Brussels, 29/02/2016 (Agence Europe) - On Monday 29 February, European Commissioner for Trade Cecilia Malmström announced the end of the legal scrubbing process for the text of the free trade agreement between the EU and Canada (CETA), following an agreement between the two parties on the investment protection chapter. The final version of this chapter picks up on the elements of the reformed approach proposed by the EU for a more transparent system for the settlement of investor-state disputes as part of the EU-Vietnam free trade agreement and EU-US free trade negotiations (TTIP).
Concluded on 26 September (see EUROPE 11164) after an agreement in principle concluded in October 2013 (see EUROPE 10947), the CETA includes a chapter on investment protection which depended originally on an improved version of the old investor-state dispute settlement (ISDS) system. This provided for the total transparency of procedures, clear and unequivocal investment protection standards, a ban on forum shopping, state control on the interpretation of the agreement, a rigorous code of conduct, the swift rejection of unfounded appeals, and the 'loser pays' principle to avoid abusive appeals.
In its new version, the chapter on investment protection included in the CETA goes even further in picking up on the whole raft of elements in the EU's new approach on investments, which were set out in its TTIP proposals in November 2015 and which were included in the recently concluded EU-Vietnam free trade agreement (see EUROPE 11429).
This chapter thus provides for: more binding wording as to the right to regulate at all government levels on investment protection; the implementation of a permanent and institutionalised court responsible for settling disputes (unlike the current ISDS system of ad hoc arbitration) with 15 members who will be appointed in advance by the parties to the agreement; the establishment of a court of appeal that will enable the examination of decisions from the point of view of their legality and their cancellation in case of error; more detailed ethics rules for avoiding any conflict of interest (such as a ban for members of the court and the appeals court on intervening as lawyers or experts in other investment disputes); the commitment of the EU and Canada to work on setting up a permanent multilateral jurisdiction or appeal court for investment.
Published online by the Commission, the scrubbed text of the CETA agreement, including its revised chapter on investment protection, will be sent to the Council of the EU and European Parliament for approval after being translated into all the official languages of the EU.
“We will finalise the translation of the text then the Commission will make a formal proposal to be able to adopt this agreement in the spring at the latest. We intend to send this proposal to the Council and the European Parliament in June. When the member states have adopted it, and with the consent of the European Parliament, the CETA will be able to enter into force temporarily”, Malmström stated.
As regards the legal status of the CETA (Ed: on the internal level of the EU), to know if this agreement will be mixed (which would also require ratification of the agreement by the national parliaments) or not, the Commission's legal service will examine this issue and make a proposal “but at the end of day, it's the Council that decides”, Malmström concluded, answering a question from EUROPE. (Original version in French by Emmanuel Hagry)