Tuesday, 12 August 2014

EU-Canada FTA and Investor-State Dispute Settlement

The EU-Canada Trade Agreement has been finalised after German concerns over possible investor-state dispute settlement provisions were satisfied. The treaty still has to be passed by the EU and the Member States, so it's not a done deal yet (apparently the ratification process could continue to 2016), but the treaty is already being described as a model for the EU-US trade deal (or "TTIP").

Investor-State dispute settlement is a mechanism that allows foreign investors to sue host governments in special arbitration tribunals. Such provisions have been included in trade agreements in the past and have come under fire for allowing foreign businesses to litigate against environmental and public health regulations created by host governments - a way for private business to subvert democratically framed laws. This has been the most controversial issue when it comes to the TTIP, raising concerns that European standards will be eroded.

Reportedly Germany protested against the use of investor-state dispute settlement being a part of the Canadian treaty, and even threatened to veto the deal, but Canadian officials state that the disagreement was actually sorted out a while ago, without needing to re-negotiate the treaty. So it's unclear how far the treaty was actually changed, or whether there will still be ISDS provisions in the treaty. The fact that the treaty won't be public before September means that it's hard to welcome this as a victory for standing up against ISDS. (If the ISDS provisions have been removed, then it will show up Trade Commissioner de Gucht's rhetoric over how necessary they are for investor confidence to be waffle).

The treaty probably will be a model for the negotiations to come for the TTIP, not only due to similar issues that need to be thrashed out, but also because this will be a test case for public and parliamentary opinion in Europe. How will the European and national parliaments react - and will the public raise any concerns? The fact that this could be one of the early tests for the European Parliament could make it even more interesting.

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