Amended CETA declaration not enough to win Walloon support, documents show

OTTAWA – One day before Belgium’s Wallonia region formally rejected the Canada-EU free trade deal, the two sides pledged in writing to strengthen the controversial dispute settlement section of the pact, The Canadian Press has learned.

The apparent concession to the Walloons was made on Oct. 13 in a short annex that Canada and Europe crafted to assuage critics of the Comprehensive Economic and Trade Agreement, or CETA.

The two sides said in writing that they would do more work to make sure that the people appointed to dispute resolution tribunals were free of bias and other conflicts of interest.

But the new language wasn’t enough to prevent the Wallonia legislature from voting to reject the deal the following day.

On Tuesday, 11 days after that pivotal vote in the small Belgian region of 3.5 million people, the EU was still trying to persuade the tiny Belgian region of Wallonia to drop its opposition to the pact, which is preventing Belgium from joining its 27 EU partner countries in approving the deal.

The Walloon opposition to the investment protection section of the treaty remained the major obstacle to the deal being formally approved Thursday in Brussels at a long-planned summit between Justin Trudeau and his EU counterparts.

A leaked document provides insight into the sticking point.

“The European Union and its member states and Canada have agreed to begin immediately further work on a code of conduct to further ensure the impartiality of the members of the tribunals, on the method of their remuneration and the process for the selection,” said the line that was added to the Oct. 13 “Joint Interpretative Declaration.”

An earlier draft of the declaration, dated Oct. 5, did not contain that undertaking to do more work.

Gus Van Harten, an investment law professor at Osgoode Hall Law School, said the trade deal is still full of loopholes on the newly created tribunal system, which is designed to settle disputes.

A key problem — and one the Walloons want addressed — is that there is nothing that prevents an individual from working both as an arbitrator and a judge, he said.

The problem is that an arbitrator’s work is done in secret, and is paid for by individual corporations, which makes it impossible to know if that same person has a conflict of interest when they hear a case later as a judge, said Van Harten.

Van Harten, who has seen the latest version of the declaration, said it is not enough for Canada and the EU to simply pledge to work on a code of conduct for the tribunal members.

“Such matters should be resolved and subject to discussion and debate well before relevant decision-makers are requested to approve CETA,” he wrote in a forthcoming analysis.

The joint declaration came into being about two months ago when International Trade Minister Chrystia Freeland and German Vice Chancellor Sigmar Gabriel began working on a document to mollify left-leaning politicians in Europe as well as the clamouring anti-trade civil society movement.

Trudeau has spoken to Martin Schulz, president of the European Parliament, in an attempt to salvage the trade deal, sources said Tuesday.

A government official, speaking on condition of anonymity given the sensitive nature of the subject matter, said Trudeau and Schulz have spoken in recent days and that Thursday’s Canada-EU summit has not been cancelled.

The prime minister said the Liberals have been working to improve the investor protection section since winning office from the Conservatives to address concerns in Europe.

“We worked with multiple countries on improving relations and responding to concerns they have and we are very pleased with the kind of work that we have been able to do, to get CETA to this point.”

Belgian Foreign Minister Didier Reynders said Tuesday that progress was being made in the talks with the Walloons.

Belgian negotiators “really are at the final texts,” he said, adding that “as you know, there is the last comma, the last word, which are probably the most important.”

Wallonia President Paul Magnette said his region won’t “tolerate” a fourth ultimatum, and will walk away from the negotiations if that occurs.

For her part, Freeland — who made a show of walking out on the talks in Brussels late last week — reiterated that Canada is ready to sign the pact on Thursday. And she also shot back at Conservative trade critic Gerry Ritz, who during question period again characterized last week’s show of emotion as conduct unbecoming “adults.”

“For any member to infer that any other member is not an adult diminishes us all,” Freeland responded coolly.

— with files from the Associated Press