Will German objections scuttle a landmark Canada-EU trade and investment deal?
By M.D.| OTTAWA
LAST October, Stephen Harper, Canada’s prime minister, flew to Brussels to sign a trade-and-investment deal in principle between Canada and the EU. On September 26th, the two sides announced the close of negotiations. But despite the back-slapping there may still be work to be done. Sigmar Gabriel, Germany’s economy minister, objected strenuously this week to a clause in the deal that would allow companies to sue governments if they felt their rights had been infringed.
The clause is common in bilateral investment deals and initially attracted little attention in the Canada-EU negotiations. But it has become a flashpoint in another set of trade negotiations, between the EU and the United States. The European Parliament, a range of environmental and civil-society groups, and certain German politicians oppose it because they feel it gives multinational firms too much power in their dealings with government.
During a debate in Germany’s Bundestag about the two sets of EU talks, Mr Gabriel said “it’s completely clear we reject these investment-protection agreements” and that the debate was not over yet. In Ottawa, Jose Manuel Barroso, president of the European Commission, questioned whether Mr Gabriel was speaking for the German government, saying that all official communications he had received from Germany were “absolutely in favour of this agreement”.
The text of the trade deal must go through a legal review and translation before being presented to the Canadian and European parliaments for ratification. Reopening it now would kill the agreement, according to Karel De Gucht, the European trade commissioner.
It would also be a blow to Mr Harper. The deal goes well beyond the traditional fare of lower tariffs and higher farm quotas. It also makes it easier for companies in both areas to compete for large government contracts, closes gaps in intellectual-property rules, and allows for mutual recognition of some professional certifications. Mr Harper has made trade diversification one of his signature themes. Canadian exporters remain overwhelmingly dependent on the US, which buys about 75% of Canadian goods exports and supplies about half of all imports. A successful deal with the EU would be a nice fillip for Mr Harper heading into an election year. But it isn’t done and dusted yet.
