Trudeau holds out hope for CETA but is a change in strategy called for?
Prime Minister Justin Trudeau is holding out hope for a last-minute breakthrough that will allow Canada’s trade deal with the European Union to be signed, despite objections from Belgium that have put the agreement in doubt.
But the signing ceremony planned for Thursday appears in jeopardy as Belgium appears to be unable to endorse the trade agreement because of ongoing objections by the regional government of Wallonia.
Belgium is the single holdout among the 28-nation union, but the country’s inability to ratify the deal effectively puts the trade pact on hold.
International Trade Minister Chrystia Freeland is making it clear that the Canadian government believes that it’s up to the Europeans — not Canadians — to engage in last minute bargaining to resolve the concerns that have stalled the agreement.
However, putting the ball back in Europe’s court may prove to be short sighted given that Canada has an obvious way out of the impasse – it could offer to drop the controversial Investor State Dispute Settlement (ISDS) provision in CETA entirely. The ISDS provision allows large corporations to sue government’s if they think their economic interests are hurt by government legislation.
Why this might save the deal is that the main objection of the economically hard-hit Wallonia province in Belgium that is single-handedly holding things up, is precisely the controversial ISDS provisions.
A bold move by the Trudeau government to drop the ISDS provisions from a high profile deal like CETA would also signal a return to the original intentions of trade deals – the lowering of protectionist tariffs. It is the expansion of trade negotiations from agreements that once focused primarily on tariff reductions to far broader agreements that require governments to change local laws and establish dispute-resolution systems such as ISDS, that have undermined support for trade agreements worldwide. This enlarged approach to trade deals, which is a staple of trade agreement like NAFTA and the proposed Trans-Pacific Partnership, run the risk of surrendering domestic policy choices to other countries (or more precisely, the corporate interests of other countries).
The truth of the matter is that if CETA were limited to tariff reductions, it would be relatively uncontroversial in Europe. Again, the objections to the agreement lies in the mandated changes to domestic laws and the creation of a dispute settlement mechanism (ISDS) that place corporate concerns over local laws.
Regulatory provisions in CETA outside the ISDS mean that both Europe and Canada face the prospect of changing national laws to accommodate foreign businesses. For example, CETA requires Canada to expand patent protections, largely due to demands from European pharmaceutical companies such as Bayer. Over time, the required changes could potentially add billions to Canadian health-care costs by extending the term of protection for popular drugs.
Moreover, there are real issues related to the enforceability of ISDS provisions – particularly in the European context. The ISDS may be challenged on various grounds by European national and sub-national governments, all of which relate to the fact that its very design grants foreign investors a privileged legal status. Essentially, the whole purpose of the ISDS provisions is to grant corporate investors with enforceable legal rights that are superior to the rights available to everyone else under the current legal system. In other words, ISDS effectively places foreign investors above the law.
No doubt, a move by the Canadian government to drop the ISDS provisions would face fierce opposition from powerful corporate interests in both Canada and Europe who benefit from such mechanisms. Moreover, such a move by Canada would certainly delay ratification. But while the political temptation of trying to somehow salvage the current deal is understandable, the long-term political interests of the Liberal government may very well be served by a change of tactics. At the very least, proposing to drop ISDS from CETA would earn kudos from Canada’s labour movement and other progressive groups, and further move the Liberals into political territory once owned by the NDP.
Over the past 35 years, governments have ignored the protests and concerns associated with trade agreements that have moved far beyond their original intention of reducing tariffs. But as opposition to these agreements steadily increases in the form of Brexit and the Trump protest vote, ignoring concerns with trade agreements that many view as unfairly tilting the balance between the public good and corporate interests, is proving to be very dangerous and a serious threat to global economic and political stability.
Projected House Business for Wednesday, Oct. 26:
Main Chamber Business
The House is meeting between 2:00 – 7:00 p.m. today.
Projected House Committee Business for Wednesday, Oct. 26
Search up-to-date Canada Fact Check databases for the full text, approval status, committee hearings and other details of all Federal bills and regulations from the current session here!