Tag Archives: comprehensive economic and trade agreement

EU-Canada CETA Approved by European Parliament

Alicia Nicholls

Members of the European Parliament (MEPs) have given their stamp of approval to the Comprehensive Economic and Trade Agreement (CETA) signed by the European Union (EU) and Canada on October 30, 2016. This is according to a press release by the European Parliament yesterday.

In the vote held on February 15, 2017, 408 MEPs out of the 751-member European parliament voted in favour, while 254 voted against it. There were 33 abstentions. The MEPs also approved the EU-Canada Strategic Partnership Agreement complementing the CETA, which will deepen EU-Canadian cooperation on a wide range of non-trade issues.

The 30-chapter CETA aims to strengthen trade and investment ties between EU countries and Canada. Negotiations were launched in May 2009 and took over 5 years of negotiations before being concluded in September 2014.

Among other things, the agreement will upon its entry into force eliminate tariffs on most goods trade between the EU and Canada. A few sensitive industrial and agricultural products will either face longer periods of protection or in a few limited cases, are excluded completely from tariff cuts. Canada has also historically agreed to open its federal and municipal procurement markets. An innovation in the agreement is the establishment of an Investment Court System instead of the much maligned investor-state dispute settlement system for the settlement of investment disputes.

As the CETA is classified as a “mixed agreement” by the European Commission, the next step will be ratification by national and regional parliaments in individual EU countries. According to the press release, MEPs expect that provisional application of the agreement could start by as early as April 1, 2017.

For further information, please see the European Parliament press release.

Alicia Nicholls, B.Sc., M.Sc., LL.B., is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

Advertisements

EU-Canada CETA: Seven Things to Know

Alicia Nicholls

After a week more akin to the nail-biting final minutes of a suspense film, the European Union and Canada have finally signed the Comprehensive Economic and Trade Agreement (CETA) today Sunday, October 30, 2016. This sets the stage for the agreement to be provisionally applied.

Here are seven quick things to know about CETA:

  1. CETA is the EU’s first completed  free trade agreement with a G-7 country and its most ambitious trade agreement to date -By numbers, it encompasses over 500 million people (500 million in the EU-28 and  35 million in Canada), 29 countries and 24 languages. Prior to CETA’s signature, trade relations between the EU and Canada were guided by the Framework Agreement for Commercial and Economic Cooperation, in force since 1976 as well as a number of sectoral agreements.
  2. Canada was the EU’s 11th largest trading partner in 2015 – This is according to EUROSTAT data as at April 2016 which valued Canada-EU trade in 2015 at 63,479 million euro, accounting for 1.8% of EU trade with non-EU partners. On the flip side, the EU is second only to the United States as Canada’s largest  trading partner. According to Statcan data, Canada exported $39,454.8 million ($CAN) in goods to the EU in 2015 and imported $53.004.5 in the same period.
  3. CETA was several years in the making –  Negotiations between the EU and Canada began in 2009 and the text was concluded in 2014 and received legal approval in February 2016. However,the agreement has had to overcome several hurdles, including the fact that as a “mixed” agreement under EU law, it had to obtain the approval of each of the 28 EU member countries (in accordance with their own constitutional arrangements). There has been popular and political opposition to the Agreement, including the impasse between the Belgium Federal Government and the regional government of Wallonia which had threatened  to be the final nail in the coffin until a last minute internal deal saved the day. Despite the resolution of this political impasse, some popular dissent towards the Agreement remains as evidenced by the anti-CETA protests.
  4.  Almost 99% of tariffs will be eliminated on goods trade between the EU and Canada – The exceptions are a few sensitive agricultural products. However, tariff-eliminations are only a small part of CETA and the Agreement is WTO-plus in many aspects. It includes provisions on trade in services, investment,  sustainable development, labour, environment, inter alia. It also opens up the procurement market in the EU and Canada so businesses in those countries can bid on government contracts in each other’s countries.
  5. CETA provides for a novel Investment Court System – The permanent bilateral investment tribunal provided for in CETA’s Investment Chapter (Chapter 8) is a marked departure from the ad hoc tribunals used in traditional investor-state dispute settlement systems. The tribunal will be comprised of 15 members (five EU nationals, five Canadian nationals and five nationals of third states). In addition to this new ISDS system, the investment chapter provides more explicit language regarding the State’s right to regulate, an appellate tribunal, greater provisions on transparency of proceedings and conflict of interests, as well as commitment by the EU and Canada towards the shared objective of working towards the establishment of a permanent multilateral investment court which will replace the bilateral court under CETA.
  6. CETA is expected to boost income in both the EU and Canada. According to a 2008 joint study by the European Commission and the Government of Canada, conducted prior to the launch of the negotiations, it was found that the annual real income gain  within seven years of CETA’s implementation is to be an estimated  11.6 billion euros for the EU and 8.2 billion euros for Canada. The stated benefits of CETA are job creation, a liberalised procurement market and increased merchandise and services trade and investment flows between Canada and the EU and cheaper goods and services for consumers.
  7. CETA will be the benchmark for future agreements signed by both the EU and Canada with subsequent trade partners.  The standard of ambition in the Agreement is high. CETA is likely to be the last trade agreement signed by the UK as an EU-member before the UK is expected to make its Article 50 notification and BREXIT negotiations begin (slated for March 2017).

