Controversial CETA Trade Deal could be Template for Brexit Talks
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CETA is the toxic trade deal between Canada and the EU causing widespread controversy on both sides of the Atlantic. The CETA agreement is the Canadian twin sister of TTIP, an equally divisive trade deal between the US and EU.
For want of a better idea, Liam Fox has recently proposed to use the CETA framework as a handy template for Britain’s Brexit deals with Europe. There are a few significant advantages and disadvantages of this train of thought that are worth considering.
One main advantage, at least for Liam Fox and the Brexit Ministers, is that they don’t have to come up with their own trade deal. Who wants to do that anyway? Spend years trying to hash out some complex legal arrangement while the world looks on impatiently. But what about this CETA deal we keep hearing these protestors going on about, can we not just pinch that and put the word “Brexit” on it?
Convenient yes, but the thing is with trade deals is they are quite complicated and there isn’t really a one-size fits all option that you can just borrow for your own means. It’s not Pick N Mix and you can’t just desperately snatch at the nearest one to you like a greedy child being pushed down the aisles of a sweet shop.
Benefits of CETA
CETA is not completely devoid of all benefit of course and its main objective is actually quite positive. CETA aims to reduce 98% of trading tariffs in order to boost trade between Canada/the US and the EU.
Sounds good so far, everyone can agree that reducing the cost of trade on both sides is a good thing. Reduce the barriers that stop you from selling products to Canada and business will flourish, new opportunities open and everyone is happy.
However, if the only component of CETA was a reduction in trading costs then you wouldn’t have people kicking off about it on both sides of the Atlantic. The real question is, why can’t we just have a trade deal that facilitates open business without having a load of nasty side products thrown into the mix?
Surely there’s nothing to fear from a trade deal with those friendly Canadians?
CETA has not had as strong an opposition as TTIP as people tend to think that Canada is less of a threat in terms of corporate takeover, and more in line with the EU way of thinking. However, it is the corporations themselves that will be extending their influence, not the Canadian government.
Furthermore, CETA is not limited to Canadian companies but will also include US firms as well – any that have offices in Canada, which is most of them.
Corporations Locking in Power through CETA
ISDS – Dangerous Component of the CETA Agreement
Large-scale multinational companies are always looking for more power, that is more or less a given. However, with CETA there is an inherent locking-in of power that would mean that the corporations could effectively dictate the policies of countries in a very real way.
The Investor-state dispute settlement (ISDS) mechanism allows companies to sue governments over any new law or policy that might reduce their profits in the future.
Prime examples of this in action would be in Germany where they placed restrictions on nuclear power and the nuclear power company Vattenfall was able to sue the German government for €4.7 billion.
A similar situation arose in Australia where they decided to remove all branding from cigarette packets and substitute with health warnings and the tobacco company sued the Australian government. There is also a case of this happening in Uruguay.
In many cases, rather than take the financial hit the governments will simply adhere to the corporation’s demands. So democracy would in a very real sense be directly affected by large corporations and their business needs.
Ratchet Clause in CETA
Contained within the CETA agreement is what’s known as a ratchet clause, locking in privatisation on services not specifically exempted. This means that once a sector has been privatised, there is no taking it back into
public ownership. CETA makes it easier for
Canadian and US firms to bid for private contracts on things like the NHS and national rail. It also makes it legally impossible to reverse the decision and take these services back, in order to protect the interests of the private company. This would create a dampening effect on policy-making where governments will be afraid to make these changes for fear of breaching the trade agreement.
CETA Regulatory Cooperation
Large companies can submit proposals for legislation to be made, effectively making up the rules for themselves and the rest of EU/Canada/USA. The deal was brokered and arranged primarily with the large multinational corporations and seems to serve them above the citizens of the countries that the deal will affect.
CETA Removing Regulations – Race to the Bottom
Food Standards and CETA
In order to facilitate free trade between US and EU, the TTIP agreement would mean relaxing standards across a wide range of industry sectors. Carcinogenic pesticides, growth hormones in beef and genetically modified food which is banned in most places in the EU would have to be allowed back into the marketplace.
CETA Impact on Workers’ Rights
Regulations on workers’ rights would need to be removed in order to facilitate unobstructed trade, creating a race to the bottom in terms of employee protection. According to a survey done in 2010, the UK has the third worse employment protection out of all the countries surveyed, with only US and Canada below us. So UK workers’ rights would be diminished further to bring us down to this level.
Banking Regulations Relaxed with CETA
As everyone knows, banking regulations basically stop us all from having a good time and can be quite annoying if you’re an investment bank who wants to make massive profits without worrying too much about the consequences, so may as well relax those regulations while they’re at it.
It’s difficult to imagine any possible negative outcome that could arise from deregulating banks in order to make it easier for them to gain profits – oh except of course a massive financial crisis like the one we are currently recovering from.
Apart from relaxing existing regulations (some of which were only introduced recently after 2008), the CETA deal could also make it difficult for new regulations to be passed that may limit financial firms in terms of their profitability or ability to speculate.
CETA Effect on Environment
One of the main aims of CETA is to open up the market so that US and Canadian firms can compete more effectively with European companies in Europe. Regulations would be relaxed, bans on dangerous practices lifted. US energy providers will be able to enter the market in places where normally they could not. Oil and gas companies will suddenly find it is a lot easier to get a contract in Europe for extracting oil and gas.
The CETA agreement will make it a lot more difficult to legislate against things like fracking. If for example, the government banned fracking, then the firms themselves could effectively sue the government for creating a policy that could affect their profits. This would also be the case if a government enacted legislation that favoured renewable energy.
CETA’s environment chapter is not legally binding in Europe and Canada, and the environmental rules have no enforcement mechanisms, so companies don’t really need to pay attention to them.
The combined effect of making it easier for a large US firm to operate, preventing governments from changing environmental policies, locking in the power of the corporation so it cannot be removed, then explaining to the companies that the rules cannot be enforced, means it is not looking good for the environment post CETA.
CETA Relationship with other Trade Deals – TTIP TISA and TPP
CETA is the first in a list of similar trade deals potentially coming our way. When you look at the broad spectrum of trade deals currently being negotiated – CETA, TTIP, TPP and TISA – you notice several things. They all seem to be centred around US companies, they corner off certain sections of the global market, and oddly enough every one of these trade deals completely ignores all the big developing economies that rival the US, including China, Brazil and India. The TPP deal or Trans-Pacific Partnership involves pretty much every other country in the world that has been left out, including Japan, Malaysia, Vietnam, Singapore, Australia, New Zealand, Canada, Mexico, Chile and Peru. So China, India and Brazil are quite notable by their absence.
CETA and Brexit
Anyone who can read a newspaper can see that CETA has its pitfalls, so the readiness to which Liam Fox grabbed at it as a possible Brexit template does not bode well for his strategic expertise. It’s almost like a schoolyard bully taking someone’s lunch money and somewhere during the transaction Liam Fox leans in to the bully and says, “Is this a trade deal going on here? Can I get a similar arrangement for myself?”