Alice-Mary Higgins (Independent) | Oireachtas source

I thank the Chairman for accommodating me and I thank the presenter. I have two sets of questions. The first is on this question of renegotiation. Mr. O'Sullivan mentioned that CETA was a test, and things do seem to have moved in a different direction since then. When we talk about an example, he referred to the EU-China deal and the EU-UK deal. All of those have maintained dispute mechanisms but only between the parties who have signed up to the treaty. The South Korea example is dispute resolution between the actual signatories of the treaty but the EU-China deal and the EU-UK deal and, interestingly, to a large extent, the new US-Mexico-Canada deal have chosen not to give dispute resolution protections to investors.

They have reserved the dispute resolution mechanism solely for the parties that are actually signatories and signed up to all those other parts of the deal. It strikes me that the tide seems to have moved in a different direction, as Mr. O'Sullivan mentioned at the beginning, and it is the case that investor dispute mechanisms are no longer being added into trade deals.

The US-Mexico-Canada agreement, USMCA, is an interesting example in respect of renegotiation. The North American Free Trade Agreement, NAFTA, took 13 years to negotiate and the renegotiation took two and half years. It strikes me that as part of the changed landscape, the fact that the EU Council and the EU Commission have been empowered to negotiate since the Singapore agreement, means that renegotiation could proceed and could be explored during the period of ongoing provisional application that we have on the current deal. It would seem to be reasonable to look at whether a better deal could be constructed while continuing with this.

In that regard, another area that is not just a matter of renegotiation but ongoing negotiation concerns the investor courts system itself. The text and the operation of the investor court system is not finalised. As I understand it, under CETA the joint committee can continue to review the practices in relation that. In fact, in the European Court of Justice ruling from 2019, the European Court of Justice quoted that the Commission had stated that it was committed to "further review, without delay, of the dispute settlement mechanism (ICS), and allowing sufficient time so that member states can consider that in their ratification processes". That review has not been held yet, as I understand it. The review was specifically around small and medium businesses and their equitable access. It was specifically also around the costs associated with taking a case. Mr. O'Sullivan mentioned that they are permanent, but of course there is a very high per diemcost attached to each day of the case. We have details on that.

It strikes me that there is actually a negotiation ongoing in terms of how we improve the ICS structure as well as scope for renegotiation. The core issue, which is the key thing for me, concerns regulation. There is of course a right to regulate. It can sometimes be a bit of a red herring. However, looking at CETA itself, it is clear that states can regulate, but companies can also seek compensation. That is made explicitly clear. The section on regulation states that the mere fact of regulation does not amount to a breach, but in the section on the withdrawal of subsidies, it is explicitly stated that that party would not be required to compensate investors. Therefore, in one section there is a protection against compensation in respect of subsidies, but there is not a protection against compensation claims in respect of regulation. Mr. O'Sullivan mentioned that member states have taken cases, but the key point here is the chill effect. That is the core of what will happen in terms of regulation.

Mr. O'Sullivan stated that he is not a lawyer, but I know that works as a senior counsellor with Steptoe & Johnson, which says on its website that bilateral and multilateral treaty investment protections "may be a highly important tool for foreign investors and industry associations in advocating against legislative changes to renewable energy regulations." It continues:

It may well be possible to use such protections as a tool to assist lobbying efforts to prevent wrongful regulatory change.

I am speaking in the context of fair and equitable treatment, which Mr. O'Sullivan's own company describes as a "very wide protection". It explicitly states:

The fair and equitable treatment standard may be breached by a frequent occurrence of regulatory changes which undermine that stability and predictability of the business environment for investors.

I am interested in a number of areas, including labour rights and the environment. However, I am very concerned that companies may be seeking to determine what the fair and equitable treatment standard might be in the context of frequent regulation, which is certainly something we are going to see in certain areas. In that regard, is it not the case that the chill effect is there? Is there not a giving of an undue power in terms of a threat of potential litigation and compensation in respect of potential necessary citizen-demanded regulation?