In the last few weeks, the Federal Ministry for Economic Affairs and Climate Action and the European Commission have worked closely together in the context of the ratification process for the EU-Canada Comprehensive and Economic Trade Agreement (CETA) to further specify the investment protection rules. The aim is to guarantee legal certainty and prevent any abuse of CETA.

These partly very technical discussions have resulted in even more precise definitions of the terms "indirect expropriation" and "fair and equitable treatment" of investors. This is to ensure in particular that necessary measures in the context of climate, energy and health policies cannot be undermined by investors or lead to claims for compensation for damages.

To this end, the European Commission and the Economic Affairs Ministry have agreed on a new, legally sound draft text. The next step is to convince all other EU Member States to accept these clarifying interpretative declarations. As soon as this is the case, the European Commission, which is in charge of trade matters, will consult the Canadian partners so that the new definitions can be adopted by the CETA Joint Committee as soon as possible.

Parliamentary State Secretary at the Federal Ministry for Economic Affairs and Climate Action Dr Franziska Brantner said: "Canada is an important partner for free and fair trade. This is why we want to ratify CETA. It is, however, important to ensure in the applicable agreement that the common goal of climate change mitigation can be achieved and that any abuse in the field of investment protection is prevented. We have elaborated the relevant clarifications, which are to be adopted by the CETA Joint Committee, together with the European Commission, also to implement the trade agenda agreed upon by the parliamentary groups of the governing coalition. We now need to convince our European partners."

Background information

The negotiations on a free trade agreement with Canada were completed when it was signed by the EU, its Member States and Canada on 30 October 2016. CETA has been applied provisionally since September 2017. This applies only to those areas for which the EU has sole responsibility. Canada has abolished its tariffs for 98% of all goods traded between the EU and Canada, and the country has opened its public procurement system to EU companies. However, investment protection, including the Investment Court System, is exempted from the provisional application.

CETA cannot fully enter into force until all the EU Member States have ratified it. As of today, 16 EU Member States have ratified the agreement. The coalition partners in the Federal Government had agreed to press ahead with the ratification of the trade agreement and at the same time work towards clarifications regarding investment protection. The agreement which has now been reached with the European Commission is an important step in this direction.

The economies of the European Union and Canada are closely interconnected thanks to diverse investment and trade links. Economic relations with Canada offer considerable potential for expansion and development. Intensifying fair and free trade and investment makes supply chains more resilient, widens access to critical raw materials and facilitates investment in climate-friendly technologies.

The Federal Government’s trade policy agenda:
In its new trade policy agenda, the Federal Government is formulating its aspiration to anchor fundamental international treaties and agreements in trade accords, such as the ILO core labour standards, the Paris climate agreement and the Convention on Biological Diversity. Violations are to be discussed in dialogue and mediation formats, and ultimately subjected to trade restrictions. In the future, inter-institutional agreements are to be used as a tool to ensure better democratic participation in the implementation of free trade agreements.