2 October 2015

CETA - a blueprint for TTIP or vice versa?

It has been just over a year since the EU and Canada concluded negotiations on the Comprehensive Economic and Trade Agreement (CETA), the first bilateral trade agreement that the EU has concluded with a G7 economy and a developed country outside of Europe. From the very outset of the CETA negotiations, it became clear that CETA’s relevance goes far beyond being an economic agreement and  would serve as a ‘blueprint’  for future EU free trade agreements (FTAs) and specifically for the more difficult negotiations with the US in the Transatlantic Trade and Investment Partnership (TTIP).
 
Being a ‘gold standard’ for future FTAs, CETA has set the bar for TTIP in many ways. The level of protection of Geographical Indications (GIs), market access for beef and the safeguarding of public services such as education and water production, were all set as benchmarks for the TTIP negotiations. Conversely, the debate over TTIP has certainly raised the political profile of CETA as many of the issues settled in CETA became politically controversial with the rise of the TTIP debate. Before TTIP even became such a widely discussed trade agreement, CETA remained safely under the radar. But the so-called Investor-State-Dispute-Settlement (ISDS) system, a legal provision that gives investors a right to call for arbitration with a state, has triggered quite some public controversy among some political parties and civil society organisations, who blame ISDS for hindering governments to legislate in the public interest. Still, ISDS is a standard provision in most Bilateral Investment Treaties (BITs) and other International Investment Agreements (IIAs). However, knowing that the ISDS system in CETA has precedent building powers for future EU FTAs including ISDS, the current debate on ISDS in both CETA and TTIP are two sides of the same coin.  
 
Not surprisingly, there are concerns that the European Parliament’s view on TTIP could affect its decision to ratify CETA. Many critics and some political groups in the European Parliament fear that CETA would reintroduce the ‘old ISDS’ via the back door, while for TTIP a new and more transparent system will be used following the Commission’s proposal to replace the outdated ISDS mechanism.  Still, it is not unreasonable to believe that the TTIP negotiations on ISDS would influence discussions between Canada and the EU, while CETA is undergoing the so-called ‘legal scrubbing’ to review the agreement’s legal wording. Although the Commission explicitly stated it does not envisage re-opening the CETA negotiations, this does not withstand the ‘fine-tuning’ of the current approach to investor protection during this legal scrub.
 
In this respect, TTIP appears to have influenced the ratification process of CETA. After all, the Commission needs to answer the concerns of MEPs, who ultimately have to give their consent for the agreement to enter into force. Bernd Lange, German S&D MEP, chair of the Parliamentary committee on International Trade (INTA), recently affirmed that if CETA would not include the updated ISDS mechanism that would be incorporated in TTIP, the majority of his group would reject the agreement. It also remains to be seen whether Germany and France, the most vocal opponents of ISDS in trade agreements, will agree to ratify the agreement as they have been arguing in favour of removing ISDS provisions in CETA.
It is clear that trade agreements are now more publicly debated and politicised. The increased Parliamentary involvement in EU trade policy has strengthened the need for transparency in trade negotiations and highlighted the greater normative impact of FTAs. Thus, the CETA agreement indeed goes beyond purely the economic aspects. We’re all too curious about the outcome of the Member States’ and Parliamentary votes expected in 2016. But until then, many obstacles lie ahead…

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