IP, rules of origin, investment protection still block CETA deal
By Anca Gurzu | Thursday 28 June 2012
After two and a half years of trade negotiations, EU and Canadian officials say they have made good progress in the areas of market access for goods, services and procurement, but the two parties still have significant challenges ahead in the areas of intellectual property, rules of origin and investment protection.
Both sides will have to make concessions, David Plunkett, Canada’s ambassador to the EU, said, on June 27, at a seminar in the European Parliament organised by the Alliance of Liberals and Democrats for Europe (ALDE). “If we fail to achieve a comprehensive result, we will miss a unique opportunity to achieve real market access for Canadian and EU companies, and economic gains for our citizens.”
Leaders on both sides of the Atlantic announced the launch of negotiations for a comprehensive economic and trade agreement (CETA) in May 2009 in Prague at the EU-Canada summit. This is the first comprehensive agreement the EU is negotiating with a G8 member. After nine rounds of formal talks, negotiators are now meeting in more focused working groups to sort out the remaining sticking points.
Negotiations have been smooth on some chapters but stalling on others. Discussions on intellectual property have been flagged about a year ago as presenting some of the biggest and continuing challenges. While issues such as copyright and its better cross-border enforcement have been or are being overcome with the introduction of new legislation in Canada, the sticking point is with the rules governing pharmaceutical companies.
Louis-Nicolas Fortin, director of international IP and trade at the European Federation for Pharmaceutical Industries and Associations (EFPIA), said there are three main things the industry is asking from Canada: a so-called ‘patent term restoration’ that would give brand-name pharmaceutical companies up to five years of extra product exclusivity to make up for the lengthy regulatory approval process; a strengthened appeal process against generic manufacturers; and an extension of a brand-name pharmaceutical company’s ability to protect data obtained from clinical trials.
In Canada, these demands have prompted fierce opposition from generic manufacturers over fears that drug prices might rise, leading Canadian negotiators to make little concessions on the issue.
Canadian and EU negotiators have also been struggling with harmonising their rules of origin regulations, which ensure that a product is produced in the country that is party to a preferential agreement and prevent a third country from taking advantage of that. But since the Canadian and American economies are highly integrated through the North American Free Trade Agreement (NAFTA) and since Europeans also have specific rules on the issue, coming to a consensus is not easy.
Philipp Dupuis, the CETA deputy negotiator from the European Commission, said the rules of origin talks are complex and time-consuming. Negotiators will need both creativity and pragmatism to find a compromise, he said.
There have also been challenges in the area of investment protection. Canada asked, in 2010, for the inclusion of an investor to state dispute settlement mechanism in the deal, which would allow corporations to seek compensation from states if government policies hurt their business interests. Investment protection has only recently become an EU competence. Member states used to negotiate their own investment protection agreements on a bilateral basis – leading to different practices. Dupuis said there is an internal exercise right now that aims to bring the 27 approaches together.
Dupuis described the progress in the market access talks as “very good so far”. He said more than 99% of tariff lines for goods have been liberalised, and there is also progress on services liberalisation. Talks on labour mobility for highly qualified professionals, as well as those on creating a framework for the mutual recognition of credentials are also going well, he said.
EU officials also took note of the level of access Canadian provinces and territories are willing to grant EU companies in public procurement. The EU made it clear from the beginning that negotiating access to sub-federal procurement in Canada is crucial to achieving a comprehensive deal. Dupuis said that, according to the offer on the table, Canadian provinces and territories have committed to opening up sectors which up until now were off-limits to foreign competition. However, there are still “some gaps in the offer,” he added.
The goal is to conclude negotiations by 2012.
More than 99% of tariff lines for goods have been liberalised, and there is also progress on services liberalisation