Thank you, Mr. Eyking.
Thank you for the opportunity to be part of your deliberations on whether or not Canada should ratify CETA. Today I wish to emphasize three areas where the costs of ratification for Canada outweigh the modest trade benefits. These problematic features are among the main reasons the deal has become controversial, especially here in Europe, and why it is extremely worrying that CETA is being pushed through both the Canadian and EU parliaments with limited debate.
The current conduct and openness of the Canadian government in ratifying CETA could well be a factor when European member states and their citizens consider whether or not to ratify CETA over the next several years. I believe recent events in the U.S. have borne out the risks of a backlash when controversial trade deals are pushed ahead without full and open public debate.
Potentially the costliest single chapter in CETA is on intellectual property rights. A considerable portion of the legislation before you deals with changes to Canada's patent regime in response to European demands for stronger protections. By extending patent terms on brand-name drugs and providing for a new right of appeal for patent holders in patent linkage cases, CETA would delay the introduction of cheaper generic medicines. This unilateral change to Canada's drug regime will add an estimated $850 million annually to the overall cost of medicines in Canada, where we already pay the third-highest costs per capita in the OECD.
These increased costs will put more pressure on provincial health care systems, private drug plans, and individual consumers. In fact, the costs of CETA's stricter intellectual property rules cancel out the potential benefits to Canadian consumers of tariff elimination on EU imports to Canada. It is imperative that the federal government release its own estimates of these increased drug costs.
In both Canada and the EU, the most controversial aspect of CETA is the inclusion of an investor-state dispute settlement mechanism. Canada's NAFTA experience with ISDS speaks for itself: we have been sued more times than any other party, with corporations successfully challenging non-discriminatory public interest regulations. Far from addressing the problem, CETA entrenches and expands the ISDS regime through an investment court system. While it improves some procedural aspects of ISDS, the substantive protections afforded to investors in this new court system are largely unchanged.
Foreign investors still receive extraordinary legal rights to sue governments for measures that may negatively affect their investments. These protections, which are not available to domestic investors or ordinary citizens, would expose taxpayers to large financial liabilities and threaten to chill public policy. In contrast to these strong protections for investors and corporations, CETA's labour, environment, and sustainable development chapters merely trigger non-binding consultations.
The third and final issue pertains to CETA's impacts on public services and regulation affecting essential services. CETA would restrict governments' capacity to regulate the entry and activity of foreign service suppliers in our domestic market, even when such regulations do not discriminate based on the nationality of firms. By locking in market access for foreign service suppliers, CETA threatens the viability of public services. A standstill and ratchet mechanism forces governments to make any future regulatory decisions in the direction of even greater liberalization, including for many services that are on the list of exceptions. I'm referring to those in annex 1.
While a number of important public services are excluded from certain of CETA's liberalizing provisions, there is no way to take reservations against CETA's core investment protections, such as fair and equitable treatment in section D of chapter 8, and this would restrict the capacity of governments to reverse privatizations and expand public services by making such decisions unpredictably costly.
With more time, I could raise other concerns. Instead, I'll simply note that some of these are explored in the CCPA's accompanying brief, which you will have shortly, and our two “Making Sense of the CETA” reports.
To conclude, if the Canadian government and European Union are serious about getting CETA right, they should take the time to make necessary changes. Full European ratification will require the approval of all EU member states, including some that still have grave concerns about its investment court system. Permanently removing that system would help make CETA less objectionable and increase the likelihood of the deal being fully ratified. But even if the ICS never becomes a reality, CETA still contains provisions that make it far from progressive and that need to be studied in detail. Consequently, it would be a mistake to ratify CETA in its current form, especially after such a hurried parliamentary review and inadequate public consultation.
Thank you.