02 January 2016


As I mentioned in my previous update, the TTIP negotiations are currently on hold, but that does not mean that all activity has stopped.  By an interesting coincidence, the other major EU trade agreement - that with Canada, generally known as CETA - seems to have been "concluded", although quite what that means is not yet clear.  For example, back in October 2013, the EU and Canada announced that they had "reached a political agreement on the key elements" - and yet negotiations have continued until now.  Even assuming that there are not more holdups, the process of ratification is extremely long, requiring all kinds of legal "scrubbing" and then approval by the various parts of the European Union and possibly national governments too (but again, that's not yet clear.)

In theory, we would have to wait until most of that was accomplished before we got to see the text of CETA, but as I noted last time, some public-spirited soul has leaked both the main text [.pdf] and the annexes. I've skimmed through the form, but not felt strong enough to tackle the latter.  I'm hoping that  experts will take a look at sections of interest and publish their thoughts in due course.

The first such analysis has already appeared, and it will probably be of particular interest to Open Enterprise readers.  It comes from the Canadian academic Michael Geist, and looks at a key area: copyright.  As he writes:

the starting point for copyright in CETA as reflected in 2009 leaked document [from Wikileaks] was typical of European demands in its trade agreements. It wanted Canada to extend the term of copyright to life of the author plus 70 years (Canada is currently at the international standard of life plus 50 years), adopt tough new rules for Internet provider liability, create criminal sanctions for some copyright infringement, implement new rights for broadcasters and visual artists, introduce strict digital lock rules with minimal exceptions, and beef up enforcement powers. In other words, it was looking for Canada to mirror its approach on copyright.

And yet the latest leak of the final CETA text shows that all the main European demands have been dropped.  Here's why Geist thinks that happened:

First, the domestic policy situation in both Canada and the EU surely had a significant impact as ACTA protests in Europe and consumer interest in copyright in Canada led to the elimination of the criminal provisions and the adoption of better-balanced, consumer-oriented rules.

The rejection of ACTA by the European Parliament in July 2012 was certainly a pivotal event that has had a major impact on the negotiations of subsequent agreements involving Europe.  Geist's other points - that Canada's copyright laws were compliant with international standards, that they are increasingly being seen as an alternative to the hard-line approach advocated by the EU in CETA, and that copyright was not a priority in CETA for Europe -  are doubtless true, but don't carry over to TTIP.  Importantly, the US will not be fighting any attempt by the EU to introduce stronger copyright rules in TTIP - on the contrary, we know from ACTA that in comparison, the EU is likely to be the moderating force here.

Putting those facts together, we can't therefore hope that TTIP will be as reasonable as CETA as far as copyright is concerned.  Indeed, as I noted in an earlier update, there is strong evidence that the European Commission is looking more than favourably on a "Christmas list" of demands from the copyright industries.

On a different note, the Canadian publication The Tyee has a useful analysis of some of the details revealed about investor-state dispute (ISDS) settlement in CETA.  It points out that ISDS is even more problematic than thought because of the existence of an important CETA commission, whose exact details have not been revealed:

Jan Spangenberg is an associate in Latham & Watkins' international arbitration practice group in Hamburg, Germany, which regularly represents states and investors in investment treaty arbitrations. He acknowledged the more narrow definition of "fair and equitable" treatment in CETA, but points out that the treaty includes a mechanism that could allow for a later modification of the provision by a CETA commission.

"It is unclear how this will work. As a result, significant uncertainty remains," Spangenberg said.

The commission, which does not yet exist, will have the final say in the definition of "fair and equitable" treatment. As of now, nobody can tell what it will decide.

That CETA commission would have another major impact on the implementation of ISDS:

The commission will also be in charge of the right of governments to appeal the decisions of arbitration courts. Here, the same problem arises: nobody knows who will be on that commission, when it will start and finish its work, and what it might decide. Governments will have to vote on CETA before they have the answers.

How appeals will work is especially worrisome for governments, because they are always the subject of lawsuits brought on by investors. Governments, on the contrary, can't sue investors in arbitration courts. This one-sidedness becomes more acute if appeals aren't possible at all or only in limited ways.

That there is no thorough judicial review of arbitrators' decisions worries experts like van Harten: "This is a fundamental problem and makes the adjudicative process non-judicial," he said.

This CETA commission is effectively a backdoor that will allow ISDS to be made even worse than it seems in the text of the treaty.  It's another manifestation of the lack of transparency that robs CETA and TTIP of much of their legitimacy.

