EU, Canada change ISDS clause, get closer to ‘gold-plated trade deal’

The European Commission announced on Monday (29 February) that  it has agreed with the Canadian government to amend the controversial investment protection clause to pulverise the risk of defeat  on a ratification vote of the trade agreement in the European Parliament.

The two partners have aligned the EU-Canada Comprehensive Economic and Trade Agreement (CETA) with the EU’s TTIP proposal of November 2015 and contained in the recently concluded EU-Vietnam free trade agreement.

Malmström: TTIP could follow Vietnam model

The EU Trade Commissioner has prioritised more transparency and a greater focus on sustainability and development, citing the new Vietnam deal as a potential model for TTIP. EURACTIV Germany reports.

“CETA takes on board our new approach on investment and its dispute settlement,” said EU Trade Commissioner Cecilia Malmström.

The revised CETA text includes a new article which preserves governments’ right to regulate and ensures that investment disputes will be adjudicated in full accordance with the rule of law.

The new deal does not feature any longer ad-hoc arbitration, but a permanent, institutionalised dispute settlement tribunal where members will be appointed in advance and that would abide by a very strict code of conduct.

“By making the system work like an international court, these changes will ensure that citizens can trust it to deliver fair and objective judgements. We can confidently say that we’ve met the expectations of both the Member States and the European Parliament,” she added.

Last week, however, the German Association of Judges voiced its concerns  against TTIP’s proposed public investment courts.  The judges believe that “creating special courts for certain groups of litigants” is a mistake.

German judges oppose proposed TTIP courts

The German Association of Judges has come out against TTIP’s proposed public investment courts. As a result, it has put itself on a collision course with the European Commission. EURACTIV Germany reports.

The agreement between the EU and Canada marks the end to legal scrubbing and it will now be sent to the European Council and the European Parliament for their assent.

CETA is expected to remove custom duties and save European exporters  around €470 million a year for industrial goods and €42 million a year for agricultural goods. The EU and Canada have also agreed to accept each other’s conformity assessment certificates in areas such as electrical goods, electronic and radio equipment, toys, machinery or measuring equipment.

“This is really a gold-plated trade deal. It is going to bring tremendous benefit to Canadians and to Europeans, we are going to feel it all in a real increase in prosperity,” said International Trade Minister Chrystia Freeland said in Ottawa on Monday.

The original CETA agreement, initially concluded in August 2014, was already the most advanced system for investors’ protection and the settlement of disputes.

The EU quietly asked newly elected Justin Trudeau’s government last fall to revisit the deal and redraft the investment protection clause, taking into account the changes made in the framework of trade talks with the United States. They feared that without aligning the two deals anti-CETA campaigners would use it as a weapon to derail ratification.

For watchdog NGO Corporate Europe Observatory, the old and the new CETA are equally risky as they give foreign investors greater – substantive and procedural rights.

However, the European Parliament seems happy with the agreement. MEPs on both sides of the political spectrum have greeted the new deal.

Dutch Liberal MEP Marietje Schaake said that the agreement with Canada is a step in that direction.

“We do not want secret courts that allow companies to put pressure on European rules and regulations . The biggest problem is that EU member states do have 1,300 other treaties with the outdated ISDS in it. Those need to be reformed. Together with the Canadians and other international players, we need to work on an international court modelled on the World Trade Organisation as a solution,” she said.

Centre-left MEP David Martin, S&D spokesperson on trade, greeted the news as a ‘first step to renew and modernise investment protection in trade agreements between democratic states with a well-functioning legal system.”

Read more with Euractiv

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