Commentary to the Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement (CETA)

The report examines the draft CETA Investment Chapter, highlighting concerns over the broad definition of 'investment' and 'investor', the inclusion of investor-state dispute settlement (ISDS), and the potential for 'treaty shopping'. It critiques the shift toward a negative listing approach for market access and the lack of clear, closed-list definitions for 'fair and equitable treatment'. The author argues that the proposed frameworks for indirect expropriation and general exceptions provide insufficient protection for legitimate public welfare objectives, such as health and environmental regulations, potentially exposing Canada and EU member states to excessive legal risks.

• The draft CETA uses an open-ended asset-based definition of investment, which the author argues is the 'least predictable for host states' and may allow tribunals to protect a 'vast universe' of assets rather than selected investment types.
• Canada proposes expanding the definition of 'investor' to include those who 'seek to make' or 'are making' an investment, extending treaty coverage to the pre-establishment phase and increasing the risk of expanded ISDS.
• The agreement's use of a 'negative list approach' for market access commitments means any sector not explicitly listed as exempt will be subject to liberalization, which the author claims is 'prone to expose Canada and the EU to longstanding commitments also in areas they did not intend to cover'.
• The Most-Favoured-Nation (MFN) provision is criticized for not preventing investors from importing substantive guarantees from other treaties, which could 'nullify any progress made in the CETA to modernize investment law'.
• There is a conflict between Canada's preference for a 'closed list' of unacceptable treatments to define 'fair and equitable treatment' and the EU's proposal for an open-ended approach including 'legitimate expectations' and 'effective transparency'.
• The EU proposes an 'umbrella clause' that would allow investors to claim a breach of contract as a violation of the treaty itself, which the author describes as 'very problematic' because it creates a parallel forum for contractual disputes.
• Regarding indirect expropriation, Canada proposes carving out non-discriminatory public welfare measures (health, safety, environment), while the EU proposes a 'proportionality' and 'necessity' test that may not be sufficiently deferential to democratic state decisions.
• The author asserts that the proposed general exceptions clauses for both parties provide 'false comfort' and will not adequately safeguard government policy space.
• The inclusion of investor-state dispute settlement (ISDS) is identified as the 'most worrisome element', especially as it allows investors to bypass national judicial systems in Europe and Canada.

APA

Bernasconi-Osterwalder, N. (2013). Commentary to the Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement (CETA). International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/commentary_investment_chapter_CETA.pdf

Chicago

Bernasconi-Osterwalder, Nathalie. Commentary to the Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement (CETA). International Institute for Sustainable Development, 2013. https://www.iisd.org/system/files/publications/commentary_investment_chapter_CETA.pdf.

Wikipedia

{{cite report |last1=Bernasconi-Osterwalder |first1=Nathalie |title=Commentary to the Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement (CETA) |publisher=International Institute for Sustainable Development |date=May 2013 |url=https://www.iisd.org/system/files/publications/commentary_investment_chapter_CETA.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bernasconiosterwalder2013commentary, author = {Bernasconi-Osterwalder, Nathalie}, title = {{Commentary to the Draft Investment Chapter of the Canada-EU Comprehensive Economic and Trade Agreement (CETA)}}, institution = {International Institute for Sustainable Development}, year = {2013}, month = may, url = {https://www.iisd.org/system/files/publications/commentary_investment_chapter_CETA.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }