With a
fast approaching European Parliament vote on the EU-Canada trade deal
CETA and potential subsequent rows over its ratification in EU member
states, CETA continues to draw heavy criticism. A close look at the
text of the agreement – and recent declarations designed to
reassure critics and gain support for its ratification – shows that
concerns over CETA are well-founded. Behind the PR attempts by the
Canadian Government and the European Commission to sell it as a
progressive agreement, CETA remains what it always has been: an
attack on democracy, workers, and the environment. It would be a
major mistake to ratify it.
Corporate
Europe Observatory
On both
sides of the Atlantic, the Comprehensive Economic and Trade Agreement
(CETA) between the EU and Canada is hugely controversial. A record
3.5 million people across Europe signed a petition against CETA and
its twin agreement TTIP (Transatlantic Trade and Investment
Partnership). European and Canadian trade unions, as well as
consumer, environmental and public health groups and small and medium
enterprises (SMEs) reject the agreement. Constitutional challenges
against CETA have been filed in Germany and Canada and the
compatibility of CETA’s controversial privileges for foreign
investors with EU law is likely to be judged by the European Court of
Justice.
Key
points:
- Across Europe, more than 2,100 local and regional governments have declared themselves TTIP/CETA free zones, often in cross-party resolutions. National and regional parliaments, too, worry about CETA, for example in Belgium, France, Slovenia, Luxembourg, Ireland, and the Netherlands.
- Over the past months, to salvage CETA’s ratification process, European and Canadian trade officials have gone into a massive propaganda mode. They have framed CETA as “a very progressive trade agreement” [...] The deal’s critics have been stigmatised as “trade hooligans” who live in a “post-factual reality”, “fuelling concerns and fears, which have no bearing on the actual CETA text”. Large parts of the media have joined the CETA cheerleading, claiming that “much of the criticism, which might be justified for TTIP, does not apply to CETA”. When the Walloon government, after 70 hours of public consultations on CETA in its Parliament, held up the CETA ratification, media commentators slammed the act as “based on general opposition to globalization, which mainly plays on emotions, largely ignoring facts”.
- The latest PR move of the CETA supporters is a multitude of 39 (!) declarations and statements accompanying the text of the agreement. These texts are designed to alleviate concerns amongst Social Democrats, trade unions, and the wider public who fear that CETA threatens public services, labour and environmental standards and undermines governments’ right to regulate in the public interest. But in fact, the declarations do nothing to fix CETA’s flaws. [...] The declarations accompanying the CETA text are full of similarly misleading statements that avoid the key problems of the agreement. [...] [CETA] is actually a major assault on democracy, workers, and the environment.
CETA
Swindles
Swindle
#1 CETA protects workers’ rights
The European
Commission praises CETA’s “strong rules on the protection of
labour rights”. But the actual labour protections in CETA are
poor. Chapter 23 on trade and labour is full of good intentions, such
as that “a Party shall not... fail to effectively enforce its
labour law and standards to encourage trade or investment”
(article 23.4.3). But there is no penalty under CETA if EU countries,
Canada, or companies operating there violate a provision like this.
European and
Canadian trade unions have proposed a protocol – to make CETA’s
labour rules effectively enforceable. The issue is important for them
as they fear that CETA would put labour standards at risk (as
employers can more easily shift capital to locations where standards
are weak and laxly enforced). Previous experience with
unenforceable labour chapters in existing EU trade deals (such as
those with Columbia and Korea) shows the European Commission took
no action, even in the case of egregious labour rights violations
well documented by the labour movement.
The low
status of labour rights in CETA could have serious implications. Many
parts of the agreement could seriously challenge the hard earned
rights of workers and trade unions: CETA’s public procurement
rules could lead to legal challenges when public authorities link
their buying practices to social criteria such as the minimum wage or
compliance with collective agreements; CETA’s foreign investor
privileges could lead to expensive lawsuits against states when they
don’t interfere in long-lasting strikes or when regions establish
mandatory minimum staffing levels in hospitals or nursing homes;
and the weakening of domestic regulation could present new obstacles
to efforts to ensure that services suppliers abide by labour rules.
CETA is
likely to lead to significant job losses. According to a September
2016 study from Tufts University, 230,000 jobs could be lost in
total. This would depress wage growth and by 2023 workers would
have foregone average annual earnings of €1776 in Canada and
between €316 and €1331 in the EU (depending on the country and
compared to a scenario without CETA). The researchers also predict
a politically dangerous rise in inequality as the gains from CETA
would overwhelmingly go to owners of capital – not workers.
