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Why I'm urging TDs to postpone the vote to ratify CETA, the EU-Canada trade deal

Posted by John Sweeney on December 13, 2020 at 10:00 PM

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The Order of Business for the Dail this week indicates a Government motion on Tuesday 15th to ratify the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, including its highly controversial mechanism allowing companies to sue an EU member state when they consider their interests are affected by new policies and regulations adopted by a national government. This is a highly significant step which effectively compromises Irish sovereignty and creates a major vulnerability for a country such as Ireland highly dependent on foreign direct investment. Ireland has been able to attract very high levels of foreign direct investment without conceding to such mechanisms, save under the Energy Charter Treaty. Ironically, it therefore is massively exposed if the further elements of the CETA agreement are ratified and come into effect. Accordingly, I am urging TDs to seek a postponement of the vote to enable time for an informed, considered, debate on the merits and implications of ratification, to be held later in 2021.

CETA has been part of a move to bilateral International Free Trade agreements that have occurred in the past decade, the trade aspects of which can generally be welcomed. However part of CETA provides for provisions to protect investors and the operation of special tribunals outside of our national courts to settle investor-state disputes, and these provisions have given great cause for concern.

In the event a national government taking steps to regulate, for example, environmental protection, Canadian firms in the market concerned would have a right to argue for compensation under the terms of CETA through an investor-state dispute settlement mechanism. CETA expressly provides that Investors can choose to take their claims outside the national courts to a specialised tribunal, which will consider whether the effect of that regulation complies with the protection afforded under CETA and interpret those provisions. It can make a claim in respect of estimated future losses also. If it found in favour of the applicant firm, the powers of such a body would extend to imposing unlimited payments of compensation by a sovereign government such as the Irish Government. While the consequences of such a finding would potentially impose enormous costs to the taxpayer, potentially running into Billions of Euro, even the fear of such claims arising would act to inhibit the state from imposing what citizens might consider appropriate future regulatory mechanisms in key areas. Such ‘regulatory chill’ would be a serious imposition on the ability of Ireland to manage its environmental protection members of the Oireachtas might deem appropriate. There is a risk therefore of environmental protection measures being driven to common denominators inappropriate to the particular circumstances of a state such as Ireland. These claims have been very contentious and the issues of interpretation arising out of the CETA are very complex, and we must be very careful not to leave Ireland exposed following a hurried consideration of this major decision in Ireland.

There are also concerns that the proposed investor-state resolution system could also seriously compromise any effort to re-nationalise a state service or utility where prior Canadian investments are involved.

I am particularly concerned about the impact CETA might have on the forthcoming EU Green Deal. As you will be aware, climate policies associated with this envisage legislative measures for a carbon border adjustment mechanism (CBAM) for selected sectors, scheduled for 2021. This would entail a carbon tariff on selected imports from countries with poorly performing climate action. In the 2021 Climate Change Performance Index, Canada is placed 4th from the bottom of the 58 countries ranked. Ireland is 36th from the top. There is thus a risk of Ireland’s ambitions on effective climate action (e.g. regarding fracked fossil fuels) being compromised by investor claims under CETA , or actions delayed at a time when Ireland needs to be moving swiftly and decisively on the climate and the biodiversity crises. But it is not just Ireland’s exposure and compromise to climate action that we must be conscious of. If Ireland was to decide to refuse to ratify CETA following proper consideration this would have massive implications for such provisions in EU deals and would force a rethink which would be hugely positive for climate action all over the EU. So we have a massive responsibility to think very carefully before we make this ratification decision.

Finally I understand that standing to initiate a CETA investor-state dispute mechanism may not require a company to be headquartered in Canada but merely to have an office located there. This would greatly expand the reach of this undesirable dispute mechanism to encompass most of the multinational companies with a presence in Ireland.

Many of these aspects have not been clearly placed in the public arena for discussion and require teasing out in Dail and public debate. I am urging a postponement of the ratification of the agreement pending this. Much of the rest of the agreement has been in provisional operations and this can continue. There is simply no need to rush this profoundly significant decision through in this way. It will not result in any immediate positive change for Ireland. But it removes our ability to block the exposure to such corporate claims through our ratification decision. Thus it makes simply no sense to rush this through. I am asking all Oireachtas members to seek a postponement. Whatever your views on this controversial aspect of the agreement, it is in the interests of our economy, society, environment and democracy to act carefully here.

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