EU Commission: CETA to Face Votes in National Parliaments

7 July 2016

The European Commission proposed on Tuesday that a planned trade deal with Canada be signed and provisionally applied, while also announcing that it would be submitting the pact for approval from all EU national parliaments, as well as the European Parliament and Council.

“Let me stress that this is a good agreement. The EU needs it, the EU wants it,” said EU Trade Commissioner Cecilia Malmström at a Tuesday afternoon press conference in Strasbourg, France.

Outlining the series of benefits that the Comprehensive Economic and Trade Agreement (CETA) would bring, she stressed that the responsibility would now be on EU member states to promote it within their own constituencies.

“CETA will make trade between the EU and Canada easier. More trade means more growth, and more growth means more jobs,” said Malmström, adding that the planned deal is modern in its approach to areas ranging from services to public procurement to investment protection.

Provisional implementation

The news marked a change in stance by the EU’s executive arm, which previously said that the deal would not need to go to national parliaments, citing the Treaty of Lisbon. (See Bridges Weekly, 14 April 2016 and 19 May 2016)

Specifically, if a deal’s provisions fall exclusively under EU competences, it would only need to go to the Council and the European Parliament.

However, if it features provisions that address areas falling under the responsibility of EU member states, this qualifies the agreement as “mixed” – therefore meaning that individual member states would need to ratify the accord in their own legislatures as well. Examples where this could occur would be investment, or some regulatory matters.

Given that the issue of “mixity” has arisen repeatedly in EU trade policy process, Commission officials flagged a pending ruling by the European Court of Justice (ECJ) on whether a separate deal with Singapore also requires national parliament approval as having the potential to give much-needed legal clarity.

While the ruling will be specific to the deal with Singapore, officials say that it could help clear up long-standing differences between the Council and the Commission on how to interpret the provisions of the Lisbon Treaty which relate to trade deals. The EU’s executive arm requested the ruling in October 2014.

While affirming that the Commission’s own legal understanding is that the CETA falls exclusively under EU competence and is not a mixed deal, Malmström told reporters on Tuesday that the “difficulty of having consensus by member states in the foreseeable future” meant that the EU’s executive branch needed to take a different approach.

Meanwhile, the Commission has suggested that the pact could be applied “provisionally” until the full ratification process is completed.

Provisional implementation could occur following approval by the European Parliament and Council, according to the EU’s executive arm, thus allowing most of the deal’s terms to apply pending the result of the national parliament votes.

“We expect that our proposal will allow us to move swiftly to allow it to be provisionally applied,” said Malmström to reporters in Strasbourg. “Anything else would bring delays to the benefits that EU citizens are awaiting.”

The deal is now going to the Council for signature, ahead of a planned ceremony with Canada this October.

Juncker: “Credibility of Europe’s trade policy at stake”

The news of the Commission’s decision comes at a trying time for the EU’s trade policy, as it works to clinch another deal with the United States this year, while also navigating the potential implications for its trade agenda from the UK’s vote to leave the EU. (See Bridges Weekly, 30 June 2016)

Meanwhile, the heated public debate over the merits of trade deals – including CETA – has already spilled over into discussions in some EU national legislatures.

For example, the Belgian regional parliament of Wallonia has said it would need to see guarantees on certain issues before approving CETA, while Bulgaria and Romania have raised separate concerns regarding visa-free travel with Canada that could make it difficult to give their sign-off to the trade deal. (See Bridges Weekly, 14 April 2016)

However, the deal has also drawn significant support from many quarters, with proponents citing the innovations across a range of subject areas. For example, on government procurement, Canada has agree to allow tenders at all levels of government, i.e. federal, provincial, and local.

The agreement also features significant market access commitments on services, while facilitating the recognition of professional qualifications for jobs such as engineering and architecture. On intellectual property rights, the two sides were able to agree on protecting various “geographical indications,” which are used to denominate products with a specific geographical origin and which have qualities, reputation, or characteristics tied to that same location. Other provisions addressed issues such as protection of copyrights, and terms dealing with trade in pharmaceuticals, for example.

The accord also features chapters on trade and sustainable development, trade and environment, and trade and labour, with a view to better coordinating their policies in these areas. The two sides have hailed the overall deal as being “historic” for its progressive nature and have suggested that it could give a clear economic boost on both sides of the Atlantic.

The process of negotiating the EU-Canada pact already dates back several years, kicking off in 2009. The pact has attracted significant public scrutiny since the talks began, and even after negotiations were concluded in 2014.

Following the legal scrub of the pact, the two sides announced earlier this year that they had revised the investment protection parts of the deal to incorporate an EU proposal for an investment court system, while stressing the “right to regulate” in the public interest by domestic governments. (See Bridges Weekly, 3 March 2016)

Officials said at the time that the changes were designed to answer concerns by citizens and businesses on both sides of the Atlantic. However, the debate failed to die down, with concerns continuing to arise over how effective these reforms would be, among other aspects of the deal.

Meanwhile, speculation had grown in recent weeks as to how the Commission would propose treating the deal in the ratification stage, particularly in light of earlier statements by both the EU and Canada that they hoped to see the deal signed this year and implemented in 2017.

“I have looked at the legal arguments and I have listened to Heads of State or Government and to national Parliaments. Now it is time to deliver. The credibility of Europe’s trade policy is at stake,” said European Commission President Jean-Claude Juncker in a statement on Tuesday, explaining the move.

Other deals

The EU is involved in trade negotiations with countries across the globe, and has plans to reach deals, or at least political accords, on some of them this year.

Along with the Transatlantic Trade and Investment Partnership (TTIP) it is negotiating with the US, the European Union also aims to announce a political deal with Japan by year’s end, along with concluding talks for a Trade in Services Agreement (TISA) with 22 other WTO members.

Other talks are also on the horizon, including an update of its agreement with Mexico; an escalation in pace for its negotiations with Mercosur; and the expected launch of trade talks with Australia and New Zealand. (See Bridges Weekly, 15 October 2015)

However, Malmström warned during Tuesday’s press conference that one fear is of CETA and TTIP being used to boost anti-globalisation feelings, which could pose a “big risk to European trade policy.”

Canadian officials react

Across the Atlantic, political leaders in Canada suggested that the move by the Commission was expected, even desirable, in light of the current issues facing the 28-nation bloc on a range of fronts.

“With the situations going on right now [following the UK exit vote] and the perceptions around the EU, it's going to be very important for them to demonstrate an ability to move forward on deals that are going to be good for their citizens,” said Canadian Prime Minister Justin Trudeau, according to CBC News.

The move by the European Commission was “anticipated,” Canadian Trade Minister Chrystia Freeland added. “[It] will keep CETA on track,” she said.

ICTSD reporting; “Canada gets clarity on how Europe will ratify trade deal,” CBC NEWS, 5 July 2016.

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