Oct 13, 2016

CETA: A significant shift from democratic governance


Imagine a far-off dystopia when foreign corporations are given the same status as citizens in public hearings. When the overriding priority for government in issuing licenses for fracking, pipeline and other projects is to make the process simple for corporations. When, regardless of how much a project is opposed by the public, governments have to ensure protests and court challenges do not cause “undue” delays.

Unfortunately, this scenario is not some distant possibility but may become legally binding reality by 2017. That is when CETA – the Comprehensive Economic Trade Agreement – between Canada and the European Union is supposed to come into force.

The word “trade” in CETA’s name can be misleading since most tariffs have already been lowered on trade between Canada and Europe. Instead, where Canadians and Europeans may notice CETA the most is in the many ways the agreement restricts democratically elected governments and obliges them give special treatment to foreign corporations.

Just one example of how CETA will fundamentally change how we are governed is the provision that guarantees foreign corporations equal or better status than a country’s citizens in public hearings on proposed regulations. It is such a surprising provision that you wonder if you have read it correctly. The wording, however, is straightforward: whenever public consultations are held about proposed regulations, CETA requires that “each Party shall permit persons [defined to include corporations] of the other Party to participate on terms no less favourable than those accorded to its own persons.”[i]

What system of government guarantees foreign corporations the right to participate in regulatory consultations on terms that are equal or better than those granted its own citizens? Can it still be called democratic? By extending the rights of citizens to foreign corporations in this way, CETA seems to fail the definition of democracy given on the Parliament of Canada’s website: “In a democratic country, all eligible citizens have the right to participate, either directly or indirectly, in making the decisions that affect them.”[ii] With Canadian Trade Minister Chrystia Freeland promising that CETA will act as the “gold standard” for future agreements, [iii] will citizens over time be increasingly marginalized as the corporations of more and more foreign countries acquire rights to be treated as well or better than citizens?

The word “trade” in CETA’s name can be misleading since most tariffs have already been lowered on trade between Canada and Europe.

Another way CETA would fundamentally change our system of governance is to compel governments to make their licensing processes “as simple as possible” for corporations. Making things simple for corporations is not balanced in this CETA obligation with other values a society may have such as ensuring that a proposed pipeline will not devastate the environment or that residents have a say in whether their local government approves major rezoning for commercial development. Since it is certainly possible for governments to approve projects without environmental hearings or public consultations—demonstrated by the fact that some jurisdictions dispense with both—could this be the standard for a licensing process that is “as simple as possible”?

Another CETA obligation may make it irrelevant to obtain citizen input as part of the licensing process. CETA requires that any criteria for getting a license be “established in advance”, which could mean[iv] governments have to state everything that needs to be done to get a license before an application is made. It could also mean corporations with licenses would not have to comply with new regulatory requirements. A World Trade Organization (WTO) committee chair has warned this obligation could “impose a significant limitation on the right of Members to modify their regulations.”[v]

In a significant shift from other agreements under negotiation, CETA would apply its restrictions on government regulation not only to the service sector but as well “to the pursuit of any other economic activity” — including all extractive industries. European oil and gas giants Shell Oil and Total, which have interests in Canadian LNG and the tar sands, stand to benefit from the regulatory system CETA will create. The Canadian mining industry, whose current projects have been fiercely opposed in some European countries, has lobbied for CETA and sees it as a means to reduce the difference between Canadian and European regulations.[vi] An industry publication explains how the investor-state provisions in CETA, like those in NAFTA, can be used to make governments pay when they introduce environmental legislation and how the threat of investor-state suits can be used as a “lobbying tool” to prevent legislation in the first place.[vii]

CETA has a number of prescriptions for government that sound like they were drafted by the oil and gas and mining industries. Governments are supposed to spell out “normal timeframes” for how long they take to process an application, and these timeframes should be “reasonable”– giving corporations a handy legal basis for a CETA investor-state challenge if governments take an “unreasonable” amount of time or whatever is deemed longer than the norm. Governments have to start processing applications and implement them without “undue delay” regardless of public protests or court challenges.

In a significant shift from other agreements under negotiation, CETA would apply its restrictions on government regulation not only to the service sector but as well “to the pursuit of any other economic activity” — including all extractive industries.

CETA will go far beyond existing WTO rules so we can expect challenges that were lost at the WTO to be won through CETA. Given their records, Canada and European governments will not be shy about taking such cases. Despite its current Mr. Nice Guy image in Europe, Canada has pursued WTO cases attacking policies that Europeans widely support, challenging European restrictions on hormone-treated beef, GMOs, and imports of seal products.

Canada even tried to overturn the 1997 French ban on asbestos, arguing before a WTO panel that its asbestos products “do not pose any detectable health risks”.[viii] Fortunately for public health, under existing WTO rules Canada lost its case. However, if CETA had been in place, Canada and its asbestos industry would have had many powerful tools to keep the French ban from ever coming into being. The asbestos industry could have threatened a CETA investor-state suit demanding billions in compensation; the ban could have been opposed by companies using asbestos arguing it had not been established in advance of when they got their licenses; in any domestic consultations before the ban was introduced, Canadian asbestos companies would have to be given treatment equal to or better than that given to French citizens; through CETA’s regulatory co-operation provisions, Canada would have been able to attack the ban in closed door meetings even before French citizens were advised it was being considered. And finally, if these efforts had failed, as a CETA party Canada could have demanded delays in implementation of the ban, giving the asbestos lobby more time to fight it.

France’s decision to ban asbestos was a significant victory in global efforts to prevent the harm caused by this toxic product, one that Canadians will also benefit from since it helped pave the way for Canada to consider its own ban. However, CETA would exert enormous pressures on government to never take on such important initiatives. Neither Canadians nor Europeans can afford an agreement like CETA that shifts government decision-making further in favour of serving narrow commercial interests.

[i] CETA, Article 6. 6.1 Technical Barriers to Trade, Article 6: Transparency, paragraph 1. http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/ceta-aecg/text-texte/06.aspx?lang=eng Defining a “person” to include an enterprise is done under CETA’s Section A – General Definitions, http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/ceta-aecg/text-texte/02.aspx?lang=eng

[ii] http://www.lop.parl.gc.ca/About/Parliament/Education/ourcountryourparliament/html_booklet/democracy-defined-e.html

[iii] “CETA a ‘gold standard’ agreement, Freeland tells EU committee”, IPolitics, https://ipolitics.ca/2016/04/20/ceta-a-gold-standard-agreement-freeland-tells-eu-committee/

[iv] The EU and Canada have left the meaning of “established in advance” up to CETA dispute panels to decide.

[v] Working Party on Domestic Regulation, Disciplines on Domestic Regulation Pursuant to GATS Article VI:4,

Annotated Text, Informal Note by the Chairperson, Room Document (14 March 2010), para. 68.

[vi] The Mining Association of Canada, “Facts and Figures of the Canadian Mining Association – 2015”, p.76.

[vii] Mineweb, “Landmark Canada/EU trade agreement could have major implications for miners”, 23 October 2015, http://www.mineweb.com/archive/landmark-canadaeu-trade-agreement-could-have-major-implications-for-miners/

[viii] WTO, “European Communities – Measures Affecting Asbestos and Asbestos-Containing Products”, Report of the Panel, 18 September 2000, paragraph 3.12.

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