The CETA Ratification Saga: The Demise of ISDS in EU Trade Agreements?

This Article focuses on the frustrating, time-consuming, and difficult legal and political process through which the Comprehensive Economic and Trade Agreement (“CETA”) between the European Union and Canada is being approved in the EU. The CETA approach includes approval of the agreements initially by the EU Commission, EU Council, and EU Parliament, but also unanimously by the approximately thirty-eight national and regional EU Member State Parliaments. That unanimity requirement has raised doubts as to whether any future controversial trade agreement—and if the CETA is controversial, so much more so are all others—could effectively be put into force by the EU, whether or not it contains ISDS mechanisms. Fortunately, the EU Court of Justice decision on similar issues arising from the EU-Singapore FTA promises a more streamlined approval process within the EU alone for future trade agreements.

However, the experience suggests two caveats: (a) any ISDS and related investment provisions should be treated in a distinct agreement for separate EU and Member State approval; and (b) notwithstanding the EU’s legal powers post-Court of Justice decision to conclude FTAs based on the EU’s exclusive authority, EU politics may make it difficult or impossible for the EU to do so.