I’ve received some 500 messages in recent weeks about the proposed free trade agreement between the EU and Canada, known as the Comprehensive Economic and Trade Agreement (CETA).
Negotiations between the EU and Canada were launched in 2009, and a provisional agreement was reached in 2014. The text is now undergoing ‘legal scrubbing’, a technical stage which follows the conclusion of international agreement negotiations. The final text will be submitted to the European Parliament once this process is concluded, and it will then be put to a vote. It can only enter into force if Parliament approves it.
The agreement contains advantages, but also gives rise to some major concerns.
Canada is an important trading partner of the European Union, and within the EU, Canada’s highest volume of trade is with the UK. CETA foresees eliminating most tariffs and increasing opportunities for British businesses to export goods and services to the Canadian market. Canada has also agreed to establish a framework for recognising EU products with geographical indicators, to give legal protection to traditional European food and drink.
CETA also foresees a sustainable development chapter, which commits both partners to increasing environmental protections, reaffirming obligations to labour rights and establishing a platform for NGOs, trade unions and civil society to monitor how the agreement is applied. Including a sustainable development chapter has been a key demand of Labour MEPs and our Socialist and Democrat colleagues in the European Parliament.
However, the current CETA text also contains investor-state dispute settlement (ISDS) provisions, which give investors legal recourse if they believe the terms of the investment agreement have been violated. Labour MEPs are against ISDS. Although ISDS has existed in thousands of trade agreements since the 1950s, including many UK investment agreements, the way they have been used by multinational companies is highly problematic, allowing them to challenge governments’ action on public health or the environment where this causes them losses. This is entirely unacceptable.
Under pressure from the European Parliament and the Socialist group in particular, the European Commission (which negotiates with Canada on the basis of a mandate given to it by all EU governments) agreed in principle to close these loopholes and end the practice of secret arbitration. What it came up with was several substantial changes to the traditional ISDS system. It would restrict the grounds on which investors could take action to clear cases of discrimination. It would not allow cases to be brought against legitimate health, environment or public policy legislation, nor because government action harms a company’s profits. The right of governments to regulate is laid down. There would be more transparency, ending secret arbitration: hearings and documents would be made public.
These changes go a long way to reforming investment protection, but it is still not acceptable for the S&D Group. We are encouraging the Commission to make further changes with Canada, including stricter conditions on the conduct of arbitrators and a more explicit affirmation of the right of governments to regulate in the public interest.
We have other concerns regarding CETA, such as whether the protections offered to public services are sufficient, the lack of explicitly enforceable labour rights in the agreement and the extensive protections given to pharmaceutical patents.
The text of CETA is currently being closely checked by trade and legal experts in both the EU and Canada, before it is translated into all 24 official EU languages. This process is expected to take until mid-way through 2016, when the agreement will be sent to national governments and to the European Parliament for ratification. Approval of member states (in the Council) and of the European Parliament are both required for the trade agreement to enter into force.
Please be assured that the Socialist & Democrat Group will continue to demand further reforms of investment protection are made to close the remaining loopholes. We will then analyse the final text closely on all its aspects before making a judgement, to ensure the proposed agreement is beneficial to jobs and keeps the European Union a competitive global trading partner with the highest protection for environmental standards, labour rights and public services. It may well be that the agreement will need to be supplemented by further guarantees or even re-opened if it is to secure parliamentary approval. Although the S&D MEPs do not have a majority in the Parliament, our concerns are shared by many others, and this is not a parliament where government whips dictate the results!