Potential impacts of CETA on water and water services

Dear MEP,

We, the undersigned organizations, would like to call on you to vote against the ratification of the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada, which endangers freshwater resources and water services at both sides of the Atlantic.

After thorough analysis of the CETA text and the Joint Interpretative Instrument, we have found several provisions within the CETA which pose serious threats to watersheds and public water and sanitation services in Canada and the EU:

-- Water is included in CETA despite all the promises that it would be out of negotiations and despite the opinion of the European Parliament in its resolution of 8 September 2015 on the follow-up to the European Citizens’ Initiative Right2Water (2014/2239(INI), no. 22), where the Parliament “calls on the Commission to permanently exclude water and sanitation and wastewater disposal from internal market rules and from any trade agreement”^[1].

Provisions of CETA Article 1.9 could lead to further water commodification and facilitate corporate water grabbing. The article says: “If a party permits the commercial use of a specific water source, it shall do so in a manner consistent with this agreement”, without defining “commercial use” or “water source”. In case of "commercial use" water rights are subjected to CETA trade and investment rules. Especially the extra investment protection standards ("Fair and equitable treatment" and “Indirect Expropriation") for foreign investors could have a strong influence on the way water rights are granted by authorities and in fact limit their possibilities to deny or restrict water rights once they have been granted to foreign investors. There have already been investment disputes involving water rights under similar agreements (NAFTA^[2], Energy Charter^[3]) that resulted in settlements in favour of the investor.

-- Reservations taken for “Collection, purification and distribution of water” services on Market Access and National Treatment are not enough to guarantee a full protection. Most Favoured Nation and Performance Requirements reservations would have been needed. And even though drinking water services are included in Annex II, investment protection would still apply to them^[4].

-- Only Germany can apply a Market Access reservation on sanitation (sewage, refuse disposal and sanitation services). The introduction of those services under the CETA framework for the rest of the EU member states contradicts article 12 of the EU Concessions Directive, which lays down that the Directive shall not apply to concessions awarded to the disposal or treatment of sewage^[5].

-- The horizontal limitation clause applied by the European Union to protect public utilities is not enough to protect public services. On one hand, it doesn’t include reservations for investment protection or National Treatment. On the other hand, the terminology is ambiguous, as the term “public utilities” has no specific meaning in international law, and no equivalent term in EU law. This horizontal exemption has never been tested in a negative list agreement or in an agreement with a country that is a significant commercial supplier of public services with a market interest in the EU^[6].

-- Regulatory cooperation and investment protection would lock in privatisation of water services and hamper the ability of governments to reclaim public water services back under public management, which is a growing trend in Europe.

-- CETA might limit the operational capacity of public water companies, as water rights are treated as investments and the reservations do not cover all current and future activities public operators need to fulfil according to national legislation^[7].

-- CETA lacks a precautionary principle approach, which is an inherent component of EU law. In addition, Regulatory cooperation in CETA would potentially restrict the policy space of EU member states. This could have major impacts on health, environment and water resource protection.

-- CETA ignores the unitary nature of the water cycle, water limits in the planet, and the multifunctional nature of water in ecosystems^[8].

The Joint Interpretative Instrument fails to address the shortcomings of the agreement and paints an unreasonably optimistic picture about CETA. There is no legally safe new commitment or clarification in the text. We will only know the real potential of CETA provisions when decisions from public authorities or public water companies are clarified at a later stage. We cannot take that risk.

The European Union must consider water as a commons, and access to water and sanitation as a Human Right. We call on you to defend interests of the people of Europe and their environment from the threats posed by CETA by voting against the ratification of the agreement in the Plenary vote.

Yours sincerely,

Blue Planet Project
Council of Canadians
European Water Movement
Food & Water Europe
Wasser in Bürgerhand (Water in Citizens’ Hands, Germany)

[1] Resolution of the European parliament, 2014/2239 (INI), no 22

[2] AbitibiBowater vs. Canada, amount paid CAD $130
Comments on Article 1.9 of CETA by prof. Gus Van Harten

[3] Vattenfall vs. Germany, amount claimed €1.4 billion, p. 23

[4] Krajewski, Markus (2016). Model Clauses for the Exclusion of Public Services from Trade and Investment Agreements.

[5] Directive 2014/23/UE of the European parliament and of the Council of 26 February 2014 on the award of concession contracts

[6] Krajewsky, Markus (2016). Op. Cit.

[7] Allianz der öffentlichen Wasserwirtschaft e.V., 2016. Wasserwirtschaft im Sog des Freihandels-CETA.
Prof. Laskowski, 2016. Rechtliches Gutachten zu möglichen Verstößen gegen Investitionsschutzregelungen des Freihandelsabkommens CETA durch Maßnahmen der kommunalen Wasserwirtschaft, ISDS, Schiedsgerichtsverfahren und Haftungsfragen.
Stadtwerke Karlsruhe, 2016. How water supply in Germany would be affected by the EU free trade and investment agreements CETA, TTIP, TiSA.

[8] Comments on Article 1.9 of CETA by prof. Francesc La Roca