Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

In regard to the argument on regulatory chill, it is clear in CETA that the Government continues to have the right to regulate. That is specifically directed to allay concerns about regulatory chill. Most investment claims do not challenge the Government's ability to legislate or regulate but are administrative in character.

A Government or State actor would be sued not because it has legislated or regulated, but because it has discriminated against a particular company or investor in the context of a particular licence or permit, or in cases of expropriation. CETA does not restrict the EU or Canada from passing new laws in the public interest, such as in the areas of the environment or health and safety, nor does it affect our scope to develop new laws in response to the needs and priorities of Irish citizens. As I said, the chill effect about which I am concerned is not around our ability to regulate and legislate. The number of free trade agreements is increasing year-on-year and so there is need for more regulations year-on-year. Some people would say we have additional taxes every year notwithstanding that we have more trade agreements every year and more environmental rules. As trade agreements have increased, so, too, have taxes, regulations and protections. I do not see that as a chill. The chill that I am concerned about is an economic one, that is, that Ireland, which has been always a reliable country and supportive of international trade, multilateralism, the EU and the WTO, might be moving away from that path. There could be a fear among investors that the political consensus that we have had in Ireland, which has been always internationalist, pro-European, pro-free trade and pro-enterprise, might be waning and that nationalistic forces might becoming popular again in Ireland. We saw the effect of that type of politics in the 1930s with the economic war. It brought our population down to 2.5 million at one point, until it was reversed by Seán Lemass and others.

On the financial impact, we do not think there will be a financial impact. If there is one, it will be minimal. The Deputy mentioned that we could still face legal fees, but if one wins the case generally legal fees are covered, or most of them are covered. There would only be a financial impact if the Irish Government or an Irish State actor was to discriminate against a Canadian company and that company was able to prove in court that it faced losses as a result of that decision and was then granted compensation as a result. We think that is pretty remote. It is impossible to assess on an econometric basis because there are so many variables and it is so unlikely to occur, but our assessment, applying logic, is that it would be zero or minimal because the Irish State and its agencies are not going to discriminate against Canadian companies and, therefore, they will not be able to prove that we have and, therefore, they will not receive any compensation for any losses.

Deputy Howlin made the valid point that there is a strong case for having these mechanisms when it comes to countries not like Canada. In other words, countries we are less confident about in terms of their legal systems and in their courts acting independently and fairly. One of the reasons the EU wants this in CETA and in the Mexico Agreement is to set a precedent. In negotiations, countries that are not democracies and do not have a courts system like ours, might ask why they should agree to this when it does not apply to other countries. They might take the view that we would be saying we do not trust them and that is why we are demanding that this clause be in a treaty with them, yet we did not say that this should be in a treaty with countries like Canada and Mexico. From a European point of view and from a strategic point of view, as team Europe, we want this included so that when we negotiate with Canada or, for example, countries in the Middle East, we can say this is standard clause that we now have in agreements with democratic partners like Canada and Mexico and we would like to see it in a particular agreement too.