On 15 February 2017 the European Parliament approved the Canada-EU Trade Agreement (CETA). Now the treaty will need to be ratified by individual member states before it comes into effect. Let’s hope that CETA is either adequately modified before it’s ratified or rejected. I’m not principally against free trade agreements, but CETA is a bad treaty. As you might already know, CETA contains many nasty provisions favouring big business over the small citizen.
The Stop TTIP campaign (which also wants to stop CETA) covered these issues very comprehensively. There are too many to discuss in a single post so let’s single out one which worries me most: the investment court system (ICS), also known as investor-state dispute settlement (ISDS). This is not unique to CETA, but included in many other free trade agreements as well.
The problem with ICS is that it gives foreign investors acces to special courts for investment disputes with states. I can imagine this is justified in case the state in question doesn’t have an impartial legal system, but the EU and Canada have high-quality legal systems. ICS is only accessible for foreign investors, which creates inequality for domestic investors and other actors in society. The rights for foreign investors to have their investments protected are vague and can interfere with the democratic process of lawmaking. And even after modification, judges aren’t employed on a tenured full time basis and a fixed salary, which gives a potential for conflict of interest. These objections, and more, are voiced by 101 European law professors.
Recently South Africa decided to withdraw from treaties with ISDS, Indonesia won’t renew them. India will remodel its treaties to nerf ISDS. Brazil never signed an investment treaty with ISDS at all and doesn’t have difficulty to attract foreign investment. Why do the EU and its member states not notice that? Do we really have to wait for ridiculous claims from foreign investors before we realize that ICS was a terrible idea? Unsurprisingly, my own political party GroenLinks voted against provisional application of CETA for this and other reasons. Another left-wing party, the Dutch Labour Party, thought that ICS was okay after it had been softened (but still subject to the above criticism). D66, slightly less left-wing, maintained that CETA shouldn’t interfere with the rule of law, but voted in favor anyway. They didn’t explain at all why a separate court for foreign investors is necessary.
Fortunately, the regional government of Wallonia resisted CETA fiercely before it reached a compromise with the Belgian federal government to approve the treaty on 27 October 2016. The compromise consisted of an addendum to the treaty which is analyzed in detail here. The most important succes of the compromise is that it requires a review of ICS for compatibility with European law by the European Court of Justice. It also states that the Wallonian region may veto the treaty if the chapter on investment protection is not improved by the time of ratification. We will have to see what their effort is worth by the time they make the decision to ratify the treaty or not.
Even though he couldn’t stop CETA, I’m grateful to Paul Magnette, the minister-president of Wallonia, for his efforts. In an opinion peace on CETA he not only discusses the danger of corporate privilege, but also the environmental consequences of international trade. International trade accelerates climate change through transportation of goods with fossil fuels and should therefore not expand any further. We have to produce more of our goods locally to counter climate change.