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CETA: Can the EU-Canada Trade Agreement be reconciled with Ireland’s climate targets?

CETA: Can the EU-Canada Trade Agreement be reconciled with Ireland’s climate targets?

The EU-Canada Comprehensive Economic and Trade Agreement – CETA – is a leading example of the new generation of interdependent cross regional economic agreements designed to further advance trade liberalisation and investment. In short, it aims to implement a widescale decrease on tariffs to make it easier to trade goods and services between the EU and Canada. Although it has not yet been formally ratified by Ireland, the agreement has applied provisionally since 21st September 2017. It is currently being examined by the all-party Oireachtas Committee on European Affairs and will be subsequently put to the Dáil for a vote, in order to gain full ratification.

Why is it so controversial?

Like many recent EU trade agreements, CETA is not without its detractors. According to Alfred de Zayas, the UN Independent Expert on the promotion of a democratic and equitable international order, CETA “is a corporate-driven, fundamentally flawed treaty which likely will dilute environmental standards”.

It has been opposed across Europe principally by a cohort of environmentalists, socialists, trade unions, human rights and global justice organisations. The Irish Green Party has an official policy to oppose CETA in its current form and it is not mentioned in the Programme for Government. Given the Green Party position at grassroots, it seems unlikely that Government formation negotiations would have concluded successfully, if it was included. The internal party wrangling has led to a Green Party TD submitting a challenge in the High Court against the trade agreement over claims that it is unconstitutional.

The deal includes a controversial investor-state dispute settlement mechanism. Critics fear that multinational corporations could use this mechanism to, in a sense, sue national governments if they felt that government policies had an adverse impact on their business operations.

For instance, in the event of a national government taking steps to regulate for environmental protections, CETA provides that investors can choose to dispute these regulations outside the national court system and with a specialised tribunal. This newly established dispute mechanism, which seeks to harmonise enforcement of the trade deal across all jurisdictions, will then consider whether the effect of that regulation complies with the rules under CETA.

Such ‘regulatory chill’ and independent arbitration would be an intrusion on the ability of Ireland to manage its efforts to legislate against climate change, according to opponents of the deal. Invariably, this would spill over into the workings of the Oireachtas and its efforts to wean off fossil fuel-based energy production and toward the transition to renewable energy in an effort to reach well publicised binding climate targets.

Environmental protection pitted against economic growth

Certain members of the Oireachtas and green activists insist that the Government’s ambitious Climate Action Bill cannot be feasibly validated at the same time the Government is seeking approval for the investor court system. For many, the two pieces of Government policy are intrinsically opposed.

The final version of the Climate Action Bill embeds the process of setting binding and ambitious emissions-reductions targets in law. The Bill commits the State to pursue and achieve these objectives no later than 2050, this equates to a total reduction of 51% over the period to 2030.

The environmental chapter of CETA has, on the other hand, been condemned as very weak in comparison to the lofty ambitions set out within the Climate Action Bill. Critics argue that when it comes to legal enforceability, it is in contrast to the strong provisions afforded to investors and lacking any references to sustainability and environmental protection.

An Tánaiste Leo Varadkar TD has been quick to point out that trade deals such as CETA, open up new markets for businesses and instead of a potential market of five million for their goods and services, Irish companies have access to hundreds of millions of customers all across the globe. He has been steadfast in his support of the deal and critical of the opposition from within the ranks of the Government and from members of the opposition, noting in an Op-Ed in The Irish Times in April 2021 that, “anything that might suggest that we are moving away from free and open trade, enterprise and Europe, is to our detriment both economically and socially and should be vehemently avoided”.

Additionally, IBEC Chief Executive Danny McCoy claims the deal “is a progressive agreement that responds to the challenges of the 21st Century and if the ratification of CETA by the Irish Government is further delayed, the signal sent to our trading partners is that the EU is becoming inward looking”. Minister of State with responsibility for Trade Promotion, Robert Troy TD believes CETA is “delivering on the ground for our citizens”.

Government faces backlash during ratification

Despite the protracted back and forth, critics and proponents have been vociferous on the issue. This represents a balancing act for the Government seeking to marry environmental concerns with the reality of modern-day trade deals, all the while Brussels expectedly waits for Member States to fully ratify the deal. Increasingly the age of unchecked global trade deals is slowing as environmental solutions gains primacy on economic cooperation.

As CETA has been provisionally applied since 2017 and each Member State is entitled to proceed to ratification in accordance with its own national procedures (and notwithstanding grassroots unrest in the Green Party and a High Court challenge) it is ultimately likely to be ratified. However, the political appetite for large scale trade deals continues to grow weary under intense political and environmental scrutiny in Ireland and beyond.

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