:

      At least as far as your largest importer of beef is concerned- Canada, you are in error.
      The Canadian government sued the US on Country of Origin labeling and won. The US is either in the process of passing legislation to revoke COO labeling or has already done so.
      Only the amount of the damages owing to Canada is being appealed.
      The Canadian action was not of course taken under TPP which has not been ratified. It may have been under WTO or NAFTA, the other treaty everyone blames for everything.

      Just a PS to all, the ‘let democracy rule’ folks
      Any international treaty by definition limits sovereignty- just as a contract between individuals limits their freedom.
      If you have contracted to sell a car you are no longer free to sell the car to someone else.
      The courts are always clogged with companies and individuals who want to get out of contracts, or want them modified.
      Over the centuries it has been found that when a foreigner sues a local in court, the court, to put it mildly, leans in favor of the local. This is the case even in the twenty or so countries that have something like an independent judiciary. In the majority ( e.g. Russia, Pakistan, India etc. ) the unconnected foreigner, corporate or individual, is simply wasting their time appealing to the courts.
      This fact of life has resulted in the evolution of international tribunals rather than domestic courts to settle international business disputes.
      To put such matters ‘to the people’ is simply to invite chaos.
      BTW; the TPP like NAFTA and pretty much all of these treaties can be left by any of the parties with quite short notice.

    • Mary says:

      What’s really galling are the supermarket labels that list five or ten “possible” sources of the ground mystery meat I’m buying. Talk about rubbing it in your face.

    • chip Javert says:


      Good emotional (but highly misleading) comment!

      Any citizen in any location anywhere in the USA can easily go to the local butcher and get local beef…unless you insist on “mystery meat”.

      • Wolf Richter says:

        Chip, you’re being silly. Yes, I can go to a butcher shop and buy 60-day dry-aged grass-fed, open-range beef, and they’ll tell me VERBALLY where it came from. But that meat costs a fortune and not many people can afford it.

        99.999% of the meat sold in the US is sold in grocery stores. We had a labeling law that required that meat be labeled by origin (where born, raised, slaughtered). That law was passed by US Congress. But that law was then overturned by the WTO upon a complaint by Canada and Mexico. Now the origin of our beef is/will be a secret once again (I think there’s an appeal going on right now).

        The WTO ruling also allows Canada and Mexico to proceed in efforts to impose US$1 billion in annual retaliatory tariffs.

        • Chip Javert says:

          Sorry for being silly.

          I live on the “Space Coast” in Florida and I just wander over to the local farm and buy a butchered cow. As log as I buy at least a half carcass, it’s cheaper than buying at Publix…

          My bad.

        • Sandy B says:

          We have a small local grocery that does their own meat processing. Ground beef, 93% lean is $5.99/pound, always. It takes time to redirect one’s shopping past Walmart, Smith’s and the rest. But there are sources for better food.

  7. Jonas says:

    On the one hand, this is good news and I’m proud of Germany for doing the right thing. On the other hand, it signifies that Germany is clearly not in the dark club which profits from these agreements. Or more likely it was, but the situation has recently shifted.

    These developments from Germany and other ww2 losers reminds me of 2007, 2008 when those countries suddenly bought massive amounts of mortgage products from the US for their pension funds and other similar actions. The Germans aren’t stupid; in times of economic stress, those countries are perhaps used against their will to buffer the fall of the Anglo world.

    At least it’s not blatantly outright exploitation, but what with the DB ‘voluntarily’ ceding business to the London firms it does look as if certain parties are feeling threatened by eu, Japan competition.

    • chip Javert says:


      Two of your comments confuse me:

      1) “These developments from Germany and other ww2 losers…bought massive amounts of mortgage products” – I was unaware Japan and Italy bought huge amounts of US mortgage products in 2007-8.

      2) “The Germans aren’t stupid; in times of economic stress, those countries are perhaps used against their will to buffer the fall of the Anglo world” – as I remember WW1 & WW2 history, it was Germany “using: (aka slaughtering) the anglo world against their will.

  8. Steve says:

    OT, from

    At the close of trading on April 18, 2000, 100 shares of Citigroup were worth $6,212. Today, a decade and a half later, that 100 shares has shrunk to 13.33 shares with a value of $531.33 as of Friday’s close. (Citigroup did a 4 for 3 stock split on August 25, 2000 and a 1 for 10 reverse split on May 9, 2011.) In other words, your value as a shareholder has been decimated by 91.4 percent.

    My hunch is that Bank of America will soon be a big talking point. Share volume in its declining stock was huge all last week.

    • Petunia says:

      We use to call it Shiti bank and it was already insolvent in the 90’s. They wouldn’t close it down because a lot of ME investment was involved, or lost, depending on how PC you want to be.

  9. chip Javert says:


    Other than campaign contributions (unclear why non-politicians don’t just call these bribes…) I don’t understand the existence of large banks. In good times they’re too complex to manage and in less-than-good-times size leads to catastrophe. Bank “bigness” certainly has not demonstrated economy of scale.

    I am not a fan of regulation (aka: government bureaucrats know better), but capitalism often does goofy stuff that needs to be moderated – the periodic (roughly every 20 years) failure of banks being a perfect example.

    For my (capitalist) money, I’d like to see retail banks separated from investment banks & insurance; I’d also like to see restrictions on retail bank size (eg; no larger than 5-10% of national retail deposit pool).

    As long as I’m at it, BofA & Citi both deserved to be dissolved in the 2007-2009 time period – their branches & staff sold to regional banks and the top 50,000-100,000 bank managers sent into (at least) unemployment.

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