These forecasts reflect the experience under previous trade deals
such as the North American Free Trade Agreement NAFTA (see the
assessment of the US trade union confederation AFL-CIO). So, rather
than protecting workers as its cheerleaders claim, CETA promotes the
wealth and power of a very few at the expense of workers. They get
nothing but inconsequential feel-good rhetoric. The additional
statements and instruments do nothing to change that.
Swindle
#2 CETA is a good deal for the environment
According to
the European Commission, CETA contains “strong rules on the
protection of ... the environment”. But the actual protections
in the CETA text are weak. Like the chapter on labour, chapter 22 on
sustainable development and chapter 23 on trade and environment
contain sweet-sounding language on “trade supporting sustainable
development”, “trade favouring environmental protection”
and so on. But like the labour chapter, CETA’s environmental
provisions cannot be enforced through trade sanctions or financial
penalties if they are violated.
CETA’s
investor rights could trigger costly lawsuits from polluting
companies when governments ban or regulate dirty mines or want to
phase-out fossil fuels; CETA’s liberalisations in the agricultural
sector and the thin protections for high food production standards
would expand an industrial model of farming that is already
destroying the planet; [...] as CETA encourages more trade,
production and extraction, greenhouse gas emissions are likely to
increase.
In short,
the pro-environment rhetoric around CETA is pretty empty and
meaningless. It is nothing but an attempt to greenwash a deal which
poses real threats to the environment and strong action to save the
planet from climate disaster.
Swindle
#3 CETA’s investor rights safeguard the right to regulate to
protect the environment, health and other public interests
According to
the European Commission, “CETA ensures protection for
investments while enshrining the right of governments to regulate in
the public interest, including when such regulations affect a foreign
investment.” The critical point missing in this statement is,
again, that while parties have the right to regulate, their
regulations must be in line with their CETA obligations and
commitments. And CETA’s chapter eight on investment contains the
same wide-ranging ‘substantive’ rights for foreign investors as
existing international treaties, which have been the legal basis for
hundreds of investor lawsuits against states – including against
regulations to protect health, the environment, and other public
interests. [...] With these extreme corporate rights, many
egregious investor attacks could take place under CETA.
“CETA
will not result in foreign investors being treated more favourably
than domestic investors” (article 6a). But CETA allows only
foreign investors to bypass domestic courts and sue states directly
in parallel tribunals – domestic firms (and citizens) simply do not
have this privilege.
“CETA
clarifies that any compensation due to an investor will be based on
an objective determination by the Tribunal and will not be greater
than the loss suffered by the investor” (article 6b). This
might be read as a guarantee that investors will only be compensated
for money that they actually spent on a project. But under the
extensive case law in the field, expected profits are generally
considered to be part of the “loss suffered by the investor”.
This means that CETA tribunals could order states to pay unlimited
amounts in compensation – including for investors’ lost expected
future profits (like in the case of Libya which was ordered to
pay US$900 million for “lost profits” from a tourism project,
even though the investor had only invested US$5 million and
construction had never started). So, rather than safeguarding the
right to regulate as its proponents claim, CETA will force
governments to pay when they regulate – whether it is to protect
the environment, health or other public interests.
Swindle
#4 CETA protects public services like healthcare and water
Probably the
biggest threat to public services comes from the far-reaching foreign
investor rights in CETA’s chapter eight. While Canada, the EU
and its member states have inserted a number of public service
reservations and exemptions in the CETA, none of these do apply to
the deal’s investor-state dispute settlement provisions (chapter 8,
section F). And they don’t apply to the most dangerous investor
protection standards, like expropriation (article 8.12) and fair and
equitable treatment (article 8.10). This makes regulations in
sensitive public service sectors such as education, water, health,
social welfare, and pensions prone to all kinds of expensive investor
claims.
Governments
could end up paying billions in compensation to foreign investors in
return. The decision would be taken by a panel of for profit
arbitrators (rather than independent judges), would be based on
CETA’s extreme investor privileges (rather than a country’s
constitution, which balances the rights of property holders) and
could include compensation for loss of expected future profits (which
are rarely compensable under most constitutions). Facing such an
incalculable risk, governments might not go ahead with their plans to
take services back into public hands – even when past
privatisations have been failures. This could threaten the growing
trend of re-municipalisation of water services (in France, Germany,
Italy, Spain, Sweden, and Hungary), energy grids (in Germany and
Finland), and transport services (in the UK and France), as well as a
potential roll-back of some of the failed privatisations of the UK’s
National Health Service (NHS) to strengthen non-profit healthcare
providers.
