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Key MEPs who will steer the ratification of the EU-Canada free trade deal (CETA) on Monday welcomed the finalized legal review of the investment provisions in CETA, and looked forward to analysing the text in-depth during the consent procedure in the European Parliament, “hopefully” to be concluded this year. The deal cannot enter into force without the backing of the European Parliament.

“I welcome the successful finalisation of modifications on CETA by the EU and Canada chief negotiators, which has allowed to finally conclude the legal review of CETA. The European Commission has done its utmost to fulfil the mandate previously given by the European Parliament and on top of that delivered the most ambitious and modern agreement on investment protection reached up to this date”, said the CETA rapporteur Artis Pabriks (EPP, LV).

“The EU and Canada has agreed to further strengthen the government's right to regulate, the cases will be addressed in a permanent and transparent dispute settlement tribunal, and equally an agreement has been reached on the appeal mechanism. I trust that the concerns expressed earlier on investment protection have now been addressed and I truly hope we will be able to ratify CETA agreement in the European Parliament this year”, Pabriks added.

"I welcome the end of the legal review of the CETA agreement and hereby the end of the negotiations, which have started already in 2009. Under pressure of the European Parliament, some significant changes have been introduced in the investment chapter of the agreement, notably introducing a clause emphasizing the governments right to regulate and a permanent investment tribunal and appellate body. "We look forward to analysing the agreement as a whole, as soon as the agreement is transferred to the European Parliament" said EP Trade committee chair Bernd Lange (S&D, DE).

EP demands on investment dispute settlement

The European Parliament in July 2015 called for a new justice system to replace” investor-state dispute settlement” (ISDS) provisions in recommendations to the negotiators of TTIP – the upcoming trade deal with the US.

MEPs asked for a system which would be “subject to democratic principles and scrutiny”, in which cases are handled “in a transparent manner”, by “publicly appointed, independent professional judges”. It should include “an appellate mechanism”, respect the jurisdiction of EU and member state courts and ensure that private interests “cannot undermine public policy objectives”, said MEPs.

In responding this request, EU Commission in Autumn 2015 presented a new investment court system as a first step in the direction of the EP demands and said it from now on constituted the EU’s basic proposal for future investment deals with the third countries.

Talks on the free trade deal with Canada had been concluded in 2014 already, and the agreed text still contained the “old” investor-to-state dispute settlement system which relied upon private arbitration, so the Commission sought to introduce EU’s new concept of investment court system in the legal review of the text, together with Canadian partners.

Next steps

As announced on Monday, in the press conference concluding the “legal scrubbing” process with Canada, the European Commission will in June send the CETA text for adoption in the EU Council, following which it will be given for the consideration of the MEPs (September 2016 - tbc).