Tomorrow the EU Parliament will vote on the EU-Singapore trade agreement. Among other things, the agreement creates a loophole for investors in government bonds in the event of debt rescheduling in an EU country. The Dutch non-governmental organisation SOMO recently pointed this out in a study.
The spokesperson for Bündnis 90/Die Grünen in the European Parliament, Sven Giegold, said:
„This agreement is a financial risk for Europe. It complicates the liability of creditors in the event of state crises and could therefore pass on risks to taxpayers. Investors can make government debt restructuring more difficult and even attack creditor participation through dispute settlement. It is naïve to conclude an agreement with the fourth largest financial centre in the world that opens up dangerous loopholes for investors. The agreement makes it more difficult to regulate the financial markets. It is a step backwards for a more crisis-resistant financial system. This trade agreement would not have been written much differently before the financial crisis. This example demonstrates once again why special litigation rights for investors are a dangerous aberration.
While it is true that Europe is entering into trade agreements with other countries in response to Trump, the Singapore agreement hardly sets any European standards. Social and ecological standards remain non-binding. The agreement does not follow the principles of a social market economy. Singapore still does not have to commit itself to the ILO labour standards, including the right to form trade unions. This is an affront to Europe’s trade unions. The treaty will increase greenhouse gas emissions instead of facilitating the achievement of Paris‘ climate protection goals. Overall, the agreement is a missed opportunity for a trade policy based on European values“.
We will be happy to send you details on the loophole in government bonds and creditor liability.