Today American and European negotiating teams in Brussels will wrap up a second formal round of negotiations on an envisaged Transatlantic Trade and Investment Partnership (TTIP). Certainly, the wave of NSA revelations has cast a shadow over the talks. And while talks continue it remains critical that negotiators inform the public and their elected representatives about the progress made and the topics discussed. One of the hot topics on the agenda this week was investment protection under TTIP and the possible establishment of a so-called Investor to State Dispute Settlement (ISDS) mechanism. Such a mechanism could also provide for out-of-court arbitration and the settlement of disputes between States and Investors. This could enable European and U.S. investors (or companies) to challenge U.S. or European public policies before a special arbitration panel, provided the government violated the rules and standards (of investment protection). The background of ISDS lies in the wish for investors, for example from Europe, to seek certainty for their investments in countries where the rule of law may not be strong or equally applied. The European Commission's negotiating mandate for the current TTIP talks includes guidance on investment protection. Though the twenty-eight EU Member States themselves jointly approved the TTIP mandate some of them are not quite pleased with the inclusion of ISDS. Especially in those countries that have dozens of their own Bilateral Investment Treaties (BITs) with third countries, such as Germany or The Netherlands. Actually, since 1959, EU Member States have concluded no less than 1200 BITs, also including settlement mechanisms. So ISDS is nothing new, it is just that there is mistrust of the Commission now being in charge. As for the Transatlantic relation, the EU and the U.S. are the largest investors in each other's economies. The U.S. Foreign Direct Investment (FDI) stock in the EU was $1.6 trillion in 2008 accounting for more than half of total U.S. FDI. In the same year 64% of FDI in the U.S. was European. As a comparison: EU investment in the US is twelve times larger than the EU outward investment to China, and twenty-eight times bigger than EU investment in India. While transatlantic trade in services and goods is very important, it is the investment flows that have generated economic integration. Estimates are that intra-firm trade accounts for a third of transatlantic trade. The EU and the U.S. in April 2012 adopted 'Shared Principles for International Investment' (Principles). Both the European Commission and the U.S. government believe they can "implement these principles while still preserving the authority to adopt and maintain measures necessary to regulate in the public interest to pursue certain public policies". It is important to note that since the Lisbon Treaty the European Commission is exclusively competent to negotiate investment agreements with third countries on behalf of the European Union. Next week it will kick-off negotiations  with China of the first ever EU Bilateral Investment Treaty (BIT). In the EU the European Parliament's formal consent is required for an agreement to take effect. The same goes for the U.S. Congress. As a Member of the European Parliament and spokesperson for the European liberal group I am following the negotiations closely and will push the Commission to address the many concerns and questions citizens have. The Commission is formally bound by the TTIP negotiating mandate. The mandate sets clear demands for the investment chapter in TTIP. On investment protection and especially the establishment of an out-of-court arbitration panel the mandate says: "After prior consultation with Member States and in accordance with the EU Treaties the inclusion of investment protection and investor-to-state dispute settlement (ISDS) will depend on whether a satisfactory solution, meeting the EU interests concerning the issue covered by paragraph 23, is achieved. The matter shall also be considered in view of the final balance of the Agreement". This means that the Commission has no carte blanche to negotiate an ISDS mechanism and should primarily focus on the objectives of investment protection as laid down in paragraph 23 of the mandate. This paragraph states clearly that protection should not limit the ability of the EU to adopt and enforce: "measures necessary to pursue legitimate public policy objectives such as social, environmental, security, stability of the financial system, public health and safety in a non-discriminatory matter". It further goes on to mention that if TTIP is to eventually include an ISDS mechanism it has to be "state of the art" and "providing for transparency, independence of arbitrators and predictability of the Agreement (TTIP, MS), including through the possibility of binding interpretation of the Agreement by the Parties". Moreover the ISDS mechanism should only apply to investment and not to market access provisions, as for instance access of EU companies to US public procurement markets. As a liberal I understand the background of rules of the game for investments; they are essential in our economies. Not trade, but long-term investments in the European economy eventually is the best guarantee for sustainable growth and employment in the EU. Investments are needed for R&D, innovation and building digital highways. Without prejudice to the ability of governments and parliaments to adopt laws and regulations it is understandable that investors wish to assess and strategize their business operations and returns. Eventually it comes down to stability, predictability and reliability of the state. It is the large scale equivalent of a citizen being able to rely on his permit to renovate and rebuild his home. And now we get to the key question: Are the U.S. and European public authorities unreliable to an extent that we need additional protection for investors? Moreover, do we need out-of-court arbitration panels in order to ensure independent and fair trails? I have no doubts that a U.S. company would enjoy the same legal protection from the Dutch government by Dutch courts than a German or British company. Including ISDS mechanism in TTIP reveals mistrust in each other's legal systems. We have to ask ourselves whether it is needed at all in TTIP. I will press the Commission to answer the questions why it is pursuing this path and how it responds to legitimate concerns and questions about transparency and necessity. To be continued.. ________________________________________  http://www.ecipe.org/media/publication_pdfs/ideas-for-new-transatlantic-initiatives-on-trade.pdf  http://trade.ec.europa.eu/doclib/docs/2012/april/tradoc_149331.pdf  http://europa.eu/rapid/press-release_MEMO-13-913_en.htm  Idem.  /2013/11/commission-mandate-on-investments-in-ttip/  /2013/11/commission-mandate-on-investments-in-ttip/, paragraph 22.  /2013/11/commission-mandate-on-investments-in-ttip/, paragraph 23.  Idem.