Report: Evaluating the Proposed Joint Interpretation of the Comprehensive Economic and Trade Agreement (CETA)

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Saskia Bricmont | 20 January 2023

Report: Evaluating the Proposed Joint Interpretation of the Comprehensive Economic and Trade Agreement (CETA)

By J. Benton Heath


This report analyzes the proposed interpretive guidance (“Proposed Joint Interpretation” or
“draft text”) on the Investment Chapter of the Comprehensive Economic and Trade Agreement
(CETA) between Canada and the European Union, which was circulated to members of the Trade
Policy Committee on 19 October 2022. The draft text is styled as a proposed Decision of the CETA
Joint Committee, interpreting the agreement as contemplated under CETA Article 26.1.5.e.

The primary focus of the draft text is the treaty’s Investment Protection standards, and
specifically the relationship of those standards to efforts to combat climate change. The purpose of
these interpretations, though not stated explicitly, appears to be to assure member state governments
and the public that the CETA’s Investment Protection standards do not prevent states from regulating
in the public interest, including by taking measures to mitigate and adapt to climate change.

These supposed assurances come in response to widespread concerns that investment treaties
obstruct the social, economic, legal, and political transformations necessary for a greener, more
sustainable future. Such concerns were expressed, most recently, in the European Parliament’s
resolution on the “modernization” of the Energy Charter Treaty, which observed that “an alarming
number of investment claims target environmental measures,” and that “various countries, including
the Member States, are being sued in relation to policies on climate or the just transition.”

The draft text largely fails to provide assurances against these concerns. The obstacles to a
green transition imposed by investment law are systemic and deeply rooted in the structure of
agreements like the CETA investment chapter. In contrast, under CETA Article 26.1.5.e., the draft
text is limited to offering “interpretations” of what is already in the agreement, and it can only go so
far in affecting CETA’s underlying balance of rights and obligations. As a result, the draft text falls
back on the same techniques that have rendered previous rounds of reform largely cosmetic and
ineffectual. There is, in short, nothing in this text that should be seen to mollify critics or redress
legitimate concerns about the CETA or other investment treaties.

Indeed, the actual impact of the draft text on the interpretation of the CETA is likely to be
minimal. In a few places, the draft text does clarify a question left open by the agreement itself, but
genuine clarifications are a rarity and concern matters of relatively small importance. In most instances,
the draft text’s interventions do little to alter the range of possible interpretations or outcomes. These
cosmetic interventions do not alter the status quo. In some places, the draft text introduces new and
troubling layers of ambiguity with respect to efforts to address racial inequality and climate change.

These reflect systemic problems, which mostly cannot be resolved by further editing. At its
core, investment law provides a special right for investors to challenge a government’s laws,
regulations, or administrative actions. This special right goes beyond, and is in addition to, the right
to file cases in the regular court system. The special right is given only to “investors”— a special
category of persons. If successful, investors can win significant payouts, or they can leverage their
claims to force governments to alter their regulatory schemes.

These features of the CETA or any other investment agreement cannot simply be interpreted
away through a Decision of the Joint Committee. These systemic features can be changed only by
amendment or revocation of the existing treaties.

Read the report

source: Saskia Bricmont