The full text of the Agreement may be viewed here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

CETA Trade Deal Deadlock Broken

Alicia Nicholls

UPDATE: Text of the Addendum (in French) is available here.

The Comprehensive Economic and Trade Agreement (CETA) between the European Union (EU) and Canada has finally won the backing of Belgium’s hold-out Walloon region. This is according to reporting by BBC News which broke the news earlier this evening. According to the BBC, Belgium’s Prime Minister, Charles Michel,  has advised that after internal negotiations among Belgium’s federated bodies, an addendum to the deal has been struck which has “addressed regional concerns over the rights of farmers and governments”.

Hailed as the EU’s most ambitious agreement with a third party to date, CETA is a  landmark agreement encompassing not just the elimination of customs duties on goods between the EU and Canada, but also deep provisions on trade in services, intellectual property, investment, government procurement, inter alia. Though negotiations formally ended in 2014, the agreement has not yet been signed.

As a mixed agreement under EU law, CETA requires the signature of all 28 EU member states (in accordance with their own constitutional arrangements). Under Belgium’s federated structure, the consent of its regional legislatures is required before the Belgium federal government can sign trade agreements with third states.

Wallonia is Belgium’s francophone region, with a population of 3.6 million which is generally less prosperous than Flanders, the Dutch-speaking region.  Wallonia’s minister-president, Paul Magnette had raised a number of concerns over the Agreement’s provisions which he insisted needed to be addressed before Wallonia would give its support. These included, chiefly, the potential impact on Walloon farmer’s in the face of competition from Canadian pork and beef imports and the potential impact of the agreement’s investor-state dispute settlement (ISDS) provisions on governments’ regulatory rights.

Monday’s deadline which the EU had set for Belgium to address its internal opposition to the agreement was missed and the signing ceremony which had been carded for today, Thursday, was cancelled. The prospect of one region potentially vetoing seven years’ of negotiating work led not only to concerns about the EU’s ability to effectively enter into international trade deals with third parties, but  on whether a similar scenario would play out in the Brexit negotiations with the UK..

Symptomatic of the anti-globalisation, anti-free trade furor sweeping over western countries, CETA has faced some popular and political opposition in other European countries as well, although all EU governments (including the Belgium federal government) have indicated their intention to sign.

So, it seems as though disaster has been averted for now and both the EU and Canada can give a sigh of relief. Wallonia’s acquiescence paves the way for Belgium to sign the Agreement. However, two notes of caution must be borne in mind. Firstly, the exact details of the Belgian addendum have not been reported as yet. Secondly, the addendum will need to be accepted by the remaining 27 EU member states. Suffice it to say, the ending of this story has not been written as yet.

As an update, the text of the Addendum (in French) is available here.

