ourEconomy: Opinion

Could the Dutch Labour Party vote down controversial trade deal CETA?

Legal experts have found the deal violates the constitution by handing too much power to corporations

Sara Murawski
10 July 2020
Image: GLOBAL 2000, CC by 2.0

The debate on CETA in the Dutch Senate, which will be scheduled after the summer break, can be considered as a precedent for other countries to follow. In the second round of written questions (which is still awaiting response from the government), the Greens and Labour – backed by a broad coalition of parties – have asked the government to respond to the letter. The parties also inquire whether the government agrees that CETA, in its current form, would alter the constitution. If so, this would imply that a two thirds majority is needed to approve this modification. Specifically, they ask for a motivated rationale “substantiated with relevant advice/rulings from courts or (international) legal scholars.” If such an advice would be requested by either government or the Senate itself, the ratification of CETA will be postponed even longer.

This autumn, the debate about CETA in the Netherlands is entering a crucial phase. While the controversial agreement passed the Dutch national parliament (Tweede Kamer) with the smallest possible majority, its ratification by the Senate is not at all certain. The Government coalition parties have only 32 out of 75 seats in the Senate, and need at least 38 in order for CETA to pass. It is safely said that most opposition parties will vote against the agreement. Much depends on the final vote of the Dutch Labour Party (PvdA) in the Senate.

CETA has a salient history in the Labour Party. While it was the former Dutch trade minister Lilianne Ploumen from Labour who negotiated and defended CETA as the new “golden standard” for future trade agreements, Dutch Labour in the European Parliament abstained in 2017. When the agreement was put to the vote in the Dutch parliament, this time defended by the current minister Kaag from the liberal party D66, the Labour Party voted against it. Initially, Labour were of the opinion that the CETA agreement as it was negotiated left enough space for substantial improvements. But after two years, that opportunity was lost due to a lack of sufficient action on the side of government.

One important issue that could have been solved, according to Labour spokesperson in parliament Kirsten van den Hul, concerned ICS or the Investment Court System. This controversial system allows foreign investors to sue governments outside of the national courts through arbitrage. According to Van den Hul, the ICS should have granted third parties such as labour unions and NGOs, representing workers and citizens potentially affected by investment projects, full access to the arbitrage mechanism. In its current form, the ICS mechanism remains a completely one-sided system where companies have only rights without corresponding obligations.

Voting against CETA, as Van den Hul explained, should be seen as an opportunity to set higher standards for fair and sustainable trade. She pointed to the fact that the ratification of CETA is also uncertain in France, Germany and Italy and even proposed to fight “on the barricades […] with a progressive coalition of the willing, making sure that we raise the bar now, especially with a view to the future in that rapidly changing world.” That was February 2020.

Fast forward to the Senate, the Dutch “chambre de reflection”. Shortly after the vote in parliament, the Labour spokesman in the Senate, Ruud Koole, stated that the fraction in the Senate will strike its own balanced consideration. Subsequently, Koole has been very critical in both expert meetings that were organized by the Senate, as well as the two rounds of written questions to the government about the agreement. In particular, Koole seems concerned about the imbalance between how the rights and interests of transnational corporations on the one hand and those of civil society on the other are enshrined in the treaty. This concern applies, among others, to the lack of enforceability of the Trade and Sustainable Development provisions in the treaty, as well as the previously mentioned investment protection in the form of the Investment Court System (ICS) that CETA contains.

While the debate on CETA in the Senate was already destined to be exciting, a recent development might be another game changer. On June 8, a collective of 37 lawyers and professors published a letter in which they argue that CETA, due to its arbitration court, is not compatible with the Dutch constitution. Company claims directed at governments should be handled by the national courts, according to the juridical experts, and not by international arbitration panels that circumvent the domestic justice system through parallel case law. They claim that the definition of indirect expropriation in CETA is (too) broad and puts the interests of investors above public interests, because they are granted more rights.

The judicial experts also warn about the “regulatory chill” effect, which implies that governments might withdraw certain policy measures because of the threat of an arbitration claim that could cost the government millions if lost. Even when won, it would tie up the government in lengthy and costly judicial fights. Last but not least, the letter points to the fact that the ratification of CETA will lead to a transfer of power to the Joint Committee and the specialized committees that consist of Canadian and EU civil servants and are authorized to develop rules related to EU-Canada (future) trade, thereby compromising democracy and national sovereignty.

The debate on CETA in the Dutch Senate, which will be scheduled after the summer break, can be considered as a precedent for other countries to follow. In the second round of written questions (which is still awaiting response from the government), the Greens and Labour – backed by a broad coalition of parties – have asked the government to respond to the letter. The parties also enquire whether the government agrees that CETA, in its current form, would alter the constitution. If so, this would imply that a two thirds majority is needed to approve this modification. Specifically, they ask for a motivated rationale “substantiated with relevant advice/rulings from courts or (international) legal scholars.” If such an advice would be requested by either government or the Senate itself, the ratification of CETA will be postponed even longer.

Amid the COVID-19 crisis, which has laid bare the structural flaws in our current (trade) system, the Labour Party seems to opt for a more classical social-democratic political direction. In choir with many other parties and with the elections coming up (2021), they are advocating for stronger welfare states and a globalization that works for all. A vote in favor of CETA could undermine these ambitions and imply another twist in the already mangled Labour CETA plot. The consequences thereof are rather incalculable – and therefore politically delicate.

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