David Martin MEP

Labour Member of the European Parliament and one of the six MEPs representing Scotland in Brussels and Strasbourg

CETA - the free trade agreement with Canada



March 2016

The EU-Canada Comprehensive Economic and Trade Agreement (CETA) is certainly a mouthful. Not only that, but at 1,598 pages you'd need a forklift truck to hoist the entire thing from one room to another. But the contents of this paper brick are seriously important for the UK economy.

In Britain we know the importance of trading with our neighbours. Indeed, it was a Scotsman, Adam Smith, who first compellingly argued the benefits of free trade between nations as a means for everyone to become more prosperous. Since then we have always been at the forefront of efforts to bring down the barriers which stop us all from gaining the efficiency and expertise of our neighbours.

The focus of EU trade policy has always been to achieve wide-ranging deals through the World Trade Organisation, so that as many countries as possible can benefit. However, since 2001 this process has stalled because of big differences between certain WTO members. Since then, the EU has pursued a policy of working with individual countries.

A good example of this is the agreement with South Korea, signed in 2011, thanks to which:

• Overall EU goods exports have increased 55%
• EU pork exports have increased 120%
• And something a bit closer to home... in 2014 Scotch Single Malt sales had increased to a record £8.6 million.

The deal with Canada will be the most comprehensive yet in terms of our offers to open up our economies. This is for two main reasons:

• Tariffs (the taxes that importers must pay at the border to receive their goods) will be completely removed on 99% of all products.
• For the first time both central government and the provinces have agreed to open up their markets for public contracts, offering huge opportunities for Scottish firms like the Weir Group, based in Glasgow.

This large scale market-opening makes sense considering our shared history and values (even more so with the new Canadian government led by Justin Trudeau).

Investor protection

The European Parliament is scheduled to sign the deal into law in the coming months. The thorniest issue is expected to be something called the Investor-State Dispute Settlement (ISDS) mechanism. Any of you interested in trade policy over the last year or so will have been made aware of the controversy surrounding the so-called ISDS. Despite it being present in thousands of treaties up to this date the issue became a hot topic after many civil society organisations, and Labour MEPs, raised concerns at its inclusion in TTIP - the ongoing trade negotiations with the USA.

Essentially what it is designed to do is offer an extra level of protection for foreign investors from being discriminated against unfairly by a national court system.

Our criticisms stemmed from the fact that over the previous decade this clause was being invoked more and more often to try to overturn government decisions made for the good of the people. A famous case was that of Philip Morris Tobacco suing the government of Australia for introducing plain packaging on cigarettes (although it must be clarified that this case was later thrown out).

The main sticking point, therefore, was that this ISDS mechanism was hindering the ability of democratic governments to regulate in the citizens' interest. Other problems included the fact that the whole process was very opaque and, believe it or not, the parties in the case could choose their own 'arbitrators' (a type of unaccountable judge). Obviously, this is something that as Labour MEPs we could not stand for, demanding wholesale changes or that the mechanism be removed altogether.

Together with our Socialist and Democrat (S&D) sister parties we came up with a list of changes that we wanted to see to make the system fairer, more transparent and protect governments' right to regulate.

The Commission were told to go back to the drawing board.

Now here comes the tricky bit. ISDS had already been included in the (already concluded) CETA agreement. Officially the process was in what was called the 'legally scrubbing' period, which means that they were checking all the various chapters - it's over one and half thousand pages remember - made sense together and in each of the many EU languages. The Commission were adamant; only small changes could be made.

The Commission's new proposal

It therefore came as a surprise on 29 February when the Trade Commissioner Cecilia Malmström made the announcement that the investment chapter had been substantially changed, with a specific clause protecting governments' right to regulate and other measures bringing it more into alignment with democratically accountable national courts.

On the face of it the changes seem very close to what we demanded. The next step is to analyse these changes fully to see if our concerns have been effectively dealt with in the legal text.

In short, the new proposal represents a big step forward and I personally welcome the fact the Commission have listened to the European Parliament and the S&D group in particular.

If you want to read more:

My interview for viEUws: http://www.vieuws.eu/eutradeinsights/video-changes-to-ceta-text-under-legal-scrubbing-do-not-set-dangerous-precedent-says-david-martin-mep/

The Commission's proposals explained in more detail: http://www.vieuws.eu/eutradeinsights/video-changes-to-ceta-text-under-legal-scrubbing-do-not-set-dangerous-precedent-says-david-martin-mep/

Politico EU's take on the announcement:

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