Business

EU and Canada set out trade agreement

Container ship in the Port of Montreal along the St. Lawrence River Image copyright Getty Images
Image caption The Canada-EU trade pact could boost trade by $20bn a year

The European Commission and Canada have unveiled the details of a new trade liberalisation agreement.

Under the deal almost all customs tariffs will be eliminated and markets for services will be opened up.

But the agreement still needs approval from the EU parliament and faces particular opposition from Germany.

Critics say the deal restricts the power of democratic governments in relation to big business.

Business benefits

It's not just maple syrup. Traded products, in both directions, range from machinery, chemicals and transport equipment to services such as insurance and communications.

The European Commission has said the deal would boost bilateral trade by 23%. And a A joint EU-Canadian study has put the combined annual economic gains at about 20bn euros although those figures were published six years ago.

However a provision included in the deal to bolster the rights of foreign investors, known as Investor State Dispute Settlement (ISDS) could still prevent the deal being approved.

Campaigners say it gives big business too much power in relation to democratically elected governments wishing to introduce new policies.


Analysis: economics correspondent, Andrew Walker

One thing could still derail the deal.

The Germans don't like the proposal that's included for a new system of tribunals, under what's knows as ISDS. If foreign investors feel they've been mistreated they can turn to these tribunals and even in some cases apply for compensation.

ISDS has actually been around for years. But recently campaigners have begun to argue that it is undemocratic because of the constraints it puts on elected governments.

For example the tobacco company Philip Morris is taking legal action against Australia over its plain packaging laws - there has been no ruling yet on this case.

Other cases have involved regulation of energy prices, disputes over patents and alleged wrongful criminal prosecution.

The German economy minister Sigmar Gabriel has said he would reject the Canada deal if the ISDS elements remain.

That has cast new doubt on whether the deal will ever come into force and it suggests an uphill struggle for other trade negotiations still being hammered out behind the scenes.


Campaigners have called the ISDS "a powerful corporate weapon to delay, weaken and kill regulation."

Nick Dearden, director for the World Development Movement says of the EU Canada deal: "If it is agreed, it will undermine the power of democratically elected governments to make decisions in the public interest".

Supporters of ISDS say it provides foreign investors with protection against discriminatory treatment and that means they are more likely to take the plunge and invest.

The EU's top trade official, Commissioner Karel de Gucht rejects the complaints against ISDS, although he has acknowledged concerns about some agreements.

He told the European Parliament: "On investment, the agreement establishes a system that sets a new standard for investor-to-state dispute settlement procedures". He said the deal with Canada "directly addresses all the concerns that have emerged so far".

The controversy about ISDS led the European Commission to launch a public consultation earlier this year about its inclusion in trade liberalisation negotiations with the US.

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