EU proposes Japan delink investment protection from accord

TOKYO, Oct. 14 — Japanese s trade officials have met their counterparts from the European Commission to find a compromise over a controversial proposed investment protection provision.

They met in Tokyo on Oct. 13 to discuss the so-called investor state dispute settlement (ISDS) provision. The two sides hope to conclude the deal by the end of this year.

The ISDS provision allows foreign investors or companies to sue governments over regulations if they allegedly harm their investments.

Tokyo is eager to include the ISDS, which is also part of the Trans-Pacific Partnership (TPP) and other trade agreements with Japan.

But Brussels wants the ISDS system to be replaced with a new system as some EU members fear the ISDS provision is a threat to their sovereignty.

The EU has pushed to create a new permanent international investment court with independent judges to adjudicate disputes with governments. Such a provision has been included already in a trade agreement with Canada, which entered into force last month.

If the two sides are unable to settle the difference, the EU has proposed an option that Japan could separate some ISDS elements from the deal, informed sources said.

In September, EU Trade Commissioner Cecilia Malmstrom indicated that the EU’s future negotiating mandates for trade agreements might not include rules protecting foreign investment.

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