By Zoltán Massay-Kosubek Policy Co-ordinator for Healthy Trade and Health Equity, EPHA
Investment protection rules and their potential reform have become a toxic issue in EU trade policy. Can a fundamentally flawed arbitration system be really reformed? Is addressing some concerns without questioning the fundamental nature of arbitration the right way to proceed? Well, the European Commission definitely attempted the impossible: it has proposed a partial reform and presented its proposal for an Investment Court System (ICS) as the seed of a new International Trade Tribunal, intended to replace the old Investor-to-State Dispute Settlement (ISDS) system. While the new text was tabled as part of the TTIP (EU-US) negotiations, little attention has been paid so far to similar language quietly introduced into the EU-Canada comprehensive economic and trade agreement (CETA). As CETA is about to be signed and ratified in the coming months, it is high time for the European public health community checks the CETA version of ICS against public interest requirements.
The recently negotiated agreement between the EU and Canada, known as a Comprehensive Economic and Trade Agreement (CETA) is the first trade agreement between the EU and a major world economy and the most far-reaching bilateral trade agreement negotiated to date. The EU and Canada recently re-negotiated the investment protection chapter and Canada basically approved the EU proposal for an Investment Court.
EPHA has joined with a coalition of public interest NGOs (BEUC, Transport & Environment, ClientEarth and the European Environmental Bureau) to conduct a detailed, legal analysis of the ICS CETA text, highlighting the good, the bad and the ugly issues. We concluded that despite some improvements, fundamental concerns have not been addressed in the revised CETA investment chapter either.
Let’s pick an example to demonstrate how the new rules could harm the public interest: The preamble and article 8.9 are supposed to strengthen the protection of the right to regulate which is key for improving public health.
Article 8.9 Investment and regulatory measures
- For the purpose of this Chapter, the Parties reaffirm their right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection or the promotion and protection of cultural diversity.
- For greater certainty, the mere fact that a Party regulates, including through a modification to its laws, in a manner which negatively affects an investment or interferes with an investor’s expectations, including its expectations of profits, does not amount to a breach of an obligation under this Section.
Life saving measures which can be affected by this include among others, plain packaging of tobacco, minimum unit pricing of alcohol and traffic-light food labelling. While the declaration does reaffirm the right to regulate to achieve public health policy objectives, contrary to public statements of the EU and Canada, this is only a declaration and not a legally enforceable measure. The public health community has witnessed the chilling effect of legal challenges already brought by the tobacco industry . This revised text will not prevent investors from suing as arbitrators are simply not likely to discard a case due to such an exception clause. In other words: nothing has changed significantly as the regulatory chill effect – which is a central objection to TTIP – will still remain exactly the same.
And this is just one of the many identified cases where the reformed investment protection measures in CETA fall short of safeguarding democracy and the rule of law. The attached analysis highlights key concerns that have not been addressed in the revised CETA investment chapter.
Despite some improvement, CETA falls short of safeguarding democracy and the rule of law, both in Europe and Canada and it still has the potential to undermine public health interests. A frog will not turn into a prince regardless of how many kisses it is given, I am afraid.