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BackA delighted EU Commission took part in a discussion with the civil society on the EU-Canada Free Trade Agreement this week: there had been a breakthrough in the free trade negotiations with Canadian officials. As usual, the representatives of the Commission already had figures at hand, specifying the additional growth the Agreement could bring for the EU economy. However, representatives of the civil society, in particular from the employee and consumer sector reacted reservedly, some even angrily, to the statements of the Commission. The Agreement will not bring improvements for employees - quite the opposite, the Agreement might even worsen the employment conditions in some industries.
12 billion Euros more for the EU Gross Domestic Product, 500 million fewer customs duties for the industry, 125 protected geographical indications (such as “Parma ham”) and at least the same access to the service market as in case of the American NAFTA Agreement. These are some of the glad tidings, which the EU Commission announced on the Free Trade Agreement of the EU with Canada (CETA Agreement). Whether it will indeed be possible to keep these promises, is a different issue altogether. Some years ago, the Commission made similar prognoses for the industrial relations with South Korea. However, after the Agreement with South Korea came into force it transpired that the assumptions on the economic development with South Korea were nowhere near achieved.
However, so far the Commission has not published any text, which specifies the details of the draft of the Free Trade Agreement. Nevertheless, there is already some information on the down sides of the Agreement in circulation:
•For example, the plan is to implement a so-called investor-state dispute settlement mechanism. However, at a trade union event, the Canadian trade union representative Larry Brown called this mechanism absurd: any company based in Canada or the European Union could therefore sue if it felt it had missed out on profit because of a government regulation. It would not even be necessary for the company to be or become commercially active in this country. The arbitrators appointed by company and state would then have to decide, whether and how much compensation the state had to pay. A practical example: Mexico refused to store toxic waste coming from the US in her country. However, this was an infringement against the Trade Agreement with the US, and based on the mechanism, the suing waste disposal company received compensation of 70 Mio. US-Dollar. In future, such cases would also be possible between the EU and the US. Instead of impartial courts, decisions would be taken by stakeholders; the ones who had to pay were the state resp. society.
•The Commission confirmed that a negative list approach will be included in the EU-Canada Agreement. That means that all service sectors, which are not on the list, have to be liberalised (“list it or lose it”). This must be rejected, because firstly it might happen that given the vast number of existing services one service might be forgotten, which, however, one does not want to liberalise, or secondly, that completely new services might appear in future, which one does not want to liberalise, but has no choice, as they are not mentioned on the list. This approach is aggravated by the so-called Ratchet Clause: services, which have been mentioned on the list as an exception, but which are liberalised after all, may not be “repatriated” if the liberalisation has not been successful, but have to remain liberalised. Example: the public sector liberalises refuse collection and puts this service out to tender. Some years later, the public sector might become aware of the fact that the refuse collection by the private service provider is unreliable and inefficient. However, according to the Clause, it is not possible to return the service to the public sector and the service must continue to be put out to tender.
•Even though the Agreement contains a sustainability chapter, comprising questions on working conditions or environmental issues, binding rules resp. sanctions in case of infringements have not been provided - there is a lack of enforcement measures.
Tom Jenkins, representative of the European Trade Union Confederation did not hide his annoyance about the negotiation result of the Commission on the Free Trade Agreement EU-Canada: Jenkins hopes that the Agreement will be put on ice after all. In his opinion it is a disgrace that the Commission attaches more importance to the protection of individual types of cheese or hormone-enriched beef than to a binding employment chapter in the Agreement.
Penny Clarke of the European Federation of Public Service Unions EPSU was disappointed about the negative list. Services and interests might develop and then such a clause would be a hindrance. However, it was positive that the Agreement would include a clause, which would exempt public utility companies (public utility clause) from it.
Non-governmental organisations (NGOs) such as Friends of the Earth or The European Consumers’ Organisation BEUC do not understand why an investor-state mechanism is necessary as such arbitration processes were so far only common in countries with delayed development, in particular in respect of constitutional issues. However, this was not the case in Canada or the European Union.
