This
collection of short reports describes and analyses many of the most
contentious aspects of the proposed Canada–EU Comprehensive
Economic and Trade Agreement (CETA). Dozens of trade and investment
experts in Canada and the EU have collaborated to provide a diversity
of perspectives on the proposed agreement, but all agree that CETA,
as it is written, threatens the public good on both sides of the
Atlantic. In a wide variety of policy areas only loosely related to
trade, CETA elevates the rights of corporations and foreign investors
above the welfare of citizens and the broader public interest.
Briefly:
-
INVESTOR–STATE DISPUTE SETTLEMENT
The latest
CETA text pays lip service to public concerns about investor–state
dispute settlement (ISDS) by replacing it with what the EU and Canada
are calling an Investment Court System. While it improves some
procedural aspects of ISDS—for example, by making arbitrators less
prone to conflicts of interest—the protections afforded to
investors in this new ‘court’ system are largely unchanged. Under
CETA, foreign investors still receive extraordinary legal rights to
sue governments for measures that may negatively affect their
investments. These protections, which are not available to domestic
investors or ordinary citizens, would expose taxpayers to huge
financial liabilities and threaten to chill public policy. Although
the text mentions a so-called right to regulate, the clause is a
guideline and does not adequately protect public interest regulation.
- FINANCIAL
SERVICES
By allowing
more cross-border financial services and facilitating greater direct
investment in the financial sector, CETA would encourage the
financial industry to take greater risks—for example, by engaging
in speculative investment—in order to survive in a more competitive
international market. CETA would also limit the regulatory options
available to governments to address financial instability by, among
other measures, giving the financial industry an institutionalised
voice in the regulatory process. Ignoring the lessons of the
financial crisis, CETA would open the financial services sectors in
the EU and Canada to greater competition and put downward pressure on
prudential regulation in ways that make both Parties more vulnerable
to financial shocks and contagion. Furthermore, key financial
services provisions in CETA are enforceable through the ISDS
mechanism, so governments could effectively be forced to pay banks
for the privilege of regulating them.
- TRADE
IN SERVICES
CETA would
restrict governments’ capacity to regulate the entry and activity
of foreign service suppliers in the domestic market, even when such
regulations do not discriminate based on the country of origin of
firms. By ensuring market access and preferential treatment for
foreign service suppliers, CETA threatens the viability of public
services and local service suppliers. CETA includes exceptions to the
services rules, but its ‘negative list’ approach means that all
services are covered by default unless specifically excluded by
negotiators. Moreover, through its ‘standstill’ and ‘ratchet’
mechanisms, CETA forces governments to make any future regulatory
decisions in the direction of even greater liberalisation, including
for many of the services that are on the list of exceptions.
- PUBLIC
SERVICES
While a
limited number of public services are excluded from some of CETA’s
liberalising provisions, key reservations are vaguely worded or
flawed. The agreement’s investment protections would restrict the
capacity of governments to expand public services or to create new
ones in the future. CETA conflicts with the freedom of elected
governments to bring privatised services back into the public sector.
Once foreign investors are established in a privatised sector,
efforts to restore public services can trigger claims for
compensation, effectively locking in privatisation.
- DOMESTIC
REGULATION
CETA would
constrain policy flexibility in areas only loosely related to trade
by mandating that licensing and qualification requirements—as well
as any measure relating to those regulations—be ‘as simple as
possible’. CETA interprets even non-discriminatory regulations as
potential trade barriers. The scope of the domestic regulation
provisions is broader than in other agreements and even trumps other
areas in CETA. Regulations concerning not just services but also ‘all
other economic activities’ are covered with only a narrow set of
reservations.
- REGULATORY
COOPERATION
CETA
would create a set of institutions and processes for foreign
governments (and their corporate lobbyists) to have a say in the
creation of new domestic regulations, which could delay or halt the
introduction of public interest legislation and undermine the
precautionary principle. The range of regulatory areas covered by
these rules is extensive, including not just goods and services, but
also investment and other areas only loosely connected to trade. Any
attempt to ‘harmonise’ regulations between the EU and Canada
threatens to push standards down to the lowest common denominator.
Moreover, business lobbyists could use this process to push for
regulatory changes that are too controversial to be included in the
text of CETA itself.
