A better deal – for Canada, the U.S. and Europe

TheGlobeandMail.com – Opinion/Editorials
Jan. 24, 2016.   Globe Editorial

It shouldn’t be any surprise that the policies of nations, and the interests of their governments, don’t always fit in with the interests of the foreign corporations that invest in those nations, even when the government initially welcomed the company.

That’s why many countries have entered into treaties to protect their foreign investors. The idea is to ensure that foreigners cannot be disadvantaged relative to domestic investors, or hit with regulations that are really just an expropriation in disguise.

The European Union and Canada have negotiated a free trade deal, called CETA, but now there is some worry that it won’t get through the European Parliament in Strasbourg, because of European critics on both the right and left who don’t like the treaty’s investor protection provisions.

The EU is even more worried that these difficulties will upset the negotiations between the United States and the EU, known as TTIP. But if Canada and the EU can sort this all out, maybe TTIP is still viable.

The Europeans’ concern has to do with the process for investment arbitration, and the quality of the adjudicators selected to render decisions. Unlike judges in Canada’s judicial system, they are paid by the job. They come and go, with varying expertise and consistency. The decisions aren’t treated as precedents. And there are no appeal proceedings. Given the big economic consequences, it’s all a bit ad hoc. Europe wants something that looks and operates more like a real, professional court. It’s not a bad idea.

The Americans seem fairly happy about arbitrations under NAFTA, though some Democrats share the concerns from across the pond. The European push-back is an opportunity to fine-tune the Canada-Europe trade deal, which deserves passage. And changes to CETA’s investor-protection process could set a precedent for common rules eventually covering Canada, the EU and the U.S.

As trade lawyer Lawrence Herman says, a permanent investment-court system is likely to mean “greater uniformity of jurisprudence and a greater measure of public confidence.” Fixing CETA in this way would respond to critics of the deal, while improving it. Sounds like a win-win. Where do we sign?

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