Don’t be fooled by CETA: It’s a wolf in sheep’s clothing

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Any member states committed to a healthy Europe should not ratify CETA. [Shutterstock]

In his State of the Union speech, Jean-Claude Juncker called the Canada-EU trade agreement the most progressive trade agreement the EU has ever negotiated. It actually poses a genuine threat to the health sector, argues Emma Woodford.

Emma Woodford is the founding director of the Health and Trade Network.

Despite the fact that it was negotiated under Canada’s more conservative former government, and for the most part, before the current trade Commissioner took up her post, both the European Commission, and the Canadian governments are attempting to sell CETA as a modern, less threatening trade agreement.

In truth, the EU-Canada Comprehensive Economic and Trade Agreement (CETA) is problematic for public health, its main problem being that it features the same provisions on investor protection and investment arbitration as the EU wants to incorporate into TTIP. There is a real risk that these could inhibit public interest decision-making in the area of health.

While Investor-to-State Dispute Settlement (ISDS) – which allows foreign companies to sue governments for public policy measures that infringe on their rights as foreign investors in shadowy arbitration tribunals – has got a lot of attention due to its proposed inclusion in TTIP, CETA already contains such provisions.

Although the Commission has recently undertaken a reform of ISDS that has found its way into the CETA text – and (misleadingly) renamed it the Investment Court System (ICS), the former problems remain. These include the ability of arbitrators to interpret investor rights like ‘fair and equitable treatment’ and ‘indirect expropriation’ widely.

In addition, the intrinsic bias of a system where arbitrators rely on their income on repeat custom from foreign companies (who are the only ones who can initiate suits) brings the impartiality of the so-called ‘court’ into question.

ISDS in CETA (even when rebranded as ICS) will potentially constrain European governments when it comes to introducing public policy measures that threaten corporate bottom lines, having a so-called ‘chilling effect’. Both TTIP and the CETA go way beyond traditional tariff reductions of old-style trade agreements; one of the key reasons why they are so dangerous.

Despite being carefully wrapped in soft woolly talk by the Commission’s spin doctors, the ISDS/ICS provisions in CETA, in fact, have just as many sharp teeth as the TTIP proposals. Canada has previously taken the EU to court in a state-to-state dispute settlement in the WTO for European asbestos legislation and Canadian mining companies have actively used ISDS for compensation.

Furthermore, when ISDS/ICS has been institutionalised in CETA, any US business that opens a company based in Canada would be able to sue an EU member state.

Taxes on soft drinks and fatty foods are an evidence-based way to contribute to the prevention of the impending epidemic of chronic diseases in Europe caused by increasing obesity across the region.

However, with increased powers for investor-state dispute settlement cases arising in CETA (and of course, TTIP), proposals such as the UK’s “soft drinks industry levy” or sugar tax may be under threat if soda companies sue for indirect expropriation.

CETA will eliminate tariffs on soft drinks entirely which runs in direct contradiction to the price increasing aims of taxes such as the sugar tax. The EU currently applies tariffs of 9.6% on soft drink imports from Canada and the United States.

Even the Interim Trade Sustainability Impact Assessment (TSIA) conducted on behalf of the Commission for TTIP found that consumption of such unhealthy products could increase if tariffs are eliminated. Tobacco, alcohol and food lobbyists want to ensure that the two agreements put a freeze on policies designed to prevent obesity and chronic disease for fear of profit loss.

CETA will likely affect the way that healthcare services are managed in both Canada and the EU. The public healthcare systems in both Canada and the EU can be excluded from CETA services commitments.

However, the first use of negative listing in an FTA by the EU means that any future new healthcare services will not be excluded from the rules of the trade agreement. Furthermore, the investment protection chapter in CETA extends to all sectors, including the health sector.

While governments have the right to regulate, this does not preclude the threat of compensation claims. In addition, some EU countries such as the UK have not bothered to exclude healthcare from CETA entirely.

The CETA agreement includes obligations with respect to pharmaceuticals and may lead to increases in pharmaceutical prices in Canada. From a public health and health policy perspective, it would have been wise not to seek further data exclusivity for pharmaceutical trials in Canada, but rather to limit this in both the EU and Canada.

However, that is not the direction in which “free trade” negotiations on IPR take place, with negotiators preferring to submit to pressure from Big Pharma to strengthen intellectual property provisions and increase profits rather than make more medicines available at lower prices.

The desperation of the Commission itself to portray CETA as a progressive, loveable trade agreement hot on the heels of the current (and most likely, temporary) collapse of TTIP needs to be taken into account by member states when considering its ratification.

Even though CETA may not require policy changes, it will make it more difficult to change them. The member states of Europe should not be voting in favour of CETA if they are committed to creating a healthy Europe. Otherwise, they will find a pack of wolf-like corporations and lawyers ready to sue for the implementation of policies designed to enhance public health.