Today, the Dutch Senate approved a law allowing The Netherlands to sign and ratify the whole EU-Canada trade agreement CETA – including its investment protection part – after years of fierce national debate on its merits.
CETA has been partially in force since September 2017. Its most controversial part, which concerns the investment protection chapter and falls within the national competence of the member states, can only enter into force after ratification by all EU member states.
In the Netherlands, CETA needs to be approved by both chambers of parliament: the main chamber and the senate.
Whereas in February 2020 the main Chamber very narrowly voted for CETA with 72 for and 69 votes against, the governing coalition parties do not have a majority in the senate. Therefore it remained unclear until the very last moment whether a majority would come together for CETA.
In the senate, a majority of opposition parties had been against CETA from the very beginning, unifying several splinter parties from the far left and from the far right of the political spectrum.
The only party that could tilt the senate towards voting for CETA was the Social Democratic Party – the PvdA.
Back to the time when CETA was negotiated, the responsible minister was Lilianne Ploumen from the PvdA. However, after the last elections the PvdA lost significantly and ended up in opposition in the main chamber. From that moment on, Ploumen declared that her party would vote against CETA in the senate.
Hence, the main question was what would be necessary to make the PvdA change its views again?
During the full-day debate on Monday preceding today’s vote in the senate, various arguments for and against CETA came to the fore again.
First, agriculture. It was acknowledged that CETA has created more market access for Dutch farmers. At the same time the fear was expressed that Canadian agricultural imports into the EU would have a negative effect on Dutch and European farmers, in particular as they arguably do not need to meet the same high EU standards for animal welfare.
Second, climate policy. Many parties which were against CETA questioned whether in times of climate crisis more international free trade should be stimulated or whether instead it would be wiser to stimulate local food production.
Third, the war in Ukraine. This was certainly a very important factor for the supporters of CETA. The war and the argument that in these days of global instability, which has led to skyrocketing energy prices, generally high inflation rates, and shortages of all kinds raw materials, it would be unwise to rebuff Canada, whose soldiers helped liberate the Netherlands from Nazi Germany in 1945.
Indeed, the supporters of CETA asked the rhetorical question: if the EU cannot finalise a trade deal with a friendly country such as Canada, with which other country can it do?
However, the main sticking point remained the investment court system – the dispute settlement provisions for disputes between investors and host states which enables investors to bring claims against the CETA parties if they are expropriated or otherwise unfairly treated in order to obtain monetary compensation.
Although Ploumen as PvdA trade minister was one of the main forces to argue for replacing the old arbitration system by the ICS, claiming that it is significantly improved and more balanced, many parties in the senate remained unconvinced.
It was argued that the ICS was unnecessary since the Dutch courts are perfectly able to deal with investors and that ICS would in fact expose the Netherlands to claims by Canadian investors. This is currently not the case because there exists no investment protection treaty between the Netherlands and Canada.
Reference was also made to the recently concluded EU-New Zeeland free trade agreement, which does not include any ICS or investment protection provisions. So opponents asked the question: why would we need ICS with Canada, if we do not need it with New Zealand?
In order to address those concerns, which were also present in Germany and other member states, the European Commission has introduced an additional complaints system: the single entry procedure. This allows civil society organisations from the EU to complain about violations of sustainable development commitments in CETA and indeed all other EU free trade agreements.
Essentially, this additional complaint procedure allows civil society organisations to directly complain to the European Commission about alleged violations of CETA and in this way open up a new tool of enforcing CETA obligations against investors.
This tool was not envisaged in CETA and it only applies for the EU part, so it remains to be seen how Canada will deal with this mechanism.
In any event, the introduction of this new complaint system, which was explained by a letter from Commission vice-president responsible for trade Valdis Dombrovskis a few weeks ago directly to the Dutch trade minister, was the key gamechanger for the turnaround of the PvdA.
Commissioner Dombrovskis expressed his relief and and satisfaction immediately after the positive vote on CETA was announced by stating on Twitter:
“I welcome the Dutch Senate’s positive vote to ratify the CETA (…) At this time of growing geopolitical uncertainty, strengthening ties with a trusted and like-minded partner is essential. For this reason, the EU continues to pursue other agreements with reliable partners around the globe.”
Now that the German government recently agreed to support CETA, and with its adoption by the Netherlands, two important ‘free trade minded’ EU member states have brought CETA closer to full ratification in the EU.
Nonetheless, it’s still a long way to go before CETA is fully ratified since several EU member states must still vote on CETA. Ratification has not taken place in France, Belgium, Ireland, Bulgaria, Greece, Hungary, Italy, Poland, Slovenia, and Cyprus.
A question is before the Irish Supreme Court whether CETA, – in particular the ICS – affects the Irish constitution to such an extent that a referendum by the Irish people would be required.
The Dutch vote today is a milestone. But the CETA ratification process continues.