CETA talks reach conclusion, but controversial ISDS remains

EU-Canada free trade agreement finalised, however MEPs threaten to reject deal if ISDS maintained.

By Julie Levy-Abegnoli

01 Mar 2016

Following more than six years of talks, negotiations on the EU-Canada comprehensive economic and trade agreement (CETA) have reached a close. The deal is expected to come into effect next year, pending approval from member states and the European Parliament.

Talks had been at a standstill since 2014, when concerns were raised over a proposed investor-state dispute settlement (ISDS) mechanism. This would have allowed corporations to sue governments. The agreement's investor protection clause has now been updated, in an effort to make the system more transparent.

In place of the tribunal members being appointed by the company and the state involved in any dispute, they will now be appointed in advance and be subject to a code of conduct. In addition, an appeal system will be introduced.


The Commission boasted that the deal will, "remove 99 per cent of customs duties, leading to tariff savings for EU exporters of around €470m million a year for industrial goods."

Parliament's rapporteur on CETA, Artis Pabriks, said this represented a, "modern, comprehensive and balanced trade agreement, which is much needed for the EU's economy and European enterprises, particularly SMEs. The sooner we ratify it, the sooner we will benefit from it."

His EPP group colleague, Daniel Caspary, called upon, "all political groups to act responsibly and to remember that this trade agreement provides the possibility for review after ratification if both sides deem it necessary to further improve some of its elements."

S&D group shadow rapporteur Sorin Moisă also praised the deal, saying; "A permanent tribunal with public judges and randomised allocation of members for each case, a permanent appellate tribunal, a code of conduct enforceable by the President of International Court of Justice, an article on preserving the right to regulate; this is not tinkering around the edges, this is a complete paradigm change."

The Romanian MEP vowed to, "spend the coming months making the case that CETA deserves the blessing of the European Parliament."

ECR group shadow rapporteur David Campbell Bannerman was equally pleased, urging both member states and MEP colleagues to, "push ahead with this trade agreement without any further delay. Each day wasted slows down economic growth in both the EU and Canada."

"It was a disgrace that two years were wasted because the EU sought to dictate human rights conditions to Canada, a huge insult. The EU should stick to trade, not politics, and we must make up for lost time," he added.

While CETA might have the support of Parliament's largest groups, others have already warned they would not agree to its ratification. Helmut Scholz, trade policy coordinator for the GUE/NGL group, acknowledged that, "the new ISDS process is no longer called ISDS, and includes elements that make the system more transparent and that make it more difficult for corporations to file a case."

However, he also noted that, "the basic principle remains; corporations may sue governments if they see their profit expectations threatened by a new law, and, to this end, they are provided with a separate legal pathway using a tribunal that is not bound by the legal and constitutional systems of the 29 states participating in CETA."

The German MEP argued that; "By agreeing to this investor protection system, the Canadian government and the EU Commission are declaring that they have no confidence in the rule of law of its partners. Apparently, both want to see better guarantees on the side of investors' interests, rather than what could be expected by our legal systems."

Ska Keller, Greens/EFA group Vice-Chair, agreed; "The final text maintains the undemocratic investor-state arbitration tribunals for foreign investors, which are inaccessible for citizens and national companies. The Commission has proposed only procedural changes, for example, in the selection of judges. However, unilateral private actions against democratic decisions will still be possible, which jeopardises core democratic values. "

"At the same time, unprecedented rights for foreign investors will be set in stone. The codification of the principle of investors' 'legitimate expectations' gives them the right to take action against any change in legislation. This flies in the face of democratic principles."

"These proposals set up a parallel legal system; domestic companies will have to go to ordinary courts whilst foreign investors will go via a separate court. This is unfair and makes no sense given that the EU and Canadian judicial systems already function adequately. Rejecting private arbitration courts must mean rejecting CETA."

The agreement will be presented to the Council by this summer, with ratification by member states and Parliament expected in early 2017.


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