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EU seeks stiff rules on free trade deal

ChronicleHerald, Halifax

EU seeks stiff rules on free trade deal

26 November 2012

By Heather Scoffield, The Canadian Press

OTTAWA — The European Union wants Canada to agree to compensate European companies for any losses that stem from changes to health, environment or safety rules in Canada, according to documents obtained by The Canadian Press.

A recent draft of the investment chapter of the broad free-trade agreement that Canada and the EU are negotiating shows 50 pages of complex, widespread disagreement between the two governments over how their investors should be treated in the other’s jurisdiction.

Canada initially asked for the investment protections, but as the trade negotiations reach their final hours, Europe appears to be pushing for stiffer rules than Canada wants.

Specifically, the Europeans are resisting Canada’s request to carve out health, safety and the environment from rules about expropriation — even though such clauses have become standard in most of Canada’s trade and investment treaties.

In the Oct. 26 draft, Canada says that “non-discriminatory measures by a party that are designed and applied to protect legitimate public welfare objectives, such as health, safety and the environment, do not constitute indirect expropriations.”

But the text remains bracketed, which means Canada is asking for this wording and Europe has not agreed.

In other European documents published on the weekend by Montreal’s La Presse, EU officials bluntly reject the Canadian position.

“Canada’s proposed text would permit expropriation without compensation, in order to pursue legitimate policy objectives. This should not be accepted,” says the note from the European Commission to its member states, dated Nov. 6 and obtained by Quebec’s CAQ party.

Instead, the EU says companies should always be fully compensated if their businesses are hurt by government policy, regardless of the good intentions of the policy.

The EU is also pushing for stronger investor rights in Canada’s protected financial-services sector, the memo shows.

The EU also wants Canada to narrow its protections of cultural industries from foreign investment. The union is also arguing for better investor access to the telecom industry, and wants Canada to exempt its companies from the “net benefits” test the government routinely applies to approve or reject foreign takeovers, the memo says.