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Merkel’s political imperatives spell trouble for CETA

German chancellor Angela Merkel will be in Ottawa for a visit on Monday, but she may not be bringing the news Stephen Harper wants to hear when it comes to the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).

That’s because the German government wants to reopen CETA and amend the investor-state dispute settlement mechanism. This controversial provision allows a transnational corporation to sue a national government that passes public interest or environmental legislation that impacts their future profits.

Last month, Germany’s Minister of Economy Sigmar Gabriel and Secretary for Economic Affairs Matthias Machnig met with France’s Secretary of State for Foreign Trade Matthias Fekl and called on the European Commission and the European Union’s member states to consider changes to this arbitration clause.

The Harper government, however, says the negotiations for CETA were completed in October 2013 and that the investor-state provision in it is non-negotiable. Harper may have taken this position with the words of former European Trade Commissioner Karel de Gucht in mind. He said last year, “If the negotiations are reopened, the deal is dead.”

Merkel likely does not have an ideological problem with bestowing corporations with the hammer of the investor-state provision, but the political reality is that her Christian Democrats have 311 seats in the Bundestag and need the support of the 193 Social Democrats in that legislature to maintain her ‘grand coalition’ government. Her minister of economy is a Social Democrat and that party is very clear in its opposition to investor-state. Last year, that party’s convention passed a resolution against investor-state.

Beyond the challenge of coalition politics for Merkel, she also needs to contend with an electorate that may not have paid too much attention to a ‘free trade’ agreement with Canada, but is very attentive – and critical – of the European Union’s current negotiations with the United States on another ‘free trade’ deal called the Transatlantic Trade and Investment Partnership (TTIP). If Merkel agrees to a corporate rights provision in CETA, voters in Germany know that the same powers would be extended to US corporations too.

There are many additional reasons why CETA should – and very likely could – be rejected by the European Parliament and EU member states (remembering that the new Syriza government in Greece has already said it will veto the EU-US deal and while in opposition said it would not ratify CETA if it formed government).

Those reasons include the extended patent provisions it gives to pharmaceutical corporations that increases their profits, adds billions to the costs of prescription drugs for those who need these medicines, and delays the introduction of less-expensive life-saving generic drugs. CETA is also the first ‘free trade’ agreement in the world to include provincial and municipal procurement. This public spending would be regulated by this deal and limit the ability of governments to promote local economic development.

It’s also clear that Europeans are worried about the regulatory harmonization that would come with TTIP and CETA. This particularly relates to the weakening of European barriers against genetically modified food and the lowering of food safety standards, most notably the US regulation that allows for chickens after they have been slaughtered to be dipped in a chlorinated bleaching solution to kill germs and bacteria. While these may sound like side issues in Canada, just a few weeks ago more than 25,000 people protested in Berlin on these aspects of the EU-US talks.

There are lots of good reasons to reject both CETA and TTIP.

Merkel’s reasons for needing CETA to be reopened may be less principled, but they nevertheless present a challenge for Harper and an opportunities for people in Canada and Europe concerned about the power that would be given to transnational corporations in these yet-to-be ratified deals.