The FT reports on how ISDS is holding up the CETA negotiations:
The EU struck a political agreement on a trade accord with Ottawa last year but the deal has become mired in negotiations over investors’ rights. Berlin fears that German standards of environmental and consumer protection could be undermined by investor protection clauses in the agreement with Canada.
Berlin could still reject the entire trade deal – which requires the approval of all 28 EU governments – if no compromise is reached. Sigmar Gabriel, Germany’s powerful economics minister, has led opposition to the clauses that give foreign companies access to arbitration proceedings that are a legal alternative to national courts.
Mr Gabriel warned this year: “Many people in Germany fear that through such arbitration, individual states could be pressurised and policy objectives circumvented by the threat of damages.”
European politicians are especially wary of investor-state dispute settlement (ISDS) clauses in the Canadian deal because they will be seen as a blueprint for the EU’s Transatlantic Trade and Investment Partnership with the US, potentially the world’s biggest trade accord, due for conclusion next year.
The German government expects the Canadian deal will be agreed at an EU-Canada summit in late September but believes that some changes could be ultimately needed in the final wording.
According to a German official familiar with the deal, Berlin is unlikely to reject the investment protection clauses wholesale, as this would sink the entire deal. Instead, negotiations are likely to focus on areas of particular concern to the German public, such as environmental protection.
Everyone knows how I feel about ISDS, but putting that aside, is there a compromise on this issue that can help get CETA done? It's easy to imagine tweaks that could be made, such as the inclusion of a clear exception to investment obligations for environmental measures. However, it could be difficult to find wording that satisfies all of the competing interest groups who will be weighing in.
But maybe there's another approach to this issue. What about some kind of "trial" period for ISDS in CETA? I have two possibilities in mind:
- There could be a requirement that the investment chapter be reauthorized in five years. That would give everyone a chance to see how it is working in practice, and make changes as needed after the five year period.
- There could be an opt-out, under which either party -- and in the EU, any Member State -- could terminate the investment chapter on its own accord if it doesn't like how things are going.
I'm sure people can think of other variations on this same theme.
