Open Letter to my North West Constituents on CETA

Dear North West Constituent,

Labour MEPs take a cautious stance when it comes to EU trade deals. Whilst we recognise that increasing trade flows between the EU and North America could be beneficial to the UK economy, we have also raised concerns regarding some of the proposals made in these negotiations.

After considerable thought and discussions on this, and having met with consumer groups, Unison, Unite, GMB and other trade unions, I will vote against CETA.

Trade agreements are supposed to be about jobs and growth, but CETA isn’t. No one, not even CETA’s advocates, is arguing that it will bring significant gains in this respect. The European Commission, which has been negotiating the deal under a mandate from all EU trade ministers including the UK’s, has found that CETA would generate only very modest gains: between 0.03 to 0.08% of extra GDP for the EU as a whole over the next ten years.

This figure also does not take into account the distribution of these diminutive gains. We know from experience that trade deals can have a negative impact on some sectors or sections of the population even when the overall outcome is positive for the economy as a whole. With CETA, the gains would be concentrated on specific industries where trade barriers remain high: e.g. cheese, spirits, machinery. But in this deal it is expected that other sectors will lose out.

The real motivation behind CETA is not about increasing trade to boost the economy. It is about setting global standards. I have focused on three key areas: public services, labour and environmental standards and investment protection.

Public services

By way of background, CETA is the first EU agreement negotiated according to a negative list for services. This means that everything not explicitly excluded is deemed to be included (as opposed to a positive list, where only the committed services need to be mentioned and everything else is excluded). This is a delicate method, one that has long been opposed by European social democrats because it is extremely risky: if public services are not all excluded in an absolutely watertight way, then all sorts of unintended consequences can ensue – including not being able to renationalise specific services that may have been privatised.

In CETA, there is a broad exemption for public services but it is subject to specific national reservations. The UK government has left thin wedges on the table, such as ambulances, private hospitals and care homes. Other EU member states are better protected. For example, free trade supporting countries, like the Finnish, German or Czech governments, all have broad exemptions that cover all public and private health, social services and education.

Following years of campaigning by public services users, providers and employees, the CETA negotiators finally recognised that this was an issue and adopted a declaration to be annexed to the agreement. This declaration adds some clarity but there are still broad concerns on how public procurement would be covered by CETA’s investment protection chapter and how certain quality criteria such as minimum staffing levels could still be enforced under the agreement. NHS campaigners and others across our public services, therefore remain opposed to CETA. I think they are making an absolutely valid point: we cannot afford to take any risk, however small it may be, when it comes to our public services.

Labour and environmental standards

Turning to labour and the environment, CETA is a huge lost opportunity. Relevant provisions in the agreement are only aspirational, when trade deals should be used to enforce specific and measurable progress. The only recourse for workers and their unions or NGOs in case of violation of international labour of environmental commitments are virtually powerless consultative committees, with no possibility for sanction. Again, this shortfall has also been recognised by the negotiators in the declaration mentioned earlier. They have now committed to improving the enforcement of these measures but without any detail. We are effectively being asked to accept something that hasn’t been negotiated yet.

There has been however some progress made. Under pressure from the labour movement both in Europe and in Canada, and thanks to the outcome of the latest Canadian general elections, the new Canadian government has ratified important international conventions on labour rights that it had not subscribed to before. This is good, but is it enough? If CETA is about setting global standards, then we should be more ambitious. I am sure this deal would not be useful in trying to convince emerging economies, such as China, that they need to adopt stronger protections for workers or the environment.

Investment protection

Last but not least, investment protection is by far the most politically sensitive issue in CETA. A first version of the deal was subjected to a public consultation organised by the European Commission on ISDS, or ‘Investor-State Dispute Settlement’. I50,000 people responded – setting an historic precedent for EU public consultations of which 97% of respondents rejected the CETA proposal to set up a parallel, arbitration-based judicial system for multinationals. In subsequent negotiations, the text was amended to make proceedings more transparent, to set some rules on how arbitrators would be selected and to commit to creating an appeal mechanism. This was renamed ICS, for ‘Investment Court System’. In essence, it is still separate justice for multinationals. It continues to provide extra rights to foreign investors over their domestic counterparts. Controversial rights granted to foreign investors under the old ISDS system remain in the new proposal, such as fair and equitable treatment and protection against loosely defined ‘indirect’ expropriation. ICS even introduces new potential problems such as the notion of an investor’s ‘legitimate expectations’.

The Belgian, Slovene and Polish governments have all conditioned their support for CETA on further changes to the ICS. Belgium actually explicitly stated that it will veto the deal if ICS is not amended.

In 2015, the European Parliament adopted a resolution laying out its vision for a reform of investment protection. As a Labour MEP, I voted against the resolution – I oppose the use of these courts and giving foreign investors more rights than domestic investors, or even citizens.
ICS in CETA does not even match the criteria set by the European Parliament. And the concern does not stop with CETA, as the Commission sees ICS as the model text for all future EU trade deals – including, in all likelihood, a possible EU-UK trade deal.

Confronted with all these serious concerns, some proponents of CETA have turned to geopolitical arguments. Stuck between an aggressive Chinese government and a Trump-led America threatening to turn the clock back on transatlantic cooperation, the EU would have no other choice than to seek new alliances. Some even argue that failing to ratify CETA could be the last nail in the EU’s trade policy coffin, following the collapse of the TTIP talks. I don’t think there is much of a risk in this respect. There are plenty of other EU trade deals currently on the table. Besides, the relationship between the EU and Canada is already strong and does not need a new trade deal to thrive. The vote in the UK referendum was primarily a reaction against the unfair impact of globalisation, and our answer cannot be yet another unfair trade deal.

Also, I have reached my decision to a ‘background of Brexit’, that adds an even greater significance to the importance of the CETA vote for the UK. Labour wants to keep the closest possible relationship with the EU, and this could mean remaining part of existing EU trade deals. If we end up out of the EU’s common trade policy as Theresa May wants, CETA could very well become the model for a future EU-UK trade deal as it is the most advanced EU trade deal ever negotiated to date. In such circumstances, we would need to be extremely clear on what we can and cannot accept. In both of these cases, CETA remains extremely relevant to the UK.

The bottom line, for me, is that we should not support a trade deal if it’s a poor deal. CETA is risky for public services, weakens the rule of law and is not good enough for workers and the environment for all the reasons I outline above.

That’s why I will vote against CETA.

I will still be your MEP until the UK formally leaves the EU. As long as I am your elected representative, I will endeavour to do whatever I can to help. Please do not hesitate to get in touch with any problems or issues that you think I may be able to help with.

Best wishes,