12 September 2014

Commission pushes ISDS for CETA despite remaining concerns

Deal unlikely to be initialled as ambiguity over investor protection mechanism continues

Simon McKeagney, Editor

Berlin, up until recently, had been grumbling about the inclusion of ISDS in TTIP, threatening to block it entirely while also expressing strong reservations for the mechanism in CETA. The negotiations with Canada, which were prematurely announced as ‘concluded’ nearly a year ago, has instead faced continued to-ing and fro-ing over investor protection provisions. As we reported, Canada also held issue with aspects of ISDS, having been sued by US pharma multinational Eli Lilly for not renewing patents under the same mechanism in NAFTA. Thus, they resisted finalising CETA until certain intellectual property (IP) areas would be excluded from the scope of the mechanism. 

The Commission strongly resisted Canada’s request, even though at the same time, public concerns in Europe around ISDS mounted. The ISDS consultation for TTIP received 150,000 replies, which it was thought could spark a review of ISDS in CETA. But EU negotiators not wanting to jeopardise CETA’s conclusion, denied Canada’s request, believing it would open up the possibility of having to revisit other provisions in order to reach a balanced deal. Canada, it seems, has conceded on this point. 

However, despite the Commission’s efforts to draw the issue of ISDS in CETA to a close, the problem of Member State opposition has remained. Germany’s firm stance on ISDS may still be a roadblock, but more recently they’ve signalled their willingness to support ISDS if they too can have exemptions in the areas of banking and debt restructuring. 

CETA won’t be initialled this month

Another year, another summit, another CETA conference without signatures on paper. In a strange repeat of last year’s EU-Canada summit, it is looking likely that CETA will not be initialled on September 26 due to the remaining question mark over Germany’s ISDS stance.

The German requests for carve-outs from ISDS on banking and debt restructuring are a headache for the Commission. Having fought so hard to resist Canada’s own carve-out request for intellectual property, they may now be forced to request their own exemptions. As a result, Canada could choose to reopen the IP issue, which in turn could have knock on effects, as Peter Clark writes:

‘If the Reuters report about German rejection of ISDS is true and Germany is not accommodated, CETA is dead. If investor protection is not part of CETA, Canada will need to consider how to restore or better establish balance, perhaps by clawing back concessions on Financial Services and/or other anticipated benefits to Europe. This will not be simple. Unravelling is a serious risk.’

Hence, despite the pending EU-Canada summit on September 25/26 at which they will announce once more the deal ‘concluded’, a lack of clarity over ISDS remains. It is surprising that even with opposition to ISDS from both the Canada and EU member states it will, in all likelihood, appear in the final text in some shape or form. And although ISDS has been called the ‘worst judicial system in the world’ and has been seen to pose enough of a threat to require broad exemptions in certain areas, the Commission has pushed both sides hard for its inclusion.

The requested exemptions may serve to protect specific areas but they do nothing to protect governments from being sued for regulating on those areas not protected, nor does it foresee what areas may need to be excluded in the future that we have yet to imagine. 

Today the Representatives of the Member States in the Trade Policy Committee of the Council (TPC) meet to evaluate the final text. NGOs in many EU Member States have called on their governments to instruct their representatives voice objection to the CETA citing ISDS.

Green MEP and trade policy spokesperson, Ska Keller said today:

"The Commission pushes the Member States to agree to CETA though it includes ISDS. Member States should reject this. It is deceptive behaviour to ask Member States for a blank check on ISDS while the Commission has still not evaluated the results of the pubic consultation on ISDS, in which a record 150.000 people participated. And outgoing Trade Commissioner De Gucht ought to mind that the new Commission President Juncker has already voiced critical opinions on ISDS provisions in our economic relations with other industrialised countries.  De Gucht must not prejudice the new Commission in his last days of office.”

A debate on CETA will also take place at the European Parliament in Strasbourg, next Tuesday, September 16.

Please share!

Related content

Your comment