Corporate Sovereignty Helps To Bring EU-Canada Trade Deal To Brink Of Collapse

from the politically-toxic dept

The trade deal between the EU and Canada, known as CETA — the Comprehensive Economic and Trade Agreement — is remarkable for the fact that it has still not been signed and ratified, even though its completion was “celebrated” over two years ago. That’s partly because of growing resistance to the inclusion of a corporate sovereignty chapter — also known as investor-state dispute settlement (ISDS). In an attempt to head that off, the European Commission persuaded Canada to swap out vanilla ISDS for a new, “improved” version called the Investor Court System (ICS). As Techdirt noted before, this is really just putting lipstick on the pig, and doesn’t change the fact that companies are being given unique privileges to sue a country for alleged harm to their investments using special tribunals, as well as in national courts.

CETA has faced other problems, notably from Bulgaria, Romania and Belgium. The first two said they wouldn’t sign because of Canada’s refusal to lift visa requirements for their citizens. That blackmail seems to have paid off. The Sofia Globe reports that Canada has agreed to remove the visa requirements from December 2017, and Bulgaria and Romania now say that they will sign CETA.

That leaves Belgium, or more precisely, the French-speaking Belgian region of Wallonia, which, as we noted back in April, was not happy with CETA. A couple of weeks ago, the Walloon parliament confirmed that it would refuse to give its permission for the central government to sign CETA in its name (original in French). Because of the way the Belgian political system works, that meant that Belgium would not be able to sign CETA on October 27, as the European Commission had originally hoped.

That, in its turn, meant that the European Union as a whole would not be able to sign CETA on that day. That’s because back in July, European Commission president Jean-Claude Juncker agreed to treat CETA as a so-called “mixed agreement,” a deal that must be ratified by all of the EU member states’ national assemblies, as well as by the bloc. If Belgium can’t do that because of Wallonia, CETA is blocked.

As you might imagine, the Walloons have come under intense pressure to change their mind, from just about the entire EU and Canadian political establishment. Last Friday, Wallonia’s Minister-President Paul Magnette told the regional parliament that he still refused to allow Belgium to sign, despite that pressure. As well as being worried about the impact of Canada’s agricultural products on Walloon farmers, Magnette singled out corporate sovereignty as a particular worry for him and his colleagues.

The fact that CETA’s ISDS/ICS remains the most problematic area can be seen from a fascinating CETA document (pdf) that was recently leaked. It’s called the “Joint Interpretative Declaration on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union and its Member States,” and is an attempt to offer additional guarantees that are enough to convince Magnette and other CETA skeptics to allow its signing and ratification:

This interpretative declaration aims to provide a clear and unambiguous statement of what Canada and the European Union and its Member States agreed in a number of CETA provisions that have been the object of public debate and concerns. This includes, in particular, the impact of CETA on the ability of governments to regulate in the public interest, as well as the provisions on investment protection and dispute resolution, and on sustainable development, labour rights and environmental protection.

The section on Investment Protection is by far the longest, reflecting the seriousness of the problems there. Here’s a key paragraph:

CETA clarifies that governments may change their laws, regardless of whether this may negatively affect an investment or investor’s expectations of profits. Furthermore, CETA clarifies that any compensation due to an investor will be based on an objective determination by the Tribunal and will not be greater than the loss suffered by the investor.

As that demonstrates, there is nothing new in the declaration. Nobody is claiming that CETA will stop governments changing their laws, just that the massive fines that can be imposed by supra-national tribunals are likely to discourage them from doing so. Similarly, claiming that those fines will be “based on an objective determination by the Tribunal and will not be greater than the loss suffered by the investor” simply confirms the untrammelled power of the tribunal to impose whatever fine it thinks is appropriate.

As of this weekend, Magnette was still holding out for more guarantees. He has said that he is not against CETA in principle, but does want improvements to it, which offers the European Commission a way out of this crisis that they will surely try to seize. If the interpretative declaration is changed sufficiently, Magnette may be willing to give permission to Belgium to sign.

However, there’s another factor. In the face of the continuing problems on the EU side, the Canadians seem to be close to calling the whole thing off. As the Guardian reported:

A landmark trade deal between the European Union and Canada is in meltdown, after Canada’s trade minister walked out of talks with the Belgian regional parliament that has been blocking the deal.

The Canadian trade minister, Chrystia Freeland, was on the verge of tears on Friday as she announced the “end and the failure” of talks with the Walloon government.

However the head of the European parliament said late on Friday he would hold emergency talks in a bid to save the deal.

As that indicates, EU politicians are still trying to patch things up, but it’s unlikely that Canada will be willing to make yet more concessions to satisfy Magnette. For his part, he said on Sunday night that he was “disappointed” with the Commission’s latest attempt to convince him to accept CETA’s ISDS (original in French). In any case, it looks increasingly likely that CETA will not be signed on October 27, and that Canada’s prime minister, Justin Trudeau, will not be traveling to Europe to do so, which would be a huge diplomatic embarrassment for the European Commission. Corporate sovereignty may not be the only reason CETA is falling apart, but it is certainly one of the main ones. The twists and turns of the Walloon saga confirm just how politically toxic it has become.

