EU-Canada pact faces German opposition over investor clauses

"We've achieved a lot. It's a good deal and it would be wrong to block it. But we must try to negotiate some adjustments".

European Commission president Jose Manuel Barroso and Canadian prime minister Stephen Harper will conclude the four-year negotiation process of the treaty at an EU-Canada summit in Ottawa on Friday. The trade treaty will then be published and submitted to the European and Canadian parliaments.

But any celebrations are likely to be muted now that the agreement, which is widely seen as a trial run for the ongoing trade talks with the US, faces a number of obstacles before it is ratified.

The mechanism, known as investor state dispute settlement (ISDS), allows companies to take legal action against governments if their decisions risk undermining their investments.

Critics of ISDS claim that investor claims can prevent governments from passing legislation in fields such as environmental and social protection, enabling corporations to claim potentially unlimited damages in "arbitration panels" if their profits are adversely affected by new regulations.

However, in an interview with the Frankfurter Allgemeine Zeitung, trade commissioner Karel de Gucht ruled out the possibility of re-opening talks, arguing that "If we re-open negotiations on Ceta, the deal will be dead."

De Gucht, who is set to be replaced by Sweden's Cecilia Malmstrom as the EU's trade chief, also condemned criticism of ISDS as a "populistic, emotional debate and one which has been fanned by the Internet," adding that "the investment protection in Ceta is the most modern and most transparent ever,"

At the weekend, the SPD party congress agreed to support the continuation of negotiations with the US on a transatlantic trade and investment partnership (TTIP), but also conditioned their support for TTIP on investor protection clauses being left out.

Both Gabriel and economic affairs minister Brigitte Zypries say that foreign investors already have sufficient legal protection in national courts, while French trade minister Nicole Bricq has also stated her opposition to ISDS being included in an agreement.

Both Ceta and, in time, TTIP will have to be backed by the European Parliament and, possibly, national parliaments if the agreements are to come into force.

Ceta faces an uncertain path when it comes before MEPs in the coming months. Deputies from the centre-left Socialist and Democrat group and the Liberals have indicated that ISDS would have to be left out in order for them to support Ceta, while the Green and far-left GUE factions have already come out against the treaty.

"My group would find it much easier to put its weight behind Ceta if ISDS was removed from the text," said Socialist group trade spokesman David Martin at the parliament's session in Strasbourg earlier this month.

In a statement on Thursday, the European trades union congress (ETUC) said that it would not support Ceta if ISDS remained part of the agreement. The ETUC also called on officials to include a list of sectors that would not be liberalised by the agreement and for Canada to sign up to the International Labour Organisation Conventions.