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Legal expert warns Canada-EU deal could damage sovereignty

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On December 5, Howard Mann of the International Institute for Sustainable Development (IISD) briefed a parliamentary trade committee on the proposed investment chapter and investor-to-state dispute process in the Canada-European Union free trade agreement (CETA). We posted an audio recording of that presentation, in which Mann says CETA would be "the most investor-friendly set of corporate rights" Canada had ever included in a trade or investment treaty.

Mann surprised the committee by reading directly from a leaked copy of the two investment chapters as they appeared at the end of November, which are now available on the Trade Justice Network website.

On December 20, IISD published Mann's submission to the committee. The legal expert explains, "If the text proceeds as currently drafted, the CETA agreement will inevitably lead to increases in the number of foreign investor arbitrations against Canada, against both federal and provincial policies, with resulting pressures not to regulate in key areas such as the environment, human health and anti-tobacco practices."

This assessment contradicts assurances from the European Commission and the Harper government that there will be more protections in CETA for the so-called "right to regulate" in the public interest. John Clancy, a spokesperson for EU Trade Commissioner Karel De Gucht, told the Australian journal Inside Story that, "We used [in CETA] a much more modern, transparent and effective system of legal language which ensures that this kind of action cannot take place."

The type of action Clancy is referring to is the high-profile investor-to-state dispute by cigarette company Philip Morris against Australia for plain packaging rules that remove all branding from cigarette boxes. The company is asking for compensation "potentially amounting to billions of dollars." In 2011, Philip Morris launched a similar lawsuit against Uruguay's plain packaging rules.

These cases, along with other high-profile investment disputes against public interest legislation (including Lone Pine's NAFTA challenge to Quebec's fracking moratorium and Eli Lilly's NAFTA lawsuit against Canada's patent system), have European consumer and environmental organizations worried about including an investor-to-state dispute process in EU trade deals.

"Australia is a developed country which has a very good judicial system," says Monique Goyens, director of the European Consumers' Organization, in the Inside Story article. "There is no reason why, if there is a problem [with trade], it should not be challenged before a court, or a corporate arbitration court."

Many European parliamentarians share this view with respect to the EU trade and investment negotiations with Canada and the U.S., and especially the U.S.

Anna Cavazzini, a policy adviser for Green German MEP Ska Keller, tells the Australian journal De Gucht is now "looking for arguments" to defend investor-to-state dispute settlement in the Transatlantic Trade and Investment Partnership. "The Commission says that something like Australia will never happen to us because, of course, we will put in place a better mechanism which will make the frivolous claims impossible... We don't believe this is true, or that it is even possible."

Mann's testimony corroborates that position. We can only hope Canada's trade committee takes it seriously in its current hearings on CETA but that is asking a lot. The Council of Canadians will appear before committee on January 28.

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