Babies are a blessing but their timing isn’t always ideal. Over the last year I have been heavily involved not just in my own pregnancy - which ended earlier this month with the birth of a beautiful baby boy - but also in following the birth of a new trade deal between the EU and Canada.
As a concerned new mother I’m worried that little Natan’s first word might be ‘CETA’, so much has the acronym been uttered around him while he was still in the womb. But as a politician, I can only be frustrated that my recent motherhood means I will miss the all-important CETA vote in the European Parliament's trade committee on Tuesday.
This should not however prevent me from making my position known. I would vote against CETA if I could.
Before going into the reasons that motivate my position, I cannot avoid acknowledging the elephant in the room. I represent the North East of England in the European Parliament, and Brexit certainly adds a layer of complexity to an already complex deal. But if anything, Brexit only adds to the importance of the CETA vote for the UK. Labour wants to keep the closest possible relationship with the EU, and this means in particular remaining part of existing EU trade deals. But if we end up out of the EU’s common trade policy as Theresa May wants, CETA could very well become the model for a future EU-UK trade deal as it is the most advanced EU trade deal ever negotiated to date. In such circumstances, we would need to be extremely clear on what we can and cannot accept. In both cases, CETA remains extremely relevant to the UK.
Trade agreements are supposed to be about jobs and growth, but CETA isn’t. No one, not even CETA’s advocates, is arguing that it will bring significant gains in this respect. The European Commission, which has been negotiating the deal under a mandate from all EU trade ministers including the UK’s, has found that CETA would generate only very modest gains: between 0.03 to 0.08% of extra GDP for the EU as a whole over the next ten years.
This figure does not take into account the distribution of these diminutive gains. We know from experience that trade deals can have a negative impact on some sectors or sections of the population even when the overall outcome is positive for the economy as a whole. With CETA, the gains would be concentrated on specific industries where trade barriers remain high: e.g. cheese, spirits, machinery. In this zero-sum game, expect other sectors to lose out.
The real motivation behind CETA is not about increasing trade to boost the economy. It is about setting global standards. Labour MEPs, who I have led on these negotiations, have focused on three key areas: public services, labour and environmental standards and investment protection.
CETA is the first EU agreement negotiated according to a negative list for services. This means that everything not explicitly excluded is deemed to be included (as opposed to a positive list, where only the committed services need to be mentioned and everything else is excluded). This is a delicate method, one that has long been opposed by European social democrats because it is extremely risky: if public services are not all excluded in an absolutely watertight way, then all sorts of unintended consequences can ensue - including not being able to renationalise specific services that may have been privatised.
In CETA, there is a broad exemption for public services but it is subject to specific national reservations. The UK government has left thin wedges on the table, such as ambulances, private hospitals and care homes. Other EU member states are better protected. For example, free trade supporting countries, like the Finnish, German or Czech governments, all have broad exemptions that cover all public and private health, social services and education.
Following years of campaigning by public services users, providers and employees, the CETA negotiators finally recognised that this was an issue and adopted adeclaration to be annexed to the agreement. This declaration adds some clarity but there are still broad concerns on how public procurement would be covered by CETA’s investment protection chapter and how certain quality criteria such as minimum staffing levels could still be enforced under the agreement. NHS campaigners and others across our public services, therefore remain opposed to CETA. I think they are making an absolutely valid point: we cannot afford to take any risk, however small it may be, when it comes to our public services.
Turning to labour and the environment, I can only regret that CETA is a massive lost opportunity. Relevant provisions in the agreement are all aspirational, when trade deals should be used to enforce concrete progress. The only recourse for workers and their unions or NGOs in case of violation of international labour of environmental commitments are virtually powerless consultative committees, with no possibility for sanction. Again, this shortfall has also been recognised by the negotiators in the declaration mentioned earlier. They have committed to improving the enforcement of these measures but without any detail. We are being asked to accept something that hasn't been negotiated yet.
There has been however some progress made. Under pressure from the labour movement both in Europe and in Canada, and thanks to the outcome of the latest Canadian general elections, the new Canadian government has ratified important international conventions on labour rights that it had not subscribed to before. This is good, but is it enough? If CETA is about setting global standards, then we would be settling for pretty weak ones. I am not sure this would be terribly useful in trying to convince emerging economies such as China that they need to adopt stronger protections for workers or the environment.
Last but not least, investment protection is by far the most politically sensitive issue in CETA. A first version of the deal was subjected to a public consultation organised by the European Commission on ISDS, or ‘Investor-State Dispute Settlement’. I50,000 people responded - setting a historic precedent for EU public consultations- of which 97% of respondents rejected the CETA proposal to set up a parallel, arbitration-based judicial system for multinationals. In subsequent negotiations the text was amended to make proceedings more transparent, to set some rules on how arbitrators would be selected and to commit to creating an appeal mechanism. This was renamed ICS, for ‘Investment Court System’. In essence, it is still separate justice for multinationals. It continues to provide extra rights to foreign investors over their domestic counterparts. Controversial rights granted to foreign investors under the old ISDS system remain in the new proposal, such as fair and equitable treatment and protection against loosely defined ‘indirect' expropriation. ICS even introduces new potential problems such as the notion of an investor’s 'legitimate expectations'.
The Belgian, Slovene and Polish governments have all conditioned their support for CETA on further changes to the ICS. Belgium actually explicitly stated that it will veto the deal if ICS is not amended.
In 2015, the European Parliament adopted a resolution laying out its vision for a reform of investment protection. It went already too far for Labour MEPs, who voted against the resolution out of complete opposition to giving any greater rights to foreign over domestic investors. But ICS in CETA does not even match the criteria set by the European Parliament. And the concern does not stop with CETA, as the Commission sees ICS as the model text for all future EU trade deals - including, in all likelihood, a possible EU-UK trade deal.
Confronted with all these serious concerns, some proponents of CETA have turned to geopolitical arguments. Stuck between an aggressive Chinese government and a Trump-led America threatening to turn the clock back on transatlantic cooperation, the EU would have no other choice than to seek new alliances. Some even argue that failing to ratify CETA could be the last nail in the EU’s trade policy coffin, following the collapse of the TTIP talks. I don’t think there is much of a risk in this respect. There are plenty of other EU trade deals currently on the table. Besides, the relationship between the EU and Canada is already strong and does not need a new trade deal to thrive. The vote in the UK referendum was primarily a reaction against the unfair impact of globalisation, and our answer cannot be yet another unfair trade deal.
The bottom line for me is that we should not support a trade deal if it’s a bad deal. CETA is risky for public services, weakens the rule of law and is not good enough for workers and the environment. That’s why I would have voted against it if I could and urge those who will be able to do so to reject CETA.