How to save the EU’s CETA with Canada

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

This piece is an attempt to provide a pathway that may secure a positive vote in the European Parliament for the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, writes Sorin Moisa.

Sorin Moisa is a Romanian MEP, Member of the International Trade Committee and S&D Rapporteur for CETA

This piece is an attempt to provide a pathway that may secure a positive vote in the European Parliament for the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada. I will assume readers know the main facts about the treaty and realise what is at stake for both sides, so we can move straight to the political substance of my message.

I speak as a politician who shoulders a portion of responsibility for the CETA. In the International Trade Committee (INTA) of the European Parliament I am a shadow rapporteur for CETA, which means that I also lead on CETA for my political group, the S&D. Personally I support CETA and generally favour more Western economic integration, with the Atlantic inevitably at its core. CETA is an important treaty in that context. But this is about much more than personal positions, it is about building majorities by honest and transparent means.

My core suggestion, in full respect of Canadian sovereignty and European Commission prerogatives, is that in the coming weeks and months the Canadian government seriously consider working together with the European Commission – and viceversa – to improve the investment chapter of CETA up to a level that will make it acceptable for a majority of European parliamentarians. This necessarily entails convincing a significant majority of social democrats. That is not an easy task and it will require more than tinkering with the controversial Investor-State Dispute Settlement (ISDS) system, which may be the understandable inclination of some of the treaty’s creators. Should this upgrade not take place there is a very serious risk that the treaty would be rejected by the European Parliament.

For Europe, the direction of the upgrade can only be towards the new public dispute settlement mechanism proposed by Commissioner Malmström: the Investment Court System (ICS). Of course, subject to bilateral negotations, improvements and agreement.

The message itself is not new. Gianni Pittella, the S&D leader made the point publicly, as did the President of the European Parliament Martin Schulz, INTA Chairman Bernd Lange, and representatives of some large national delegations in the S&D. Various national governments also called for ISDS in CETA to be abolished or reformed at various times with varying degrees of intensity. Now it’s crunch time and we need to actually address the problem. 

In Europe, the politics of this is clear, but not simple: there is strong opposition by a significant majority of social democratic MEPs in the European Parliament to ISDS in general, as a matter of principle. The number of MEPs opposing ISDS is much higher than the number of MEPs opposing CETA. ISDS is the thorn in the flesh of CETA. This reflects a high degree of social mobilisation in a few large member states of the European Union. The only way to solve the problem is to confront it head-on. It is exactly what Commissioner Malmström has begun doing with her proposal to transform the ISDS into an Investment Court System (ICS) based on several fundamentally different principles than the old ISDS. 

Even if the new system emerged in a TTIP context, its existence is the elephant in the room for CETA (and beyond): if one could have somehow imagined that CETA would have passed with the old text, the raw truth is that the new ICS concept has made that a political impossibility.

The new system can still be improved – perhaps with Canadian help, too – and one should not rest on the laurels, but it has changed the atmospherics on the matter in Brussels. We need that type of change with regard to CETA, as well, otherwise the arithmetic simply shows high risk of failure. For what it’s worth, this is the reading of the situation of someone who would personally vote for CETA even in its current form, for the overall strategic considerations briefly outlined above. 

It may be a useful reminder that the negotiations on the TTIP Resolution back in July 2015 almost stumbled against the very content of the language on ISDS. This clearly showed the make-it-or-break-it importance of the solution to the ISDS conundrum. However, one of the paradoxical effects of the June-July crisis is that it united the centre-right EPP, whose position was not quite unanimous on the old ISDS: the more the final ISDS-related compromise moved towards a centrist position, incorporating sensitivities of the left, the closer the EPP itself was to consensus on the matter. Also back in July, Manfred Werner, the EPP leader, publicly supported Malmström’s ISDS reform ideas. So did, among others, Marietje Schaake, the INTA coordinator for the Liberals (ALDE). The conclusion is that upgrading the investment chapter in CETA will not weaken the EPP and ALDE support of the treaty, but on the contrary, that will be consolidated. 

In Canada, history has created propitious conditions for this to be achieved swiftly. I have strong reasons to believe that the Trudeau government would be asking on its own initiative for improvements in the investment chapter of CETA. It has campaigned on transparency and fairness in trade policy and bringing just that in the most controversial chapter of CETA – which is a structuring deal for Canada’s trade policy- is therefore common sense. To paraphrase Prime Minister Trudeau, ”it’s 2015” for ISDS, too, and we need to change the game here, as well.

The new trade minister, Chrystia Freeland, wrote a landmark book on ”the rise of the new global super-rich and the fall of everyone else”, and is concerned that we are living in a world of winner-take-all economic forces. Supporting inclusive growth, transparency and the middle class, she can only be seeking an investment protection system that is fair, transparent and legitimate, as opposed to one perceived as an instrument for those very super-rich and powerful to challenge public policy. As a former journalist with exposure to both Europe and North America she certainly has a good feel for social sensitivities on both sides of the Atlantic.

Last but certainly not least a crucial point must be made: this would not be a reopening of the negotiation. The investment dispute settlement sub-chapter is not about and does not involve any exchange of economic substance, any trade-related or market access type of concessions between the two parties. Only that could be defined as a renegotiation. This is about principles and legitimacy: if an improved text can make the treaty more acceptable and legitimate for European and Canadian society, it would be absurd not to seize the opportunity. Put differently: none of the parties can lose or gain trade or GDP from it. There could have been concerns about losing face, perhaps, but after the Canadian election and the publication of Malmström’s new dispute settlement system, even that, formerly a problem, turned into opportunity.

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