Juncker promises careful look at US trade deal

(LUXEMBOURG) - Europe's incoming commission head Jean-Claude Juncker on Wednesday said he would take a careful look at a controversial yet central element of a proposed giant EU-US free trade deal that allows corporations to sue governments.

There will be nothing "that will allow secret courts to have the final say in disputes between investors and states," Juncker told the European parliament just prior to a confirmation vote for his entire 28-member commission team.

"I had thought my commitment on this point was very clear but I am happy to clarify and reiterate it here," he said.

Juncker was referring to a highly controversial clause in the EU-US Transatlantic Trade and Investment Partnership (TTIP), a blockbuster trade deal currently under negotiation that would unite the world's two biggest markets.

The so-called investor-state dispute settlement, or ISDS, allows firms to sue national governments if they feel that local laws -- such as health and safety regulations -- violate the trade deal and threaten their investments.

Juncker said under no circumstances would the ISDS have the final say over any dispute that could arise between companies and governments.

"The rule of law and the principle of equality before the law" would always prevail, he said.

Many European lawmakers, especially from the left and the greens, are deeply suspicious of the mooted trade deal.

Their concerns are also shared by the influential German government that fears the mechanism could allow multinational companies to bypass national legislation and undermine sovereignty.

In Uruguay, for example, cigarette maker Philip Morris has used a similar clause to sue the government for ordering that the health warnings be larger on cigarette packets.

As a guarantee that the concerns would be respected, Juncker said his highly trusted right-hand man, the former left-of-centre Dutch minister Frans Timmermans, would have final word on the matter.

"There will be no investor-to-state dispute clause in TTIP if Frans does not agree with it too," Juncker said.

Europe's incoming trade commissioner Cecilia Malmstroem is set to take over the contentious free trade deal on a day-to-day basis.

In testimony to parliament earlier this month she opened the door to the possibility of dropping the clause.

"Will ISDS be part of TTIP? I don't know, maybe not," Malmstroem said in the question-and-answer session with EU lawmakers.