In short,
CETA severely limits governments’ ability to create, expand,
restore, and regulate public services. This threatens people’s
rights to access services like water, health care, and energy, as
well as labour conditions in these sectors. Claiming that CETA
protects public services without changing the deal’s provisions
that work to the contrary is wishful thinking, at best.
Swindle
#5 CETA establishes an independent court to settle
investor-state disputes
Under CETA,
investor-state lawsuits would be decided by a tribunal of three
for-profit arbitrators with vested interests. Unlike judges, they
would not have a fixed salary, but be paid per case, with US$3,000
per day (article 8.27.14, referring to the standard payroll in
investment arbitration). In a one-sided system where only the
investors can sue, this creates a strong systemic incentive to side
with them – because as long as the system pays out for investors,
more claims and more money will be coming to the arbitrators.
There are
other flaws which make CETA’s investment tribunal prone to bias.
There is no cooling-off period before or after the appointment of its
members and they will neither be banned from sitting as arbitrators
in other cases nor from private lawyering (outside the narrow scope
of investment disputes, see article 8.30.1). So, they could be part
of the small club of investment lawyers who have until now driven the
boom in investment arbitration and grown their own business – by
encouraging investors to sue and by interpreting investment law
expansively to encourage more claims. The selection criteria for the
members of the tribunal also exclude expertise in legal areas outside
of this club – areas which are less dominated by commercial
interests, but might be relevant for rulings, such as national
administrative, labour, or environmental law (article 28.27.4).
Citing the
flaws in the proposed appointment procedure for the arbitrators and
doubts about their financial independence, Germany’s largest
association of judges and public prosecutors has questioned the
investment court system (ICS) as it is included in CETA and also
proposed for its twin deal TTIP: “Neither the proposed
procedure for the appointment of judges of the ICS nor their position
meet the international requirements for the independence of courts”,
the judges wrote in a statement published in February 2016. The
European Association of Judges has similar concerns.
No one in
her right mind would sign a contract which states one thing on the
basis of promises that something very different will happen in the
future. But the Commission seems to try exactly this: make the
European Parliament and EU member states ratify an international
treaty which will forever bind our societies, on the basis of vague
promises that it will be improved in the future.
Swindle
#6 CETA will uphold standards to protect people and the
environment
Chapter 12
on domestic regulation commits Canada, the EU, its member states,
local and regional governments to adopt or maintain licensing and
qualification procedures that are “as simple as possible”
for corporations (article 12.3.7), unless they are listed in a
complicated annex. The commitment to make the approval process for a
nuclear reactor, a pipeline, a food processing plant, or a bank “as
simple as possible” is likely to impact future standards. For
instance, reforms to strengthen banking supervision and risk
management as recommended by the Basel Committee on Banking
Supervision could be considered a violation of chapter 12. Nothing in
the CETA text balances the simplicity criterion with other values
that a society may have – such as ensuring that a proposed pipeline
does not destroy the environment or that local residents have a say.
Take
electronic waste for instance. In 1998, a proposal from the European
Commission backed by the European Parliament included plans to ban
hazardous substances in electronic waste. Through a dialogue process
bearing all the traits of regulatory cooperation under CETA, US
officials and business lobbyists attacked the proposal, referring to
its much vaunted negative impacts on transatlantic trade. In 2002,
when the waste directive was adopted, the hazardous substances part
had been significantly weakened. It took a court case by the
Danish government and the European Parliament to finally take one
substance which was to be banned in the original proposal (deca-BDE)
off the EU market – ten years after it was first proposed. This is
the power of regulatory cooperation.
So, rather
than upholding social, environmental, or health standards, CETA poses
a real risk of lowering them. It results in heavy additional
burden on regulators and strengthens the role of business lobbyists
in the development of regulations, potentially undermining not only
the development of much needed regulations, but also our democracies.
Full
report and references:
I love this this is essentially finding a use for all those environmentalists groups.
ReplyDeleteJust buy a plot of land for five million, and say: "Oh boy this is a great place to store all my chemical waste in a facility that conforms to the relevant standards."
Wait for the activists to stop you, and cash in on a check worth millions. Then use the property you bought to build a posh residential area for all those activists.
It's genius, and basically corporate welfare/an excuse for any state to have their revolutionary element removed.
We are playing hefty games here.