Read the full BBC article here.

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.

EU-Canada CETA trade deal hangs in the balance

Alicia Nicholls

The Comprehensive Economic and Trade Agreement (CETA) negotiated between the European Union (EU) and Canada appears to be in limbo as Belgium’s French-speaking Walloon region has said a strident non (no in French) to the deal. According to media reporting, two key issues appear to be sticking points for the Walloon government. Firstly, there are concerns about potential increased pork and beef imports from Canada which they believe would be disadvantageous to Walloon farmers. Secondly, there is disagreement about the investment court system mechanism proposed for the settlement of investor-state disputes which they argue is tilted in favour of investors and would infringe on states’ rights to regulate.

The other 27 EU countries (including the UK) have indicated their willingness to sign and so does the Belgium government. So how is it that a Belgium region of roughly 3.6 million out of a total EU population of 500 million could potentially veto a trade agreement which took in essence seven years to negotiate? The CETA is a mixed agreement which means that it requires signature and ratification by each EU member state in accordance with its own constitutional requirements. Under Belgium’s constitutional arrangements, each of that country’s regions must give its consent to the national government  to sign any trade agreement. The Walloon Government has declined to give its consent to the Belgium government to sign the CETA. This has given rise to the quandary now being faced.

The CETA is the EU’s most ambitious free trade agreement to date with a third party. It not only seeks to eliminate customs duties on all industrial goods and on most agricultural and food products, but covers trade in services, intellectual property, government procurement, investment, inter alia. The negotiations were officially completed in September 2014. The text has been legally reviewed but only becomes binding once the Agreement has entered into force.

CETA’s investment chapter is novel as it establishes a permanent investment court which would hear disputes brought by investors, allows for greater transparency in proceedings, defines more narrowly the circumstances under which investors can bring claims, includes an express right of states to regulate and includes an appeal system. This new system is a marked departure from the traditional ISDS system found in old school BITs and in investment chapters of most FTAs like the Trans-Pacific Partnership (TPP). CETA will replace the 8 bilateral investment treaties that currently exist between individual EU states and Canada and under which claims by investors were heard by ad hoc arbitration panels. The provisions in these BITs were tilted heavily in favour of the investor and lacked language protecting states’ regulatory rights. It should be noted that Belgium and Canada do not have a BIT.

This current showdown between Wallonia on the one hand, and the rest of the EU and Canada on the other is just the latest episode in the drama playing out between free trade and the rising anti-trade populism and consequent political opposition sweeping across western countries. For example, US ratification of the Trans-Pacific Partnership remains held up in the US Congress and whether it is indeed ratified is not a certainty given the rhetoric of both major presidential candidates. With regard to CETA itself, this is not the first hurdle the agreement has faced as earlier this year Bulgaria and Romania had raised objections to the agreement over Canada’s failure to remove visa requirements for Bulgarian and Romanian nationals.

The Monday deadline has been missed and it is the first time that one region in an EU country has threatened to derail a negotiated outcome with a third state, a prospect which is not just frustrating for EU leaders and Canada but raises questions about the reliability of the EU as a negotiating partner seeing that this agreement is with a western country with similar values on trade.

To this effect, Canada’s Minister of International Trade, Chrystia Freeland, is reported as stating as follows:

“Canada has worked, and I personally have worked very hard, but it is now evident to me, that the European Union is incapable of reaching an agreement — even with a country with the European values such as Canada, even with a country as nice and patient as Canada.”

Another question is what does this state of affairs mean for the future BREXIT negotiations once the UK makes its Article 50 notification? Some commentators had previously argued that CETA might have been a suitable model for future EU 27-UK relations as it does not involve the free movement of labour. This issue was raised by EU Commissioner, Cecilia Malmstrom, who is quoted in media reports as saying “If we can’t make it with Canada, I’m not sure we could make it with the UK.”

Alicia Nicholls, B.Sc., M.Sc., LL.B. is a trade and development consultant with a keen interest in sustainable development, international law and trade. You can also read more of her commentaries and follow her on Twitter @LicyLaw.