EU court rules in favour of trade deal with Canada

EU leaders Donald Tusk (L) and Jean-Claude Juncker (R) with Canadian PM Justin Trudeau (C).

The EU-Canada free-trade agreement's provisions to protect investors do not breach EU law, the European Court of Justice (ECJ) ruled last Tuesday in a major relief for proponents of the deal that came into force in 2017, news wires reported. The ECJ’s judges said that the mechanism to resolve disputes between investors and states is in line with EU law.

The system of tribunals to settle disputes between foreign investors and states in the Comprehensive Economic and Trade Agreement (CETA) with Canada, which critics say unfairly favour multinationals, became a focal point of protests against the planned EU-US TTIP trade deal and CETA when EU countries were deciding whether to back the latter in 2016.

The court ruled that the “Investment Court System”, which is also part of Europe's trade agreements with Singapore and Vietnam, will have no “effect of the autonomy of the EU legal order” and will allow companies to sue governments if they feel their commercial rights are infringed. But some environmentalists, social activists and free trade-sceptics argue it does not give citizens a balancing right to take legal action if corporations break the rules.

The Belgian region of Wallonia, then led by the Socialists, threatened to block the deal, but the federal government persuaded it not to do so in return for certain concessions - including a request for the ECJ to give its view. Belgian Foreign Minister Didier Reynders, whose liberal MR party will be battling to stay in power in an election in May, said he was pleased with the ruling, adding in a statement that Belgian businesses had done well in the first year of CETA.

The agreement entered force on a provisional basis in September 2017. Full implementation of CETA, including the investor protection parts, requires approval by all 28 Member States and, for Belgium, also of its regional parliaments.

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