Controversial part of Canada-EU trade deal may be left out of U.S. talks

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Canada's trade deal with the European Union is under new scrutiny after the EU indicated the most controversial aspects of its pact with Canada might be dropped from similar talks with the United States.

The investor-state rules meant to resolve disputes between companies and governments are shaping up to be the main lightning rod of the Comprehensive Economic and Trade Agreement (CETA) released Friday by Canada and the EU.

Senior members of the German government – including the Economy Minister – have voiced their strong objections to those sections of CETA.

The response from the new EU leadership, which takes the helm Nov. 1, appears to be focused on defending the deal with Canada, but suggesting changes could be made as the EU works on a similar deal with the U.S.

Incoming EU trade commissioner, Cecilia Malmstrom, told a confirmation hearing Monday that while it is too late to remove the controversial clauses from CETA, they could be dropped from similar trade talks with the U.S. for the Transatlantic Trade and Investment Partnership, or TTIP.

"Will it stay in TTIP? I don't know," Ms. Malmstrom said, when asked about the investor-state issue. "I do not exclude that it will not be there."

Investor-state dispute provisions allow corporations to launch arbitration claims in response to government policies that they consider unfair. Critics say they give industry too much power to overturn decisions made by elected governments.

Ms. Malmstrom's comments, as reported by the Dow Jones News Service, acknowledged the debate over investor state dispute settlement (ISDS) clauses, but indicated it is too late to make changes.

"I think it would be a mistake to open up the Canadian agreement," she said. "I agree there are problems with ISDS because there have been abuses but … we cannot just think them away, we need to find a way to approach this."

The comments from Brussels were promptly raised on Parliament Hill in Ottawa, where the NDP said they add justification to the party's concern over the investor-state clauses.

"The investor state provision was always problematic, especially in between countries who have legitimate and very well structured legal systems to deal with these," said NDP MP Guy Caron after raising the issue in Question Period. "The fact that the commission would actually listen to those concerns is very encouraging to us."

However, Trade Minister Ed Fast found positives in that Ms. Malmstrom defended the deal.

The senior leadership of the EU is turning over and the confirmation hearing provides an early sense of the direction of the new leadership. The CETA must still be approved by the Canadian Parliament and provinces and European parliaments. All 28 member states of the EU will likely hold votes on the deal, though the exact process is still a matter of debate. It is also unclear whether all provinces and territories will hold votes in their legislature, or whether some will approve the deal through regulation or other means.

The Conservative government was also facing questions Monday over its decision to cover the costs of flying the outgoing EU leadership – European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso – back to Europe on Friday using a Canadian Forces Airbus. The government's justification of the expense was that it allowed the leaders to attend an evening event in Toronto on Friday after a signing ceremony in Ottawa earlier in the day.

The CBC estimated the cost of providing the plane normally used by the Prime Minister at approximately $338,055, a figure the government did not dispute.

NDP MP Charlie Angus said the decision was an abuse of tax dollars.

The Prime Minister's director of communications, Jason MacDonald, defended the decision. "The Airbus was offered as a courtesy to our European Union guests and helped ensure that no elements of Friday's Summit were cut short," he wrote in an e-mail.