ISDS provision still dogs trade deal
Following more than six years of talks, negotiations on the EU-Canada comprehensive economic and trade agreement (CETA) have ended, according to a story by Julie Levy-Abegnoli for The Parliament Magazine. The deal is expected to come into effect next year, pending approval from member states and the EU Parliament.
Talks had been at a standstill since 2014 when concerns were raised over a proposed investor-state dispute settlement (ISDS) mechanism.
As they operate currently, such mechanisms allow corporations to sue governments before secret tribunals if the corporations believe their profits are under threat from government policies.
Taxpayers, who would have to pay for any compensation awarded by a tribunal, are not allowed to know what goes on during the hearings.
And there is no appeals process.
Many of those opposed to ISDS provisions, which are included also in the Transatlantic Trade and Investment Partnership (TTIP), involving the US and the countries of the EU, and in the Trans-Pacific Partnership (TPP), involving the US and 11 other countries (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam), have claimed that they are undemocratic.
Even though these agreements have been negotiated in secret, there have been leaks leading to public outcry over the ISDS provisions.
In the case of the TTIP, which is still under negotiation, some adjustments are believed to have been made to the ISDS provisions, and, in the case of the TPP, which has been signed but not ratified by the parties to it, tobacco has been the subject of an ISDS ‘carve out’.
According to Levy-Abegnoli, the CETA 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 percent of customs duties, leading to tariff savings for EU exporters of around €470 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,” he said
But 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 co-ordinator 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.”
“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,” the German MEP argued. “Apparently, both want to see better guarantees on the side of investors’ interests, rather than what could be expected by our legal systems.”