*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
435 West 116th St., Rm. JGH 825, New York, NY 10027
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“A New Challenge for Emerging Markets: the Need to Develop an Outward FDI
Policy”, "China Moves the G20 toward an International Investment Framework
and Investment Facilitation", "China Moves the G20 on Investment", "The
Rise of Self-judging Essential Security Interest Clauses in IIAs", "Can
Host Countries have Legitimate Expectations?", "The Next Step in
Governance: The Need for Global Micro-regulatory Frameworks", "The Evolving
International Investment Law and Policy Regime: Ways Forward", "China's
Outward FDI and International Investment Law", and  "Policy Options for
Promoting FDI in the LDCs" *are* available at and

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*Columbia FDI Perspectives*
Perspectives on topical foreign direct investment issues
No. 209  September 25, 2017
Editor-in-Chief: Karl P. Sauvant ([log in to unmask])
Managing Editor: Matthew Schroth ([log in to unmask])
A stronger role for the European Parliament in the design of the EU’s
investment policy as a legitimacy safeguard
* <#m_-5970712019506122914__edn1>
Catharine Titi** <#m_-5970712019506122914__edn2>

Since the Treaty of Lisbon and the transfer of exclusive competence over
FDI from the member states to the EU, the European Commission has designed
an innovative investment policy, leaving in the shadows another powerful
actor whose contribution can easily be overlooked. Yet, in the post-Lisbon
era, the European Parliament not only enjoys extensive powers in the
formulation of the EU’s investment policy, but it has also made clear that
it will not hesitate to use them. Its involvement is a significant and
welcome development, given that the Parliament is the EU’s democratically
elected institution, and an active role should be envisaged going forward.

In the post-Lisbon era, the Parliament and Council act through regulations
to define the framework for the EU’s investment policy. The Parliament may
require that its recommendations to the Council or the Commission be taken
into account. It has further acquired the right to be immediately and fully
informed about investment negotiations. The Commission’s negotiators
regularly brief the monitoring groups of the Parliament’s Committee on
International Trade, and technical debriefings are held with members of the
Parliament. This ensures that the two institutions are on the same page,
and that the Commission can be mindful of the Parliament’s wishes.

For good reason, the Commission *is* mindful of the Parliament’s wishes.
Since the Treaty of Lisbon, the conclusion of international investment
agreements (IIAs) requires parliamentary consent, effectively investing the
Parliament with a veto power over investment negotiations. Cognizant of the
sway of its new power, the Parliament has voted down two international
agreements,[1] <#m_-5970712019506122914__edn3> demonstrating to those who
had any doubt that its consent is not a mere formality to be taken for
granted, but a means for it to exert leverage over negotiations. The
“threat” that its consent may be declined ensures respect for its views.

A combined reading of Parliament resolutions and EU IIAs reveals this
interplay of power between Parliament and Commission. An example comes from
investor-state dispute settlement (ISDS). The Parliament’s Resolution of
April 6, 2011 stressed the need to reform the existing ISDS machinery to
increase transparency and allow appeals.[2] <#m_-5970712019506122914__edn4>
The Resolution of October 9, 2013 took the view that non-litigious dispute
settlement should be provided.[3] <#m_-5970712019506122914__edn5> The
Resolution of July 8, 2015 urged the Commission to replace arbitration with
a system with publicly-appointed judges and an appellate mechanism.[4]
<#m_-5970712019506122914__edn6> Subsequently, the Commission presented the
two-tiered investment court system, increased transparency and added soft

Of course, to say that the Parliament has a meaningful role is not to say
that it has the *only* role in shaping investment negotiations; for
example, the Resolution of July 8, 2015 followed the Commission’s own
concept paper,[5] <#m_-5970712019506122914__edn7> which had already
envisioned an investment court, transparent ISDS and an appellate
mechanism. The concept paper itself was presented at a time when pressure
was brought to bear on the Commission by member states, especially Germany,
in relation to reform of ISDS and an investment court system. In reality,
at the EU level, the Parliament expresses concerns and identifies risks;
its inputs are broadly-worded policy suggestions. The Commission proposes
ways to address these risks and has the technical expertise to elaborate
concrete investment provisions. The EU’s investment policy appears then as
the culmination of an institutional dialogue.

That the Parliament’s imprimatur attaches to the new IIAs is appropriate
and should be encouraged. Investment negotiations have moved center stage
in the public debate, and it is hoped that the Parliament’s interest will
not wane when the public debate subsides. As the Parliament continues to
exercise its formal right to be informed, the specialized knowledge it
gains will allow it to formulate more concise and informed policy

Going forward, it may also be opportune to move away from the current
all-or-nothing consent model to allow the EU’s political institution
formally to propose amendments during negotiations. Either way, the Treaty
of Lisbon has given the Parliament the necessary powers to impact the
content of EU IIAs and reduce the need, if any, for member state
participation in the design of the EU’s investment policy. In the new state
of affairs, the Parliament is a player to be reckoned with; at the same
time, it needs to learn how to handle its new role. This larger public role
of the Parliament is desirable. The greater its involvement, as a
democratically elected institution, the stronger its legitimizing effect on
investment negotiations, further rationalizing the competence transfer over
FDI from the member states to the EU.