In the face of that and many other worries around ISDS in CETA, the following statement from the S&D group in the European Parliament is good news:

The Commission should listen to the concerns voiced by the European Parliament and the S&D Group about the investor-state dispute settlement mechanism (ISDS) in the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada.

It will be up to the Parliament – the democratic conscience of EU trade policy – to decide whether or not to ratify CETA.

The CETA agreement, to be initialled at the EU-Canada summit at the end of September, would be a positive agreement and would bring opportunities for growth and jobs on both sides of the Atlantic. It covers various sectors ranging from agricultural and industrial goods to services, intellectual property rights, public procurement and sustainable development.

However, some EU member states, notably Germany, have raised serious concerns regarding the controversial ISDS clause in the agreement that allows multinational companies to bring international arbitration cases against governments. The S&D Group has always opposed the inclusion of this mechanism and we expressed our opposition in letters sent to EU Trade Commissioner De Gucht as far back as 2012. A resolution adopted by the European Parliament in 2011 on EU-Canada trade relations also states the Parliament's preference for traditional state-to-state dispute settlement and the use of local judicial remedies to address investment disputes.

The ISDS mechanism, where applied, has already shown how much power corporations have wielded in the name of profit. It is time the EU followed the Australian example and scrapped ISDS in the CETA and in the EU-US Transatlantic Trade and Investment Partnership (TTIP).

CETA has already been delayed for too long. A trade deal between the EU and Canada has the potential for great economic benefits and it should not be put in jeopardy for the sake of an unnecessary investment clause.

That's significant because putting together the S&D group with the Greens and others opposed to ISDS in the European Parliament brings the total number of MEPs very close to the majority needed to reject CETA - and maybe even TTIP - when it comes to the big vote.  Of course, much could happen between now and then, and it's quite possible that the S&D group will succumb to the promise of "concessions" on ISDS from the European Commission.  But the statement does at least indicate that getting CETA and TTIP through the European Parliament is not going to be easy.

Strangely, the European Commission seems to be going out of its way to make it even harder.  Here's what it announced last week:

The European Union today took an important step towards creating a comprehensive EU investment policy, with the publication of a Regulation setting out a new set of rules to manage disputes under the EU's investment agreements with its trading partners. The rules – set out in the Regulation on financial responsibility under future investor-to-state disputes – are a necessary component of a common EU investment policy.

'This Regulation,' said EU Trade Commissioner Karel De Gucht 'represents another building block in our efforts to develop a transparent, accountable and balanced investor-to state dispute settlement mechanism as part of EU trade and investment policy. '

The rules set up the EU's internal framework for managing future investor-state disputes. They define who is best placed to defend the EU’s and Member States’ interests in the event of any challenge under investor-to-state dispute (ISDS) in EU trade agreements and the Energy Charter Treaty. The rules also establish the principles for allocating any eventual costs or compensation. Member States will defend any challenges to their own measures and the EU will defend measures taken at EU level. In all cases, there will be close cooperation and transparency within the EU and the EU institutions.

Friends of the Earth Europe pointed out:

According to the European Commission, this regulation will come into force on 17 September. This is two months ahead of the intended evaluation of the European Commission's own public consultation on the investor-state dispute settlement mechanism being proposed in the current negotiations for the Trans-Atlantic Trade and Investment Partnership (TTIP).

Commenting on publication of this regulation, Paul de Clerk, trade campaigner at Friends of the Earth Europe said: "Finalising this regulation while the public consultation on investor-state dispute settlement in TTIP is still on-going is completely unacceptable and undemocratic. This not only undermines the 150,000 European citizens and stakeholders who have participated in the public consultation, but also brings into question the credibility of the European Commission about their willingness to listen to the voices of citizens on this important issue."

That's exactly right: this is yet another slap in the face for the European public, and confirms that the so-called "consultation" on ISDS in TTIP was simply window-dressing.  The Commission didn't even have the decency to wait until after the official analysis of those 150,000 submissions, but went straight ahead and published its new ISDS rules now, when it can't possibly take into account what all those people have said.  It is an act of pure contempt for the hundreds of millions or ordinary citizens that pay their not un-generous salaries.

It shows once more that the European Commission is hell-bent on steamrollering ISDS through, both in CETA and TTIP. Since it manifestly doesn't care a hoot about the growing rejection of ISDS by the public and hundreds of civil society organisations, it looks like we will once more have to pin our hopes on the European Parliament to stop this arrogant, high-handed behaviour by doing to CETA and TTIP what it did to ACTA: rejecting them.

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