EU trade deal could un­ravel

Few dwell any more on CETA’s neg­a­tives

The Hamilton Spectator - - COMMENT - Thomas Walkom ap­pears in Torstar news­pa­pers.

The Cana­dian gov­ern­ment has suf­fered an­other set­back in its elu­sive search for a trade and in­vest­ment deal with the Euro­pean Union. The EU’s top court has con­firmed that in at least one con­tro­ver­sial area, such deals must be ap­proved by all 28 of the or­ga­ni­za­tion’s mem­ber states.

Since some EU mem­bers, such as Bel­gium, re­quire the con­sent of re­gional as well as na­tional leg­is­la­tures, this con­firms Ot­tawa’s worst fears: The Com­pre­hen­sive Eco­nomic and Trade Agree­ment be­tween Canada and the EU must be okayed by no fewer than 38 sep­a­rate Euro­pean par­lia­ments be­fore it comes into full ef­fect.

Tues­day’s rul­ing by the Court of Jus­tice of the Euro­pean Union was os­ten­si­bly about a 2013 free trade deal be­tween Sin­ga­pore and the EU. But it sets a prece­dent for sim­i­lar yet far more im­por­tant pacts, in­clud­ing CETA.

In ef­fect, the court ruled that any deal al­low­ing for­eign in­vestors to chal­lenge na­tional gov­ern­ments, such as the pro­posed in­vest­ment court sys­tem within CETA, must be unan­i­mously ap­proved by all EU states.

The in­vest­ment court sys­tem, some­times called the in­vestor-state dis­pute mech­a­nism, would al­low for­eign com­pa­nies to chal­lenge do­mes­tic laws that threaten their prof­itabil­ity. It has long been a flash point in Europe.

Point­ing to Canada’s sorry ex­pe­ri­ence with a sim­i­lar sys­tem un­der the North Amer­i­can Free Trade Agree­ment, crit­ics ar­gue — cor­rectly — that it lets for­eign in­vestors over­ride demo­crat­i­cally elected leg­is­la­tures.

In an ef­fort to ap­pease these crit­ics, the EU agreed last year to treat CETA as “mixed” pact that re­quires ap­proval from in­di­vid­ual mem­ber states as well as pan-na­tional Euro­pean in­sti­tu­tions.

Tues­day’s court of jus­tice rul­ing ce­ments that po­lit­i­cal de­ci­sion in law.

Last year, Canada and the EU also agreed to re­write the in­vestor-state dis­pute res­o­lu­tion sys­tem to make it sound more ju­di­cial. That wasn’t enough to mol­lify the crit­ics, so they then agreed to post­pone what they had by then named the in­vest­ment court sys­tem and press ahead with the rest.

In Canada, a bill to im­ple­ment CETA has passed both houses of Par­lia­ment and awaits royal as­sent.

In Europe, the deal has been rat­i­fied by the Euro­pean Par­lia­ment. That was a vic­tory of sorts. Last fall, it nar­rowly es­caped be­ing scup­pered by the Wal­loon re­gion of Bel­gium.

Still, for some­thing that has been so ten­ta­tive, CETA is bragged about end­lessly.

Its pas­sage has been re-an­nounced count­less times on both sides of the At­lantic.

Stephen Harper’s Tories boasted about it when they were in power. Now Justin Trudeau’s Lib­er­als do the same, laud­ing it as an ex­em­plar of the mod­ern trade and in­vest­ment treaty.

The gov­ern­ment says CETA show­cases how open Canada is to the world — by which it means how un­like Don­ald Trump.

Here at home, few dwell any more on CETA’s neg­a­tives, such as the rise in drug prices its in­tel­lec­tual pol­icy pro­vi­sions will en­cour­age.

Nor is there much fret­ting any more about pro­cure­ment poli­cies in CETA that will pre­vent mu­nic­i­pal­i­ties from favour­ing lo­cal busi­ness.

In most Cana­dian me­dia, CETA is treated as a good thing — a kind of feisty Per­ils-of-Pauline hero­ine who man­ages to es­cape in the nick of time from as­sorted Wal­loons, Trump fanciers and other pop­ulist vil­lains.

But it re­mains very much an in­com­plete ar­range­ment. Gus Van Harten, an Os­goode Hall trade ex­pert and law pro­fes­sor, says the court rul­ing con­firms that CETA’s in­vestorstate dis­pute sys­tem won’t be fi­nal­ized any time soon.

“By im­pli­ca­tion,” he wrote in an email Tues­day, “it has been hasty for the fed­eral gov­ern­ment to be push­ing ap­proval of CETA in full in Par­lia­ment on Canada’s be­half.”

Van Harten calls the as-yet-unim­ple­mented in­vestor court sys­tem a ma­jor loose end.

He’s right. It is one that could ul­ti­mately un­ravel the en­tire pro­vi­sional agree­ment.

THOMAS WALKOM

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