-
INTELLECTUAL PROPERTY RIGHTS
CETA would
strengthen the position of patent holders relative to innovators and
consumers, which would encourage the already destructive practice of
patent trolling in software and other industries. Because
intellectual property is covered by the investor–state dispute
mechanism in CETA, patent holders may be able to sue governments for
future regulations designed to reduce the power of patent trolls.
CETA does not directly threaten Internet freedom, but by locking
in the current system of industry-friendly intellectual property
rules in Canada and the EU, CETA would prevent governments from
returning to a more user-friendly intellectual property regime in the
future.
-
AGRICULTURE
The
ratification of CETA would be a severe setback for efforts to
encourage non-industrial farming practices and sustainable
agriculture on both sides of the Atlantic. For example, by
expanding duty-free import quotas (e.g. for milk and meat), CETA
would expose Canadian and European farmers to considerable
competitive pressure, which could encourage more profitable (for
some) but less sustainable farming practices. Furthermore, CETA
raises concerns around processing and production standards,
particularly in Europe. Practices that are considered safe in
Canada, such as the surface treatment of meat with acetic acid, the
use of hormones in beef production, and the use of genetically
modified organisms, are restricted in the EU on the basis of the
precautionary principle. Under CETA, those precautions could be
attacked on the basis of the ‘aftercare principle’ employed in
Canada’s ‘science-based’ regulatory approach. CETA also
undercuts the current system of geographical indications for European
products. Of the 1,308 food items, 2,883 wines and 332 liquors
protected in the EU, only 173 are protected in the CETA text.
- CLIMATE
AND ENERGY
CETA’s
provisions for investment protection coupled with its weak
protections for environmental and resource measures will undermine
sustainable climate and energy policy in the future. Efforts to
stop fossil fuel–based energy production and promote renewable
energy will be threatened by CETA, which poses a grave danger to any
measures put in place to reach the goals that the EU and Canada
agreed to in the 2015 Paris Agreement. CETA lacks any provisions that
clearly protect regulations and measures aimed at curbing climate
change or promoting renewable energy from investor attacks. The
agreement’s Trade and Sustainable Development chapter is thin and
does not contain any concrete obligations for the Parties to develop
future-oriented and climate-friendly policies.
- LABOUR
RIGHTS
Despite its
positive rhetoric regarding the rights of workers, CETA fails to
introduce the kind of binding and enforceable labour provisions that
would protect and improve labour standards in the EU and Canada.
Several EU member states as well as Canada have not ratified some of
the International Labour Organisation’s core labour standards or
priority governance conventions. The CETA text encourages but does
not obligate them to do so. Tellingly, the labour chapter in CETA is
exempt from the general dispute settlement provisions of the
agreement. In the event of a dispute over a labour standards
violation, CETA merely requires the Parties to engage in non-binding
consultations.
- CANADA
- SPECIFIC CONCERNS
Most
concerns about CETA are shared by Europeans and Canadians, but a
handful of CETA’s impacts would be felt more negatively in Canada.
Under CETA, Canada would be forced to make unilateral changes to its
intellectual property regime for pharmaceuticals that would increase
drug costs. For the first time in a Canadian trade agreement, CETA
would apply restrictive procurement rules to municipal and provincial
governments, which could undermine local and regional development
initiatives. CETA could also come into conflict with the rights of
Indigenous peoples, whose traditional lands are often the target of
foreign resource companies. Other areas of Canadian concern
include the impact of CETA on supply-managed agricultural sectors,
and how the chapter on the temporary entry of business persons will
affect the domestic labour market.
-
RATIFICATION PROCESS
For the
purposes of ratification in the EU, CETA has been presented as a
‘mixed’ agreement. This means that, following the decision of the
Council of Ministers (expected autumn 2016) and the vote in the
European Parliament (expected late 2016/early 2017), all 28 EU member
states must ratify the treaty. Hower, the European Commission and
many member states are pushing for ‘provisional implementation’
of CETA even before the national ratification processes. At all
stages of the ratification process, CETA’s critics in Europe will
have opportunities to organise against CETA’s implementation. Legal
actions against the agreement have already started: CETA is being
challenged before the European Court of Justice and, at the member
state level, before the German Federal Constitutional Court. In
Canada, CETA must be passed into law nationally before it comes into
force, which will require the approval of both the elected federal
Parliament and the appointed Senate. The current government is
strongly in favour of CETA and will push for its ratification as
early as autumn 2016, despite opposition from a variety of
municipalities and public interest organisations.
Full
analysis:
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