There’s the sales pitch around the Comprehensive Economic and Trade Agreement (CETA). And then there’s the reality.
Two weeks ago, the Royal Bank suggested that CETA, recently signed in principle between the European Union and Canada, might not live up to the hype that’s being used to sell it to Canadians.
Capital Economics, a research organization for the corporate sector, went further, judging the benefit could be “very small.” Citizens’ based think tanks like the Canadian Centre for Policy Alternatives have actually predicted a decrease in GDP and job losses.
Primarily, that’s because few trade barriers exist for Canadian exports to Europe. While there may be isolated exceptions, such as Atlantic shellfish, generally we send them raw materials on which there are very low tariffs.
Pitching CETA as a trade agreement is misleading. CETA is really about giving transnational corporations greater access to public spending and the delivery of essential services, and then ensuring that there is minimum regulatory control that might interfere with corporate profits. The procurement chapter of CETA allows European corporations to bid on all government contracts over a threshold value of $340,000, right down to the level of municipalities. No favouritism or preferential treatment to local industries will be permitted, unless specifically negotiated in the agreement. Over 50 Canadian municipalities, including the largest in the country, are so alarmed by all the implications of this that they have asked their provinces to exempt them from CETA. Of course, that won’t be allowed to happen.
Then there’s the service sector. The latest update by the European Commission reveals that over half the overall GDP gains for the EU under CETA will come from access to the delivery of Canadian services. Expect an increased push towards the partial privatization of public services like water and waste-water management in a post-CETA world. If CETA follows the FTA and NAFTA pattern, also expect takeover attempts of Canadian businesses delivering services like light and power. In support of this last point, I refer to a Canadian Centre for Policy Alternatives study. It found that, between 1988 and 2002, 96.6 per cent of American investments in Canada took the form of takeovers rather than the creation of new businesses. That period was also characterized by downsizing into precarious (part time and contract) employment. Should we expect more of this also under CETA?
All of this bodes badly, in my opinion, for citizens, for local businesses and for the right of governments at all levels to make decisions in the interest of the public and the environment. Once CETA is signed and ratified by parliament, governments will be bound for decades by rules that they cannot ignore, override or amend at risk of lawsuits.
Corporate lawsuits relating to procurement would take place under the umbrella of the Canadian court system. However, If the European corporations were service providers, they would be considered investors and entitled under CETA’s Investor-State chapter to sue the Canadian government in an offshore tribunal where Canadian law counts for nothing. According to the 73-page 2012 report “Profiting from Injustice” by Corporate Europe Observatory, corporate bias and conflict of interest among the arbitrators are widespread in these tribunals.
In all probability, it won’t be just European corporations that use the Investor-State mechanism. Many large Canadian companies have affiliates across the Atlantic. Under CETA, they could conceivably initiate Investor-State lawsuits via these affiliates in order to compel their own government to refrain from introducing regulations they dislike. Furthermore, under NAFTA rules, Mexican investors and service companies will get the same preferential treatment that is being offered to their European counterparts, even though their countries don’t have to offer anything in return to Canada.
The most insidious characteristic of these lawsuits is not the cost to taxpayers of litigation and damages. It is the impact they will have on democratic decision-making. The mere threat of a lawsuit acts as a substantial deterrent to the development of government policy that would be in the interest of the public or our environment. Everything begins to be seen through the prism of potential litigation, frequently in offshore tribunals.
Our government has done three things throughout the negotiating period that suggest they are serving the interest of global corporations. Most Canadians don’t know that it was Canada, not an initially reluctant EU, that insisted on the CETA Investor-State chapter with its recourse to offshore tribunals. The Canadian government has also made it easier for global corporations to take over Canadian businesses by raising the threshold from $344 million to $1.5 billion before any foreign transaction is reviewed. Finally, it’s becoming harder and harder for Canadian municipalities to gain federal funding for infrastructure projects if they don’t engage in public-private partnerships with corporate investors. Those investors tend to be global corporations, because local businesses find it difficult to come up with the substantial financial backing necessary to participate in these partnerships. All of the above lead to the threat of more Investor-State lawsuits.
I believe that there is a creeping and secretive power shift going on. It’s leading away from sovereign nation states and democracy and shifting towards corporate empire. Trade agreements like CETA are one of the most effective tools global corporations have to dismantle sovereignty. So here’s the big question: why is our own government apparently facilitating this?