Back in December An Taisce issued a statement of our position on CETA in reaction to an upcoming Dáil vote on ‘full ratification’ of the trade treaty. The vote was subsequently postponed until early 2021.

CETA has now been referred to the Oireachtas Committee on European Affairs for examination. This may be seen as a win but placing the task with this particular committee may exclude looking at wider impacts on climate action, health, employment, and justice.

CETA is a ‘mixed agreement’ meaning that the ‘trade’ aspects are dealt with separately to the ‘investment protection’ elements.  The part of the agreement dealing with the real trade in goods, reduction of tariffs, quotas for access etc has been in place since 2017 – even without ‘ratification’. The ‘full ratification’ is not about increasing trade but rather about adding the Investment Court System (ICS) part of CETA.  

 

 Why are the implications of the Investor Courts System so serious?

Comhlámh who's campaigned on TTIP and CETA for several years has produced an excellent fact checker and coordinated a letter signed by NGOs which appeared in the Irish Examiner which stated

ICS provides a dispute settlement tribunal where foreign investors can take a case against a state for perceived breaches in CETA’s investment protection standards.

 This mechanism would sit outside the remit of national courts and the European Court of Justice (ECJ), instead setting up new structures with the power to impose large financial penalties on governments and ultimately the taxpayers. There is nothing to stop foreign investors taking a case to the national law courts or thereafter the ECJ, as they see fit.

The reason ‘investment protection’ is treated differently and requires separate national ratification is precisely because it carries huge financial and policy implications for member states. The proposal for an ICS is intended to replace the controversial Investor-to-State Dispute Settlement (ISDS) system.

Full ratification could introduce, for the first time in Ireland, liability under ISDS/ Investor Courts which allows companies to sue the Irish state for massive compensation if the future profits of that companies will be reduced by the cost of obeying a new state policy or regulation.   

It also has huge implications for health, environment, equality and employment standards.  While existing regulations might be kept, and states still have the ‘right to regulate, they will be more reluctant to introduce ambitious new laws or policies if they face potential lawsuits for compensation around obeying such laws. 

Ireland has more to lose than most because we are currently not exposed to investor courts. This would introduce a brand new level of vulnerability for us as a small open economy.  The only ISDS to which we are currently connected is the Energy Charter.

The EU is currently trying to amend the energy charter and many other countries, which signed up to ISDS Courts in the past have publicly regretted that decision – Australia is one prominent example. 

While already existing regulations may be protected and states will still technically have “the right to regulate”. The problem is that new regulations or laws to improve environment, health, employment , equality etc. could lead to potentially massive demands for compensation from companies whose future earnings might be affected by the cost of obeying those new rules. This can create a ‘chill effect’ where states are too afraid to introduce ambitious laws.

ICTU, SIPTU, FORSA, MANDATE, and most unions worldwide are against ISDS/ICS because it creates a major barrier to the improvements of workers rights and conditions. One famous example of such a chill effect in action is the case taken against Egypt when they tried to raise the minimum wage. 

The European Public Health Alliance (EPHA) have expressed fears for the negative impact CETA can have on healthcare. With particular focus on ICS, the EPHA warned that “lifesaving public health measures which could be affected by CETA’s investment chapter include, among other initiatives, minimum pricing of alcohol, food labelling, air pollution restrictions, chemicals legislation and soda/sugar taxes.”

Simply by threatening to sue governments for huge amounts, foreign corporations can pressurise states to water down or abolish regulations in areas such as climate, environment, health, finance, or taxation that have been enacted or proposed in the public interest. The fear of such claims can also make a Government fearful of advancing progressive policies and regulations.

Further Info on CETA and ICS

• Comhlámh’s CETA and ICS fact checker
• Echo Chamber Podcast  panel discussion on CETA
• Detailed explainer with Independent Senator Alice Mary Higgins
• Making sense of CETA (PowerShift & Canadian Centre for Policy Alternatives)
• CETA: The implications for Ireland (Comhlámh)
• Joint Interpretative Declaration on CETA – Unpacking the “clarifications” on investment protection (Seattle to Brussels Network (S2B))
• ICS: The Wolf in Sheep's Clothing (Public Services International)

 Illustration: Latuff