Germany threatens to reject EU-Canada free trade deal

Le président de la Commission européenne, José Manuel Barroso et le premier ministre canadien, Stephen Harper lors d’une rencontre sur l’accord en septembre 2013
Commission President José Manuel Barroso and Canada's Prime Minister Stephen Harper signed the deal in principle. September 2013. [European Union/ Flickr]

Germany is to reject a multi-billion free trade deal between the European Union and Canada which is widely seen as a template for a bigger agreement with the United States, a leading German paper reported on Saturday (26 July).

Citing diplomats in Brussels, the Sueddeutsche Zeitung said Berlin objects to clauses outlining the legal protection offered to firms investing in the 28-member bloc.

Critics said they could allow investors to stop or reverse laws, particularly those relating to the protection of the environment.

EU-Canada free trade deal ‘opens door to environmental lawsuits’ on EurActiv

EU-Canada free trade deal ‘opens door to environmental lawsuits’

More on EurActiv »

The German government could not sign the agreement with Canada "as it has been negotiated now", reported the paper quoting German diplomats in Brussels.

It also said the clauses in the Canada deal were similar to those in the US agreement, which is still under negotiation.

"The free trade treaty with Canada is a test for the agreement with the United States," said one senior official at the Commission in Brussels, according to the paper.

If the deal with Canada is rejected "then the one with the United States is also dead", added the official.

Investor-state dispute mechanism

Asked about the report, a spokesman for Germany's Economy Ministry referred to correspondence which outlined Germany's concerns about investor protection in talks with both countries.

"The German government does not view as necessary stipulations on investor protection, including on arbitration cases between investors and the state with states that guarantee a resilient legal system and sufficient legal protection from independent national courts," wrote Deputy Economy Minister Stefan Kapferer.

In the letter, dated June 26, Kapferer took a similar position on investor protection in the still-to-be-agreed Transatlantic Trade and Investment Partnership (TTIP) agreement with the United States.

Brussels argues that without these clauses, companies from Canada will not invest in Europe. Trade Commissioner Karel De Gucht has downplayed fears of corporate dominance in the TTIP talks and organised a public consultation on the investor-state dispute clause in January.

Brussels wants to hear more on TTIP investor-state dispute clause on EurActiv

Brussels wants to hear more on TTIP investor-state dispute clause

More on EurActiv »

Canadian Prime Minister Stephen Harper and European Commission President José Manuel Barroso signed a deal in principle last October, leaving officials to work out the final details. Sources said last month that the lower-level talks had run into trouble.

In Ottawa, a spokeswoman for Canadian Trade Minister Ed Fast did not directly address the report that Germany would reject the deal. Instead, Shannon Gutoskie said Canada and the European Union were making "excellent progress" as they worked to complete the text.

Gutoskie said German governments had long preferred treaties with tough investor-protection provisions.

"Germany's bilateral investment treaties contain investor-protection clauses that are far more stringent than those in the Canada-EU agreement," she said.

The Sueddeutsche said EU states will this week receive the treaty for officials to examine in detail before it is signed. All EU members have to sign the agreement for it to take effect.

The deal with Canada could increase bilateral trade by a fifth to €26 billion a year and the more ambitious one with the United States, if agreed, could encompass a third of world trade and almost half the global economy.

Both accords seek to go far beyond tariff cuts and to reduce transatlantic barriers to business, but the talks are extremely complicated.

External links: 

European Commission



Mike Parr's picture

"Brussels argues that without these clauses, companies from Canada will not invest in Europe."

Really? In the 1990s I produced a couple of reports covering a couple of industry sectors in Belgium for the Canadian embassy. The aim was to encourage Canadian companies to..... invest in Europe in general and specifically Belgium. At that time "barriers to business" were not seen as significant - which begs the question - what has changed since the 1990s that requires this new pan-Euro treat.

One notes that supporters of this treaty only ever talk in generalities - not specifics with respect to "benefits".

rebentisch's picture

ISDS provisions relate to the (extrajudicial) enforcement of the trade deal. It is hard to argue that CETA without ISDS provisions would break the deal. Both parties can fully trust their respective legal systems. ISDS are a constitutional risk.

"Brussels argues that without these clauses, companies from Canada will not invest in Europe."

Who is that "Brussels" who stipulates that? If it is a strawman please burn it, if it is an official replace him.