In spite of the jubilation by the EU Commission, the Free Trade Agreement with Canada is not set in stone for a long time: firstly, the text on the Agreement has to be brought into an official form; afterwards the Agreement has to be scrutinised by lawyer-linguists.
However, from the point of view of employee organisations and NGOs, their greatest chance of achieving any amendments of the Free Trade Agreement with Canada lies with the European Parliament. If the MEPs do not approve of the Agreement, the Commission officials do not have much choice but entering into renegotiations with Canada.
From the Commission’s point of view, the Agreement shall come into force in about 2 years’ time.
However, so far the Commission has not published any text, which specifies the details of the draft of the Free Trade Agreement. Nevertheless, there is already some information on the down sides of the Agreement in circulation:
•For example, the plan is to implement a so-called investor-state dispute settlement mechanism. However, at a trade union event, the Canadian trade union representative Larry Brown called this mechanism absurd: any company based in Canada or the European Union could therefore sue if it felt it had missed out on profit because of a government regulation. It would not even be necessary for the company to be or become commercially active in this country. The arbitrators appointed by company and state would then have to decide, whether and how much compensation the state had to pay. A practical example: Mexico refused to store toxic waste coming from the US in her country. However, this was an infringement against the Trade Agreement with the US, and based on the mechanism, the suing waste disposal company received compensation of 70 Mio. US-Dollar. In future, such cases would also be possible between the EU and the US. Instead of impartial courts, decisions would be taken by stakeholders; the ones who had to pay were the state resp. society.
•The Commission confirmed that a negative list approach will be included in the EU-Canada Agreement. That means that all service sectors, which are not on the list, have to be liberalised (“list it or lose it”). This must be rejected, because firstly it might happen that given the vast number of existing services one service might be forgotten, which, however, one does not want to liberalise, or secondly, that completely new services might appear in future, which one does not want to liberalise, but has no choice, as they are not mentioned on the list. This approach is aggravated by the so-called Ratchet Clause: services, which have been mentioned on the list as an exception, but which are liberalised after all, may not be “repatriated” if the liberalisation has not been successful, but have to remain liberalised. Example: the public sector liberalises refuse collection and puts this service out to tender. Some years later, the public sector might become aware of the fact that the refuse collection by the private service provider is unreliable and inefficient. However, according to the Clause, it is not possible to return the service to the public sector and the service must continue to be put out to tender.
•Even though the Agreement contains a sustainability chapter, comprising questions on working conditions or environmental issues, binding rules resp. sanctions in case of infringements have not been provided - there is a lack of enforcement measures.
Tom Jenkins, representative of the European Trade Union Confederation did not hide his annoyance about the negotiation result of the Commission on the Free Trade Agreement EU-Canada: Jenkins hopes that the Agreement will be put on ice after all. In his opinion it is a disgrace that the Commission attaches more importance to the protection of individual types of cheese or hormone-enriched beef than to a binding employment chapter in the Agreement.
Penny Clarke of the European Federation of Public Service Unions EPSU was disappointed about the negative list. Services and interests might develop and then such a clause would be a hindrance. However, it was positive that the Agreement would include a clause, which would exempt public utility companies (public utility clause) from it.
Non-governmental organisations (NGOs) such as Friends of the Earth or The European Consumers’ Organisation BEUC do not understand why an investor-state mechanism is necessary as such arbitration processes were so far only common in countries with delayed development, in particular in respect of constitutional issues. However, this was not the case in Canada or the European Union.
In spite of the jubilation by the EU Commission, the Free Trade Agreement with Canada is not set in stone for a long time: firstly, the text on the Agreement has to be brought into an official form; afterwards the Agreement has to be scrutinised by lawyer-linguists.
However, from the point of view of employee organisations and NGOs, their greatest chance of achieving any amendments of the Free Trade Agreement with Canada lies with the European Parliament. If the MEPs do not approve of the Agreement, the Commission officials do not have much choice but entering into renegotiations with Canada.
From the Commission’s point of view, the Agreement shall come into force in about 2 years’ time.