Just what we don't need: An investor rights deal with the EU

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How many Canadians realize the Harper government is well into detailed talks aimed at concluding a comprehensive “free trade” agreement with the European Union?

Probably not many yet, though hopefully more will soon. In light of the bad experience with NAFTA and other similar trade deals worldwide, the last thing we need right now is yet another investor rights agreement, this time to increase the power of European and Canadian corporations at the expense of Canadian and European citizens. But corporate lobby groups like the Canadian Council of Chief Executives are relentless. Even though the global economic meltdown has totally discredited the prescription of deregulation, privatization and free trade, they continue to insist we need still more of it.

As with earlier trade deals, the push for the Canada/E.U. economic agreement has come from large corporations. In October of 2008, the Canada-Europe Roundtable presented a Declaration setting out the agenda for negotiations that was signed by more than 100 of the largest corporations in both Europe and Canada.

Amongst others, the signatories included: water multinationals Suez and Veolia from France; pharmaceutical giants Bayer AG, Glaxo SmithKline and Merck; huge oil companies like Royal Dutch Shell and Total S.A. as well as tar sands producer Suncor; financiers Deutsche Bank and Power Financial Corporation; mining companies like Barrick Gold and Teck Cominco; infrastructure companies SNC-Lavalin, Bombardier and Bilfinger Berger AG; and genetically modified seed producer Monsanto Canada.

Canada and the EU responded by setting up a joint committee to elaborate on what negotiations should cover. That group reported on March 5 in what was blandly titled Joint Report on the EU-Canada Scoping Exercise. Both the corporate Declaration and the bureaucratic report make clear that what is on the table is much more than trade in goods and services and a reduction of tariffs. What is proposed is a sweeping expansion of earlier trade deals, possibly including public services like water and health care.

The corporate Declaration calls for a binding “state of the art” goods and services agreement “covering new generation issues and outstanding barriers”. They ask for “comity in environmental regulation” and elimination of “non-tariff barriers,” the buzzword for public policies which corporations don’t like.

The Scoping Exercise report provides more detail on what is at stake, particularly for Canadian public services that are within provincial jurisdiction. It says: “The provinces and territories will participate in the negotiations with a view to making binding commitments in all areas, wholly or in part, in their jurisdiction…” and “…the services provisions of any agreement should apply to measures taken by all levels of government … no mode of supply or services should be excluded a priori.”

Pressure from European corporations for access to areas of provincial jurisdiction is a key reason for the Harper government’s push for expansion across the country of internal trade agreements like the Trade, Investment and Labour Mobility Agreement (TILMA) between B.C. And Alberta. TILMA permits corporations to sue governments for their policies and to obtain multi-million dollar fines if provinces or municipalities are found to be in violation of investor rights. (For more on internal trade and the connection to the EU deal, see: State of Play by Steven Shrybman.)

Formal negotiations between Canada and the EU will begin May 6 at a Canada/EU Summit in Prague. If a new economic deal is concluded between Canada and the EU, there will be serious implications for Canadian relations with the United States and Mexico. That is because the NAFTA includes a “most favored nation” clause within its chapter on investment and services. Article 1103 of the NAFTA specifies that each NAFTA country shall provide “treatment no less favorable” to another NAFTA party that it provides to any other party.

What that means in plain language is a real possibility that any concessions Canada provides to the Europeans will have to be provided to the U.S. and Mexico as well. If we give European water or health companies preferential access to our provincial services, we may well have to offer the same access to U.S. and Mexican companies.

This is one reason why Canadians should be cautious about any feeling that an investor rights deal with Europe will somehow be kinder and gentler than other free trade deals. Even though many European countries have social systems and public services which are superior to those in either Canada or the U.S., the logic and history of free trade agreements everywhere is about pressuring standards downward and entrenching corporate rights.

There is an active trade justice movement throughout Europe precisely because of concern about the trade agreements the EU has already signed, generally with developing countries. One U.K. based coalition of 80 groups with some 9 milliion members is actually called the Trade Justice Movement. The Trade Justice Movement is “campaigning for trade with the rules weighted to benefit poor people and the environment.” Their slogan is “Stop Europe’s unfair trade deals”.

Groups like the T.J.M., the Association for Taxation of Financial Transactions to Aid Citizens (ATTAC, which has an active chapter in Quebec), the European Network for Public Services and the European Network on Debt and Development all offer the prospect of common cause for progressive Canadians as the Canada/EU talks proceed.

Some European activists, particularly environmentalists, may be concerned about entering into an investor rights deal with Canada, given our dreadful record on climate change, our unchecked tar sands development, our support for genetically modified foods and the bad international record of many Canadian mining companies.

European and Canadian activists may also find themselves working together on Colombian trade and human rights issues, given the recent introduction in the Canadian Parliament of legislation for a Canada/Colombia free trade agreement and the February announcement by the European Union that it too intends to enter into free trade talks with human rights renegade Colombia.

If Canadians want a glimpse of what an investor rights agreement with the EU may end up like, we need look no farther than Mexico. Mexico entered into a free trade agreement with the EU in 2000. According to a 2007 report by Mexican trade experts Manuel Perez Rocha L. and Rodolfo Aguirre Reveles (The E.U.-Mexico Free Trade Agreement Seven Years On: A warning to the global south, Transnational Institute, Mexican Action Network on Free Trade and ICCO):

“Instead of the promised economic and social benefits, the treaty has left the Mexican state unable to implement policies to promote small and medium sized companies … across various economic sectors the FTA has worked to the benefit of European transnational corporations and to the detriment of Mexican industries.”

Economically, free trade with the European Union is a big deal, since it is the world’s largest economy, larger than the United States. The EU accounts for 31 per cent of world economic output, which is more than the U.S. contribution of 26 per cent. The gross domestic product of the EU in 2008 was 18.4 trillion U.S. dollars compared to 14.3 trillion for the U.S. In comparison, Canada’s GDP in 2008 was just 1.5 trillion.

The population of the EU is 491 million, compared to 303 million in the U.S. and just 33 million in Canada. European transnational corporations are extremely rich and powerful and will not worry much about the democratic preferences of Canadian citizens or local governments should a Canada/EU trade deal be concluded.

The impressive protests during the G20 meetings in London at the beginning of April helped highlight the depth of anger in Europe about the prevailing economic model. Unemployment is sharply on the rise in Europe, just as it is in Canada, and governments there -- as here -- are constrained from responding fully by the binding neo-liberal obligations of the trade agreements they have already signed.

Just what we don’t need are new restrictions on the democratic rights of Europeans and Canadians to act decisively in the face of this economic crisis. Instead, we desperately need what European social movements called for in the lead-up to the G20 meetings in what has been dubbed The Paris Declaration:

“We can build a system that works for people and the environment, a system to serve the needs of the many, a system based on the principles of public benefit, global equity, justice, environmental sustainability and democratic control.”

European and Canadian activists have many reasons to work together to try to achieve that vision.


Blair Redlin is a researcher with the Canadian Union of Public Employees, based in Burnaby, B.C. In addition to bargaining support for CUPE's municipal sector in B.C., his research priorities include privatization and P3s, water, trade agreements, energy and transportation.

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