Report Says Backlash From NSA's Surveillance Programs Will Cost Private Sector Billions Of Dollars

Germany Says It Won't Agree To CETA With Current Corporate Sovereignty Chapter

from the so-where-does-that-leave-TTIP? dept

Mon, Jul 28th 2014 8:34pm — Glyn Moody

This is potentially huge: according to the leading German newspaper S&uumlddeutsche Zeitung, Germany will not accept CETA, the Canadian-EU trade agreement, if it contains a corporate sovereignty chapter in its present form (original in German, pointed out to us by @TeraEuro):

German EU diplomats confirmed in Brussels on Friday that the [German] federal government could not sign the agreement with Canada "as it is now negotiated." Although Germany was, in principle, ready to initial the agreement in September, the chapter on the legal protection of investors is however 'problematic' and currently not acceptable.

This confirms rumors that CETA is finally completed, and that the plan is for the EU member states to "initial" it -- accept it in principle -- in September. However, if Germany really does refuse to sign up with investor-state dispute settlement (ISDS) included in its current form, the pressure will be on the European Commission to take it out -- because of the nature of CETA, all 28 EU member states must approve it before it is fully ratified. However, here's what the Commission told S&uumlddeutsche Zeitung regarding that idea: Without these clauses, the European Commission's trade department says, a Canadian company will hardly invest in Europe. How could an investment in Bulgaria, a country which the European Commission has, so to speak, officially certified for high-level corruption, be justified without legal protection? Or in Italy, where cases before the national courts can last eight to ten years?
But according to the European Commission's own figures, bilateral investment between the EU and Canada is flourishing (pdf): in 2012, the total investment by EU companies in Canada was €258 billion, while Canadian investment in the EU was €115 billion -- 45% of the EU's, even though Canada's population is only 7% that of the EU. In other words, contrary to the European Commission's scaremongering, Canadian companies are clearly perfectly happy to invest in Europe on a massive scale even without ISDS, which is therefore unnecessary, and can be dropped from CETA.

It's therefore not clear how the European Commission will react to this development, and whether it will try to push through the current version of ISDS, attempt to modify it by re-opening negotiations with Canada, or accept that ISDS must go if it wants to save CETA. But what is not in doubt is that this has major ramifications for TAFTA/TTIP. Germany's justified concerns about corporate sovereignty in CETA apply even more strongly to the far-bigger agreement. If it wants ISDS out of one, it will certainly want it out of the other. A refusal by the US to accept that -- quite likely, given its firm support for corporate sovereignty -- would mean that TAFTA/TTIP is dead.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: ceta, corporate sovereignty, germany, investor state dispute settlement, isds, tafta, ttip

22 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

That One Guy (profile), 28 Jul 2014 @ 8:52pm

Good start
Now they need to expand it so that any corporate sovereignty clause is an instant 'No deal', and all the other countries need to follow suit.
[ link to this | view in thread ]
Anonymous Anonymous Coward, 28 Jul 2014 @ 8:56pm

And in further news...
...common sense is breaking out in...Germany? (aside to news director, open mike; "Is this copy right?")?
[ link to this | view in thread ]
Vel the Enigmatic, 28 Jul 2014 @ 9:19pm

A good sign?
I think so. Lets just hope it spreads like the flu.
[ link to this | view in thread ]
KJ (profile), 28 Jul 2014 @ 9:25pm

Why the change of heart?
Any info on what brought this on?
[ link to this | view in thread ]
Anonymous Coward, 28 Jul 2014 @ 9:58pm

I'll never understand how anyone could even think of selling out the nation's sovereignty, and people, to international corporate tribunals. Whom then override domestic laws with international corporate law.

I'm curious what Germany's reason is for pushing back against corporate sovereignty. I'm sure it's not due to the reason I listed above.
[ link to this | view in thread ]
Anonymous Coward, 28 Jul 2014 @ 10:36pm

Re: Why the change of heart?
I think German MPs are smart enough to realise that there is already lots of investment.

Why a 'Free Trade' agreement is even required is beyond me, I have seen no evidence for these silly agreements. And the fact that they have to lock them up in secrecy for so long just stinks to high heaven!
[ link to this | view in thread ]
Devonavar (profile), 28 Jul 2014 @ 10:58pm

Re: Why the change of heart?
According to Michael Geist it has to do with a Swedish company suing Germany for trying to go nuclear free.

http://www.michaelgeist.ca/2014/07/crumbling-ceta-investor-state-dispute-settlement-rules-threa ten-take-canada-eu-trade-agreement/
[ link to this | view in thread ]
That One Guy (profile), 28 Jul 2014 @ 11:11pm

Re: Re: Why the change of heart?
That would do it alright, a government finding out the hard way that corporate sovereignty clauses put companies on the same level as entire governments would likely leave a foul taste in their mouths, and sour their disposition towards those clauses in future 'agreements'.
[ link to this | view in thread ]
That One Guy (profile), 28 Jul 2014 @ 11:16pm

Re:
Money and power.

