17 September 2014

Investor State Dispute Settlement dominates CETA debate in Strasbourg

MEPs raise doubts on whether Canadian deal will pass Parliament scrutiny in 2015

Simon McKeagney, Editor

A late plenary debate on CETA last night in Strasbourg was dominated by questions over the Investor State Dispute Settlement (ISDS) with MEPs claiming that the Commission has ignored the concerns of the public around the mechanism, and warning that it would have a difficult time passing in a parliamentary vote as a result. 

Outgoing Trade Commissioner Karel De Gucht said that ISDS in the Canada deal “sets new standards” and that all concerns had  “been addressed”, but noted that it would be well into 2015 before the CETA agreement would reach the floor of the plenary for a vote.

Negotiations for the CETA were launched in 2009 and the political agreement was prematurely concluded on October 2013 without any signatures on paper. The continuing ambiguity over whether a consensus has been reached on the investor protection chapter might be one of the reasons why CETA will not be initialled at the EU-Canada Summit in Ottawa next week.

The key question

David Martin (S&D) asked the Commissioner if there were “political reasons” that the text was not being initialled next week, and that if negotiations were not regarded as concluded “would it be possible for the ISDS still to come out from CETA?” Martin’s views reflected many of the interjections from the S&D group, who see ISDS, along with the threat to public services, as one of the largest stumbling blocks for deals like CETA and TTIP. “My group could much easier put their weight behind CETA if ISDS was removed from the text.”

Similar expressions of doubt were expressed by ALDE MEPs, with Marian Harkin asking “why is it necessary in countries that have highly developed and well understood legal systems to include extra mechanisms for resolving disputes?” Her views were echoed by Marietje Schaake, who said: 

“But still the key question that should be answered is whether or not we need ISDS between two mature democracies with the rule of law. But the question is not only relevant for the CETA. Many of us are looking at the text with the anticipation of finding clues for the TTIP which is under negotiation. I am looking forward to learn more about the results of public consultation to which an unprecedented amount of citizens and stakeholders replied.”

On the public consultation De Gucht said that the results would be released in “the next couple of weeks” but maintained that “it shows that 50,000 of 150,000 answered identically…they have found a way to circumvent without going into the system”. This does not bode well for those arguing that all responses should be counted as equal, regardless of whether they’re identical or not.

Green MEPS Keith Taylor and Yannick Jadot both called for an outright rejection of CETA, with Mr. Jadot saying it was clear that the agreement had “more risks than benefits.” He noted Germany’s demand for an ISDS exemption on banking and debt restructuring but said that “for us in the European Parliament it is not enough.”

Germany puts it foot down

The reservations around ISDS at Council level should also not be underestimated. Friday’s meeting of the Trade Policy Committee of the Council indicated that it could be a long road ahead before countries like Germany will agree on a final ISDS chapter, despite Commission claims that negotiations have come to an end.

Council sources say that the current text on investor protection is ‘not acceptable for Germany’ and that continued negotiations on the ISDS chapter are needed to make it better. While their concerns centre on the need for ISDS exemptions on banking and debt restructuring, it is understood that Germany has also suggested that other areas, from taxation to culture and media, are in need of a review in the context of ISDS. They have also said that the public consultation on ISDS in TTIP should be taken into account for CETA.

What is clear is that in the minds of many, the future of ISDS in CETA has a direct impact on the ongoing EU-US negotiations, and that few see ISDS as viable for either agreement. The Commission may maintain that the ISDS provisions in TTIP and CETA are entirely unconnected, but given the heightened public awareness of the risks, as well as a future plenary vote on CETA next year, it's unlikely to remain that way. Germany may still accept ISDS in CETA if their demands are met, but will the Parliament? The future of ISDS, and thus, CETA and TTIP, remain in doubt. 

You can watch the full recording of yesterday's debate here.

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