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21 September 2016

Legal doubt, political concerns, overshadow CETA-TTIP ahead of Bratislava Summit

Less than half of EU countries pen letter of support for both deals as TTIP set to be put on ice

Simon McKeagney, Editor

Tomorrow’s two day meeting of EU trade ministers in Bratislava is set to be interesting. A circle of rumours and uncertainty surround both TTIP and CETA, and both face a mountain of legal and political challenges that may still be their undoing. 

French Foreign Trade Minister has vowed to ask his colleagues that the TTIP talks are suspended (which may already de facto be the case.) In a sign of desperation, German minister for Economic Affairs Sigmar Gabriel flew to Canada last week to personally secure further concessions in CETA, despite the Canadian government and the Commission reaffirming that the negotiations are closed. This week, tens of thousands took to the streets in protest in Brussels and German cities, while sources all but confirm that TTIP will be effectively shelved until next summer, after no signs of progress from the US side and Brexit implications to mull over. All of these developments will need to be considered by EU ministers in Bratislava. 

Renegotiation for Gabriel?

As we wrote earlier this month, Social Democrat politicians are in a particularly hard bind for supporting CETA and TTIP. None more so that Germany’s Vice-Chancellor Gabriel, who together with his European SPD party colleague Bernd Lange MEP (chairperson of the European Parliament’s International Trade Committee) managed to secure a vote in support of CETA at a closed-door SPD party convention on Monday 19. 

This is big news. Rejection would have certainly had an impact on the S&D group in the European Parliament, and support for CETA would have been likely to collapse completely. But instead more than two-thirds of party delegates supported the motion presented by the SPD Bundesvorstand. 

Gabriel can now agree to support the CETA conclusion, signature and provisional application during the Trade Minister Council meeting in Bratislava. It seems now also assured that all other S&D affiliated trade ministers will vote equally in favour.

Gabriel’s brief jaunt to Canada was a crucial factor. Although not mandated to do so, his last minute negotiations with the Canadians shall become part of the CETA Agreement in a "legally binding way".  

The concessions specifically relate to the interpretation of the material investor protection standards of "Fair and Equitable Treatment", the independence of the arbiters in investment cases, and the exclusion of public services from investor challenges. There shall be some kind of "clarifying" additional declaration that has a legally binding value. The exact form of such declaration has not been determined yet, it seems. 

However, to make it more complicated, political wrangling at the SPD party convention resulted in "further concessions” which include the protection of the EU’s precautionary principle; sanctions in the case of failure to obey the labour clauses in CETA; a clarification that foreign investors shall not have advantages in protection vis-a-vis domestic investors; a clarification that committees established under CETA would have "initially" only a "consultative function"; and an "extended consultation procedure" between the European Parliament, national parliaments and civil society, regarding European and national competences prior to any Provisional Application.

This begs the obvious question- with so many changes necessary for SPD support, how can they be achieved without reopening the negotiations? Yannick Jadot, Shadow Rapporteur and Member of the International Trade Committee in the European Parliament thinks this is just one of many CETA problems:

"It will be impossible to conclude the CETA when the German SPD has requested so many changes that are only possible with another renegotiation. Similarly, countries like Belgium and Austria are not even in a position to sign at this time. Austria has promised a plebiscite and the Wallonia parliament has essentially blocked the Belgian government from signing. There is even uncertainty that it is compatible with the EU Treaties. This is not the time to start even considering ratification of this deal.”

Legal doubt 

Last week only twelve EU countries pledged their support for CETA and TTIP in a letter to Commissioner Malmström, the clearest indication yet of how divisive these deals are across Europe. While the political rhetoric may shift under pressure, the structures of democracies in Austria or Belgium are harder to overcome. Without a unanimous vote in favour by all 28 EU Member States, CETA remains stalled, if not dead forever. As it stands, those 28 votes are not guaranteed. 

That says nothing of the fact that ratification is required at Member State level parliaments too, another huge hurdle down the line. It would be unwise for any EU government to pledge their support for CETA in full knowledge that it will fail during the parliamentary ratification process later on. 

Then to the biggest elephant in the room: whether CETA (and by implication, TTIP) is even compatible under EU law. Many legal experts, judges, and public interest groups have raised doubts on whether the investment protection rules in these deals are reconcilable with our judicial systems, given the parallel nature and exclusivity of private arbitration. This remains the biggest problem with CETA, and has not been answered by any reform agenda. Only the European Court of Justice could put the question to bed once and for all, but someone must ask the question. 

If not with Canada…?

Consensus now seems to be building amongst EU ministers and Commission-alike that TTIP is in a coma for the time being, and unlikely to get revived before Obama leaves office. This conclusion comes mainly from the unwillingness of the US negotiation team to move on any of the EU’s priorities up until now. Brexit of course, further complicates this process. With CETA also on shaky foundations, the EU Commission’s director-general for trade Jean-Luc Demarty warned last month that EU trade policy is ‘close to death’. Other proponents of CETA have been quick to make the values argument, arguing that if we can’t do a deal with the Canadians, then who can we make a deal with? 

Neither are true, and both purposefully ignore the genuine problems that exist in the content of these deals. Never before has there been so much interest in free trade deals in Europe. And as a group of public interest organisations summed up well last month, the deals must be judged on their content, not on the people we do deals with, or our vague sense of shared ‘values’:

‘Europe should have more self-belief and trust its democratic processes. Should any institution decide to reject CETA, this will be in response to detrimental provisions, such as investment protection, and missed opportunities in the agreement, and not the prospective trading partner. Such a decision would be based on the belief that the agreement will not deliver the promised benefits - at least not into the hands of small businesses, citizens and the environment.’

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