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New investor protection deal in EU-Canada trade talks offers little consolation

Press Release

Tuesday 1 Mar 2016

Nessa Childers, MEP for Dublin, reacted with apprehension to today’s announcement, from the EU Commission and the Canadian government, of changes to provisions on investor protection in the draft EU-Canada trade deal.

This announcement comes after widespread civil society rejection of the private arbitration panels used by corporations to challenge government decisions under protection investment protection chapters in trade treaties.

These were met with particularly fierce opposition in the context of the ongoing EU-US trade talks, as citizens grow more aware of the track record of big corporations in suing governments for compensation for losses in expected profits.

These come on foot of public policies and decisions in areas such as tobacco control or environmental protection.

The European Commission decided to propose the replacement of this system, known as Investor-to-State Dispute Settlement, with a permanent, publicly appointed arbitration court called an  investor court system (ICS)

Speaking from Brussels today, in reaction to the announcement, Ms. Childers said:

“Last autumn, the Commission caved in to pressure from civil society and MEPs, who have the final say on any trade agreements negotiated by the Commission on behalf of the EU. The EU executive dropped private arbitration in favour of a permanent court with some safeguards, to rule over disputes under the EU-US trade deal.

“However, myself and other colleagues pressed the Commission on the fundamental contradictions between this ‘ISDS-lite’ system, and the unadulterated, hard-core ISDS system that would govern disputes under the EU-Canada trade deal”.

“Initially, the Commission insisted that no changes could be brought back to the table with Canada, which led to widespread fear that U.S. multinationals could sue EU governments through the back door, using this agreement via their subsidiaries in Canada.

“But, even if the Commission backtracked and secured this concession, a  fundamental problem remains.

“We are basically granting corporations exclusive rights to sue for compensation in a special legal forum, other than the courts of law everyone else must resort to, and institutionalising a system first devised to deal with remote, untrustworthy jurisdictions in what was then known as the Third World.

“This is quite an intractable mess, and one that costs citizens either through tax money lost to company claims, or through public policy measures that do not see the light of day because governments fear legal action.”

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

Next steps

  • CETA will be translated into the other EU languages to allow the commission publish its legislative proposal to ratify the agreement
  • The Council of member states and the European Parliament will vote on CETA
  • EU Member States ratification – there is a conflict of opinion as to whether CETA is a mixed agreement – which requires national approval, or an EU agreement where the EU Parliament and Council’s approval is enough.