Sunday

5th Dec 2021

Opinion

Unfair EU-Canada trade deal is wrong response to Trump

  • Signing the EU-Canada free tradel deal was held up by Belgium's Wallonia at the last stage (Photo: Die Linke)

Ahead of next week's Ceta vote in the European Parliament, its proponents are touting the EU-Canada agreement as "the most progressive trade deal ever".

They claim Ceta will be a blueprint for a fair, social and environmentally-friendly trade policy and will shape globalisation in the interest of workers and ordinary citizens.

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A yes to Ceta would also allegedly send a strong message of support for a rules-based trading system, which is at stake under US president Donald Trump.

But it is precisely Ceta’s rules that are the problem.

They will further shape globalisation in the interest of corporations, without providing any effective protection for workers or the environment. They will also significantly limit democracy.

Special privileges for foreign investors

These grant Canadian investors the exclusive right to bypass European courts by suing the EU and member states before international tribunals.

Since CETA includes largely the same investor rights as existing trade and investment deals corporations will be able to claim compensation if a certain policy - say health or environmental protection - threatens their investments.

Governments could even be ordered to compensate corporations for lost hypothetical future profits. Past cases have seen billion dollar payouts, primarily to large corporations such as Siemens, ExxonMobil and Deutsche Bank.

Under Ceta, investor-state tribunals would be transparent and publicly appointed. But lucrative daily rates of $3,000 for the arbitrators would remain a strong incentive to rule in favour of investors.

Moreover, the risk of being sued under Ceta would be even greater than with existing agreements. It would, for instance, be easier for investors to challenge banking regulations than under Nafta.

Ceta’s explicit protection of investors’ legitimate expectations grants them a powerful weapon to fight democratic policies.

And due to the strong integration of the Canadian and the US economy, many US companies will be able to sue too.

Giant corporations like Chevron are rubbing their hands over what is effectively TTIP through the back door and this may well apply to some of Trump’s businesses as well.

Liberalising services

For the first time in an EU treaty, Ceta’s services chapter will follow a negative list approach pushed by corporate lobby groups.

What this means is that all services - unless explicitly excluded - will be deregulated, but the exceptions are patchy. Most worryingly, there is no exception which shields public services from investor-state lawsuits.

Regulations in sectors such as healthcare or water could potentially be attacked by expensive compensation claims.

This already happened to Estonia, facing a €90 million investor lawsuit because public authorities refused to increase water prices.

It has already happened to Slovakia, which was ordered to pay €22 million in damages after the government required health insurers to operate on a not-for-profit basis. Nothing in Ceta prevents such investor attacks on decisions in the public interest.

These examples illustrate the anti-democratic nature of Ceta and other trade agreements like TTIP, a draft EU-US deal, and the EU-Japan deal; they lock in existing property and economic relations by enshrining them in international law, severely restricting space for democratic policy to change them.

Canadian political scientist Stephen Gill calls this the "new constitutionalism", a global neoliberal constitution that renders the transition to a more just socially and ecologically just society impossible.

But what is missing from Ceta is revealing, for instance, effectively enforceable labour rights, or a sanction mechanism to implement Ceta’s environmental standards or obligations for corporations.

Economist Thomas Piketty suggested there should be no more trade liberalisation without sanctionable minimum rates for corporate taxes and emission reductions. Unsurprisingly, Piketty considers Ceta “a treaty which belongs to another age” that should be rejected.

Trump’s agenda at home, on the other hand, fits neatly with the basic thrust of Ceta.

He has initiated a new era of deregulation, demolishing feeble advances on financial regulation and retreating from obligations on climate action.

To please big business he has also just vowed to remove a staggering 75 percent of existing regulations. He has even hinted at shutting down the key institution supporting environmental regulation entirely.

At a time of looming climate catastrophe, a widening gap between the rich and the poor and the rise of the far right in many places, it is downright cynical to call Ceta "a deal that brings fairer trade for all".

Ceta includes many provisions that risk exacerbating the exact same social problems fuelling the inhumane politics of Trump, Le Pen and Co: social inequality, political exclusion and a crisis of democracy brought about by the neoliberal doctrine of "no alternative".

What we need is a paradigm shift towards an inclusive trade policy that is founded on the needs of people and our planet. Ratifying Ceta will take us yet further away from this.

Pia Eberhardt works with Brussels-based lobby watchdog Corporate Europe Observatory

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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