OTTAWA/BRUSSELS (Reuters) - The European Union has convinced Canada to include a new way of settling investor claims in their trade deal, making it more likely that it will be passed and putting the United States under pressure to accept the same terms.
The two sides wrapped up negotiations on the Comprehensive Economic and Trade Agreement (CETA) in 2014, but opponents expressed concern about provisions designed to protect foreign companies from state interference. They have said these provisions handed too much power to multinationals.
The issue has been contentious on both sides of the Atlantic, but particularly in Europe, where campaign groups have focused on investor-state dispute settlement (ISDS) in their opposition to CETA and the planned EU-U.S. trade deal (TTIP).
In a statement, Canada and the EU said they had made changes to increase the rights of governments to regulate and set up a permanent and transparent tribunal to settle disputes.
"We have responded to Canadians, EU citizens, and businesses with a fairer, more transparent system ... We are confident that CETA will be signed in 2016 and will enter into force in 2017," the statement said.
The trading partners said that under the revised deal investors should be protected against expropriation of assets and be guaranteed fair and equitable treatment, but that governments were free to set policies, even those that hit investors' profit expectations.
Responding to criticism of ISDS, the new tribunal would not work in secret and its members would be chosen by Canada and Europe, rather than partly by investors. There would also be the right to appeal decisions.
Canada and the European Union said they would also seek to create a permanent multilateral investment court to replace the various tribunals that would spring up if other similar trade deals are struck.
Brussels already has the new tribunal system in a trade deal with Vietnam and hopes to include it in free trade agreements it is seeking to conclude with the United States and Japan.
The major parties in the European Parliament, which has to approve the deal, welcomed the changes. But some critics were not convinced.
The Canadian consumer rights group Council of Canadians called it "smoke and mirrors", while Friends of the Earth Europe described CETA as dangerous and said it should be rejected.
Reporting by David Ljunggren in Ottawa, Philip Blenkinsop in Brussels; Editing by Richard Balmforth