Those 'minor' clauses put corporations on the same level as governments, effectively able to dictate the laws that could affect them by threatening to sue for massive amounts if something a government does 'harms' their profits, so they are more than willing to throw enormous amounts of money at the various people/groups negotiating the agreements until enough of them are willing to sell out.
[ link to this | view in thread ]
Anonymous Coward, 29 Jul 2014 @ 1:44am

Re: Re:
The problem they are made to solve is very real. The thinking is that governmental institutions can use legal tricks to hamper deals during negotiation and during implementation. By having someone watch over the process and assure that it is done correct, the thinking is that companies will have an easier time making investment in even extremely corrupt countries. Now EU corruption is more or less consistently about 10-20 % of the total budget, which is not good at all. About half of it gets caught in EUs internal minutious revision.

So the thinking behind ISDS has some merit. The problem is that it becomes a ball and chain on even opposition politicians. They have to honour the contracts of the former government even if they had 0 influence on it. I would call that putting the corporation above governments in that instance. As for corruption it wouldn't be impossible for a government likely to lose next election to make some extremely shady deals just to be able to shout at the new government and how they do nothing about it. Add in a few jobs for the friends and you have ISDS protecting corruption...
[ link to this | view in thread ]
Anonymous Coward, 29 Jul 2014 @ 4:56am

Re: Re: Re:
"even extremely corrupt countries"

lol - good one.
[ link to this | view in thread ]
Anonymous Coward, 29 Jul 2014 @ 4:57am

Re: Re: Re: Why the change of heart?
well Canada is being sued by a drug company for not just rubber stamping the approval of a drug for 'new' uses. They had the audacity to expect testing to show the drug actually did what was claimed. You'd think they'd know better, but the US demands and Canadian politicians bend over
[ link to this | view in thread ]
Anonymous Coward, 29 Jul 2014 @ 4:59am

kick de Gucht out of the EU Commission and perhaps things will start moving forward again. the thing i find quite strange is what is de Gucht getting out of all this? he must be on the take from someone, somewhere, otherwise he wouldn't keep on about the 'benefits' of this shit clause. mind you, he was the one who was doing everything the USA entertainment industries wanted to get ACTA implemented in the EU. how anyone who is supposed to be working for the good of the EU can continue to try to get it totally stitched up, without getting 'something for his trouble' from the USA mostly, that wants companies to be able to bankrupt a country is beyond me. why has no one done any probing, any investigating, into what he's up to?
[ link to this | view in thread ]
Anonymous Coward, 29 Jul 2014 @ 5:24am

Re: Re: Re: Re: Why the change of heart?
It would be interesting to sit in on the discovery phase of this.
[ link to this | view in thread ]
Hans, 29 Jul 2014 @ 5:44am

HTML entity gone wrong...
Hey Glyn, "S&uumlddeutsche"? I think you mean Süddeutsche (assuming my Unicode makes it through alive), or even Sueddeutsche...
[ link to this | view in thread ]
John Fenderson (profile), 29 Jul 2014 @ 5:49am

Re: Re: Re:
"So the thinking behind ISDS has some merit."

I disagree. If a country id do corrupt that it dissuades investment, then let it dissuade investment. That, at least, would provide encouragement for the country to reduce corruption.
[ link to this | view in thread ]
Anonymous Coward, 29 Jul 2014 @ 6:37am

Re: Why the change of heart?
I'm not really sure about this and as far as I know, there is no "official" reason. But while German industry is presumably massively pro-ISDS, the German people are massively against it (at least those who know about ISDS, but the topic gets more and more attention).

It would not be the first time that German politicians do a complete turn on some point and claim that they "have always seen ISDS very critically" after realising that something might significantly influence their popularity.

Another example is the "exit from the exit from the exit from nuclear energy" after Fukushima.
[ link to this | view in thread ]
Anonymous Coward, 29 Jul 2014 @ 6:41am

PS: Re: Why the change of heart?
Or should one call it the "nuclear phaseout phaseout phaseout"?
[ link to this | view in thread ]
John Fenderson (profile), 29 Jul 2014 @ 9:40am

Re: And in further news...
No nation (or person, for that matter) is always wrong or always right.
[ link to this | view in thread ]
Eldakka (profile), 29 Jul 2014 @ 8:07pm

Re:
I think Devonavar had it right:

Re: Why the change of heart?
According to Michael Geist it has to do with a Swedish company suing Germany for trying to go nuclear free.

http://www.michaelgeist.ca/2014/07/crumbling-ceta-investor-state-dispute-settlement-rules-threa ten-take-canada-eu-trade-agreement/
i.e. Germany being sued by a Swedish company for billions for pulling out of nuclear power.
[ link to this | view in thread ]
KevinEHayden (profile), 30 Jul 2014 @ 7:26am

Thanks Gemany
Well we once saved Germany from tyranny in World War II. Now they're repaying us by saving us from corporate tyranny.
Well done.
[ link to this | view in thread ]
Cerberus (profile), 30 Jul 2014 @ 6:44pm

Re:
At least he is on his way out: a new Commission will be installed soon (so far, only the President of the Commission has been chosen).
[ link to this | view in thread ]