(The full report can be found here)*
Determine what provisions are likely to be included in the Investment Chapter of a Canada-UK Preferential Trade Agreement, assuming the UK proceeds with Brexit.
We examined the political and contextual factors that could help inform a post-Brexit Investment Chapter for both parties, as well as examined past agreements signed by the Parties. CETA was used as the baseline, given that it is currently the status quo between the Parties. CUSMA and CPTPP were also looked at as primary examples of recent agreements signed by Canada, though additional agreements and academic research were also used.
Several contextual factors and Party objectives primarily informed our approach to determining what types of provisions to include. For context, we considered:
1) the dual purpose of international investment law and the expansion using investment chapters in larger preferential trade agreements;
2) Brexit as a catalyst event; and
3) Canada’s and the UK’s experience in negotiating and implementing investment agreements.
For Party objectives, we considered:
1) Canada and the UK’s shared objectives of transitioning CETA, retaining the right to regulate and increasing investment;
2) the UK’s objective to establish an independent investment policy and develop a precedential treaty for future investment negotiations; and
3) Canada’s objective to further diversify its trade relationships while advancing its inclusive trade agenda.
Many provisions will remain largely similar to those found in CETA, though there is also room to expand beyond that baseline. Changes could include expanding labour and environmental standards as seen in CUSMA, including a gender chapter as seen in Canada-Israel, including provisions that provide for investment facilitation and investor obligations, and expanding on the prohibitions on performance requirements as seen in CUSMA and CPTPP. Dispute resolution is one area that is currently under intense focus on the international stage, with many agreements moving away from traditional investor-state dispute settlement (ISDS). The UK has repeatedly mentioned concerns regarding ISDS, and may not want ISDS in the agreement at all. Given that both Canada and the UK have well established legal systems with respect for the rule of law, providing no ISDS and leaving protection of investor rights to the domestic courts (similar to CUSMA) is likely an appropriate option. In the alternative, a heavily reformed version of ISDS that limits what matters investors may bring claims under (similar to CETA) is also be an appropriate option. In any event, traditional ISDS is unlikely. Overall, while there should be little difficulty in Canada and the UK coming to agreement on an investment chapter, it still represents an opportunity to push the boundaries on the “gold standard” that was set during the CETA negotiations.
The full report can be found here.
* Image Credit: https://ec.europa.eu/trade/policy/in-focus/ceta/