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Comments on “Corporate Sovereignty Helps To Bring EU-Canada Trade Deal To Brink Of Collapse”

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That One Guy (profile) says:

"Now, what can we do about the elephant in the room without actually kicking it out..."

The funny bit of course is that with corporate sovereignty being a big issue they’ve really only got themselves to blame.

They could simply see how toxic it is to various parties and toss it to the betterment of the public, lawmakers and governments (basically everyone not a large corporation), but since that stands to tick off the people who bought them instead you see them wiggling and squirming, trying to convince the recalcitrant parties that it’s not that toxic, and look, they even named it something different, that’s got to count for something, right?

BernardoVerda says:

"Canada" is feeling frustrated, and perplexed -- a lttle miffed, maybe even a little hurt

Here in Canada, it’s rather amazing just how reluctant the press has been to recognize or explore the issue of the investor-state dispute settlement provisions, at all, let alone acknowledge their fundamental role in the opposition to this agreement.

Most of the resistance to the CETA agreement seems to be casually brushed aside as more-or-less baldly protectionist sentiment and/or antiquated reluctance to accepting “free trade” principles.

So then, of course, the Walloon stumbling-block must be assumed to be merely some combination of agricultural protectionism and incomprehensible, ultimately irrational fear of adjusting to the modern world and a modern economy — and not even justified {sniff} because after all, even under the new deal Canada still won’t be exporting much pork to Belgium, anyhow.

Ronald (profile) says:

Rela Life example: Why not show ho this would go down?

Let’s have an example, and see how this would have played out! (I do not pretend to know, but perhaps others or EU experts can tell)

The example is right here:

A tomanian village and a Canadian mining opreation are in conflict over an open cast mine:

“Last July, the company filed a request for international arbitration to obtain compensation from Bucharest over the delays to the project.

Initially in favour of the mine, Romania’s former leftwing government abruptly changed its position in 2013 following a wave of unprecedented protest across the country”

Ronald (profile) says:

Re: Re:

Well there is a lot about creating common standards and regulations that otherwise interfere with exports and imports. So that makes trade easy.
The problem is that what happens is that manufacturers and other organisations see this as an opportunity to weaken those standards in stead of strengthening them. And (some) politicians and consumer organiasations see them as an opportunity to strengthen those standards, and otherwise inject a lot of their policies. So then you get an decade long negotation process where some win and some lose. But mostly the politicians and public servants lose, since they cannot handle the way the high priced lawyers hired by the industry are able to deal with the negotiations…

orbitalinsertion (profile) says:

Re: Re: Re:

I certainly have not seen the process through inception, but it seems like a lot of regulatory normalization involves raising protections or price-setting across the board while destroying environmental law from the outset. And yes, the empowering of corporations to control and make profit at the expense of people, countries, and the world certainly increases with the lobbying and the fact that some companies and industry groups get a seat at the table as stakeholders, none of this has any apparent positive effect on the total cost of trade by removal of tariffs (the theoretical point of the whole thing).

Maybe they were trade deals, once. But i am not overly convinced. Maybe it is a matter of perception.

Anonymous Coward says:

Re: Re: Re:

“You get negotiations process” – no, you don’t. Some unknown experts and corpo-lobbyists do, the public does not. And then, when it comes to signing, the governments can either take it or leave it.

But this is not selling an Apple to Cupertino-fanboy, that corporations are always getting so moist to have (take it, of – and so the public with their governments should be able to modify the agreement’s terms the way they like.
Maybe Waloons just figured this out.

Anonymous Coward says:

a shame it’s only to the brink and not yet scuppered it fully and completely!
i read where certain lobbyists and coporate heads are still trying to push CETA (and other deals) through. that being the case, it can only mean there are significant financial rewards on offer to them! and not just them either, to the myriad of corrupt politicians who are involved as well! they aren’t doing this for the benefit of the people or the industries concerned, but for what they are getting out of it personally

ECA (profile) says:

for all of this..

Where is the trade??
Is it OUR RIGHT to sue other nations for NOT buying our BLEACHED CHICKENS, because we would loose money..
(the Brits dont want them)
Iv looked all over the net, and come to the conclusion that the USA SHIPS OUT(exports/GIVE AWAY) over 60% of our grains and corn.
And one the BIG GMO companies SELLS its good in other nations and SUES farmers, that TRY to hold grain for the next harvest, so they would not need to BUY MORE GRAIN..

David (profile) says:

Near to tears. Seriously?

Okay, let’s hear it for the next reporter to note that the man representing XYZ-whatever is strutting like a Banty rooster, sick as a junk yard dog, disloyal as an alley cat, drunk and disorderly or just too dumb to know the horse has left the barn.

We know they are, so report it when they do. But adding that the woman is near to tears without stating her mood, crushed, angry, so f*ing angry that she was near to tears.

Personally I would guess angry. And yes, I’m mad enough to spit – in a particular reporter’s eye.

orbitalinsertion (profile) says:

Re: Near to tears. Seriously?

True, this, among many other things normative to genders in reporting, and everywhere else, as we are yet instilled and even inculcated with this culturally.

It’s possibly true that the reporter’s intent was to show the extreme frustration in the situation and would report on men equally, but all too often this is not the case, and we can word things more carefully when it is. Particularly in a communications field.

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