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German Economy Minister Reverses Course on CETA: Urges Approval Despite ISDS

Posted December 01, 2014

Canadian importers and exporters hoping to benefit from the Comprehensive Economic and Trade Agreement (CETA) received some positive news last week with the announcement by German Vice Chancellor Sigmar Gabriel that his country won’t stand in the way of the deal’s ratification despite the highly controversial investor protection provision.

Head of Germany’s leftist Social Democratic Party (SPD), Gabriel has served as Minister for Economic Affairs since last year and has been a vocal critic of the investor-state dispute settlement (ISDS) mechanism, saying quite recently that Germany would not sign the Canada-EU trade pact unless the clause was scrapped.  “It is completely clear that we reject these investment protection agreements,” he told a parliamentary debate in September.

However, speaking before the Bundestag on Thursday, Gabriel encouraged German MPs to vote in favour, notwithstanding inclusion of the ISDS. “If the rest of Europe wants this agreement, then Germany must also approve. There is no other way,” he said.

The Economy Minister argued that without the CETA agreement with Canada and the TTIP agreement with the U.S., Europe would be left at the mercy of booming Asian markets. “If we as Europeans lose out, it would be a mid-sized catastrophe for Germany.” Hundreds of thousands of jobs in industry are at risk, Gabriel said. “If we do this wrong, our children will curse us.”

Though contrary to his party’s official stance on the issue, Gabriel appears to have backed down under pressure from EU Trade Commissioner Cecilia Malmström, who met recently with the SPD chief. “It will not be possible to have the arbitration procedure taken out of CETA. We are acting in a European environment and should also listen to the opinions of other countries,” Gabriel said after the meeting.