An SIA analysis of the Investment Chapter in the EU-Canada Comprehensive Economic and Trade Agreement (CETA)

This study is a section from the Sustainability Impact Assessment (SIA), commissioned by the European Commission, on the impacts of the Investment Chapter in the EU-Canada Comprehensive Economic and Trade Agreement (CETA). The Investment Chapter in CETA could encourage economic benefits including trade-stimulating effects and fostering intangible business linkages in Canada, although the significance of these will likely be minor to notable at most; impacts in the EU will likely follow these trends but on an even lower level of significance. Positive environmental impacts would result from increased investment in green technologies, yet negative impacts would likely result from increased FDI in the oil sands and mining sectors in Canada. Various social impacts are expected, but all relatively minimal in scale. The majority of the study is devoted to investigating the costs vs. the benefits of including controversial NAFTA-style investor-state dispute settlement (ISDS) provisions in CETA. It find that there is no solid evidence to suggest that ISDS will maximise economic benefits in CETA beyond simply serving as one form of an enforcement mechanism, just as state-state dispute settlement is also an enforcement mechanism. And the policy space reductions caused by ISDS allowances in CETA, while less significant than foreseen by some parties, would be enough to cast doubt on its contribution to net sustainability benefits. As such, the study’s assessment suggests that a well-crafted state-state dispute settlement mechanism might be a more appropriate enforcement mechanism in CETA than ISDS.