An active, constructive and publicized participation of the Parliament may
be key to convincing stakeholders that the design of the EU’s investment
policy is both legitimate and representative.

* <#m_-5970712019506122914__ednref1> *The Columbia FDI Perspectives are a
forum for public debate. The views expressed by the author(s) do not
reflect the opinions of CCSI or Columbia University or our partners and
supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed
** <#m_-5970712019506122914__ednref2> Catharine Titi ([log in to unmask])
is a tenured Research Scientist at the French National Centre for
Scientific Research (CNRS) and the Research Centre on Procurement Law and
International Investments (CREDIMI) of the University of Burgundy. The
author is grateful to Hanna Bourgeois and two anonymous reviewers for their
helpful peer reviews. The author also wishes to thank Alberto Alemanno,
Alexandra Koutoglidou and Carlo Pettinato for their useful comments.
[1] <#m_-5970712019506122914__ednref3>In 2010, the Parliament declined its
consent to the first version of the EU-US SWIFT-Terrorist Finance Tracking
Program Agreement, and, in 2012, to the Anti-Counterfeiting Trade Agreement.
[2] <#m_-5970712019506122914__ednref4> Resolution of April 6, 2011 on the
future European international investment policy, para. 31.
[3] <#m_-5970712019506122914__ednref5> Resolution of October 9, 2013 on the
EU-China negotiations for a bilateral investment agreement, paras. 45-46.
[4] <#m_-5970712019506122914__ednref6> Resolution of July 8, 2015 on the
negotiations for TTIP, para. 2(d)(xv).
[5] <#m_-5970712019506122914__ednref7> “Investment in TTIP and beyond–the
path for reform,” Concept Paper, 2015,
*The material in this Perspective may be reprinted if accompanied by the
following acknowledgment: “Catharine Titi**, ‘**A stronger role for the
European Parliament in the design of the EU’s investment policy as a
legitimacy safeguard**,’ Columbia FDI Perspectives, No. 209, September 25,
2017. Reprinted with permission from the Columbia Center on Sustainable
Investment (** <>**).” A
copy should kindly be sent to the Columbia Center on Sustainable Investment
at **[log in to unmask]* <[log in to unmask]>*. *

For further information, including information regarding submission to the
*Perspectives*, please contact: Columbia Center on Sustainable Investment,
Matthew Schroth, [log in to unmask]

   - No. 208, Lisa Sachs, Jeffrey Sachs and Nathan Lobel, “Corporations
   need to look beyond profits,” September 11, 2017.
   - No. 207, Lilac Nachum, “How much social responsibility should firms
   assume and of which kind? Firms, Governments and NGOs as Alternative
   Providers of Social Services,” August 28, 2017.
   - No. 206, Victor Steenbergen and Ritwika Sen, “Increasing vertical
   spillovers from FDI: ideas from Rwanda,” August 14, 2017.

*All previous FDI Perspectives are available at
<>**. *

*Other relevant CCSI news and announcements*

   - *On September 21, 2017*, Kaitlin Cordes and Jesse Coleman co-authored
   a short blog
   titled "Not So Sweet: Tanzania Confronts Arbitration over Large-Scale
   Sugarcane and Ethanol Project," on a recently initiated investor-state
   claim regarding the Agro EcoEnergy project in Tanzania. The blog highlights
   some of the challenges being faced by Tanzania and other host states
   seeking to balance the various rights, obligations, priorities and
   interests affected by large-scale agricultural investments.
   - *On September 19, 2017*, CCSI launched its* Fall 2017
   International Investment Law and Policy Speaker Series
   Remaining speakers include Annette Magnusson, Fuad Zarbiyev, Adrian Jones,
   and Carlos Correa. This fall, the series is again co-sponsored by Crowell &
   Moring LLP and Baker & McKenzie LLP. The series is moderated by Ian Laird,
   Grant Hanessian and Kabir Duggal. All talks take place at Columbia Law
   School. Select presentations will be webcast; please see our website
   the schedule and more details. No registration is required.
   - *On October 4, 2017*, CCSI and the Columbia Society of International
   Law, will co-host a talk on "EU Investment Policy: The Legal Challenges,"
   at Columbia Law School. The construction of a genuine EU investment policy
   has been and continues to be challenged from multiple sides. Mislav
   Mataija, who represents the European Union in World Trade Organization
   disputes, will give an overview of these battles and map out their
   implications for EU investment policy. *For more information, please
   visit our website here

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2017 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
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