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European Commission asks Canada to renegotiate key provision of CETA

The European Commission has approached the Trudeau government about renegotiating the Investor-State Dispute Settlement (ISDS) provision in the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). The negotiations on the deal were formally completed in September 2014, but it has been stalled in a legal scrubbing and translation process since then.

Reuters reports, “Canada is open to rethinking the contentious issue of investor protection in its free-trade accord with the European Union… Steve Verheul, Canada’s chief trade negotiator with the European Union, [said] ‘I am going to be exploring potential paths forward on this issue, but I should flag that we do have concerns about reopening any part of the negotiations’…”

The European Commission has proposed that an Investment Court System (ICS) replace the ISDS provision in both CETA and the United States-European Union Transatlantic Trade and Investment Partnership (TTIP). The Council of Canadians has rejected this because ICS and ISDS are not substantially different. Council of Canadians chairperson Maude Barlow says, “The proposed investment court system still gives a special status to foreign corporations by allowing them to challenge the laws that apply to everyone else through a special system outside established court systems.”

It would appear that Verheul’s concerns about reopening CETA to amend the ISDS provision include:

– the “very careful balance that was struck” in CETA could unravel

– his belief that governments already have the right to regulate under the current CETA

– he says setting up an international court has “some appeal” but is a longer-term exercise that would delay the implementation of CETA

– Canada agreeing to ICS, but the US rejecting it in the ongoing TTIP negotiations (as it already has, see here)

– Canadian investors being at a disadvantage should Canada agree to a different dispute model than the United States

Meanwhile, the European commissioner for trade Cecilia Malmström has tried to downplay the issue by asserting it could be settled without reopening CETA. According to her media release, “[Malmström] stressed that the CETA provisions on investment were already state of the art and that the EU was aiming for some fine tuning to make it equivalent to the new EU approach as laid out in the Investment Court System proposal.”

The bind for the Trudeau government is this: It’s unlikely that CETA would pass in a ratification vote in the European Parliament given the high level of opposition in that body to ISDS and the growing demands for “reform” to that provision. But given TTIP negotiations are ongoing, and the United States has rejected ICS in those talks, it’s likely not practical for Trudeau to endorse ICS in advance of a resolution of the issue within the TTIP. As such, a waiting game has likely developed. While it had been expected that CETA could go before the European Parliament early next year, it’s now likely to be delayed until late 2016 or early 2017.

Barlow has recently completed an 8-country speaking tour in Europe to help mobilize Europeans against CETA and TTIP in advance of those votes whenever they may happen. For a brief overview of that tour, please click here.

For more on our campaign to stop CETA, please click here.

Further reading
Council of Canadians rejects both ISDS and ICS in CETA (Nov. 20, 2015)
US rejects Malmstrom’s proposals to amend ISDS in TTIP (May 11, 2015)
What’s going on with CETA 14 months after negotiations on it were completed? (Nov. 28, 2015)

Photo: Canada’s lead CETA negotiator Steve Verheul.