CETA’s investment chapter : blueprint for a global investment reform ?


The Canada and European Union (EU) Comprehensive Economic and Trade Agreement (CETA), belongs to this new generation of global treaties that purports to govern the world of trade as between two regional powers: The European Union and Canada. The EU is Canada’s second most important trading partner after the US, and each bloc entertains a very lucrative investment relationship in the other’s territory, as the total bilateral investment stocks exceeded $440 bn in 2014. It is precisely this investment relation that these two economic powers have decided to enhance through chapter 8 of CETA, a chapter that has sparked difficulties until the very end of the negotiations and even beyond. Indeed, it took more than five years for negotiators to agree on a text which signature ceremony happened to be canceled out of the opposition of the leader of a Belgian regional government, Wallonia. Rescheduled three days later, the European Council President Donald Tusk and the Canadian Prime Minister Justin Trudeau finally signed the promised deal, only after a plane mechanical issue delayed the latter Prime Minister.

At the image of the signature ceremony, CETA is today a very fragile thing, legally speaking because it still has to be ratified in order to fully enter into force, and politicallyspeaking for the exact same reason: in the context of a wide popular opposition to international investment treaty both in Europe and in Canada, it is hard to imagine this mixed agreement succeeding through 29 signatures of national parliaments (including Canada2 ). The general public does not see the actual benefit of replacing eight bilateral investment treaties (BITs) by a unique succeeding agreement that will harmonize European investment policies with Canada (the beginning of an end for reverse discrimination in the field of investment). It also sees the promised economic growth – of currently less than 2% both in the EU and a Canada – as an illusion that has been promised too many times. What looks more concrete to the public opinion is however a real lack of transparency and an alleged fragilization of public services and of local industries to the benefit of multinational companies.

And yet this wide opposition to investment treaties may in fact be the very reason why we need a CETA. Let us immediately end the breathtaking suspense: this paper will argue that CETA’s investment chapter, in its substantive provisions, truly is a way towards an investment reform that has the potential to spread globally. Indeed, the negotiations were concluded at a time where a window of opportunity is open to influence deeply other countries’ position as regard to their negotiating position with the EU. When we compare CETA and TTIP, the most striking difference is the one between a negotiation that works and a negotiation that does not. A success that can be explained by the necessary reforms that CETA is proposing in relation to the investment regime, and that starts with procedural change, as the very criticized and traditional Investor-State Dispute Settlement (ISDS) system is set to become an Arbitral Court System, based on the principle of transparency of proceedings and on the careful selection of independent, skilled and permanent judges to serve as arbitrator in the course of a five-years renewable mandate . But this paper will focus on substantive change entailed by the negotiated treaty, and it will argue in a first part that CETA brings a long-awaited certainty in many unsettled issues of investment law; and in a second part that the treaty undoubtedly takes the stance of supporting states through much more favorable provisions than the average standard of investment treaties.

M2 Global Business law and governance
Université de Columbia, New York

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