EU Trade Ministers Review Next Steps for US, Canada Pacts

19 May 2016

The European Commission has confirmed plans to submit a proposal to the European Council in June for signing the 28-nation bloc’s trade deal with Canada, amid continued questions over the pact’s potential fate in the ratification stages.

The news came as part of a meeting of trade ministers from the EU’s 28 member states. The Brussels gathering also saw ministers – meeting under the European Council – discuss next steps for the bloc’s trade deals with the US, including a new sustainability impact assessment.

Canada “mixed deal”?

The EU and Canada completed negotiations for a bilateral trade deal – known as the Comprehensive Economic and Trade Agreement, or CETA – in 2014, following six years of talks.

While the negotiations themselves were already difficult to complete, getting the deal to the signature and ratification stages has also proven challenging, with public debate in both the EU and Canada focused heavily on topics such as the potential investor protection and dispute settlement provisions of the pact.

Earlier this year, a legal scrub of the agreement saw the two sides change the deal in order to incorporate an investment court system which the EU has said should become the norm for all of its future trade and investment agreements. At the time, officials explained that the move was also in response to the feedback from their respective citizens. (See Bridges Weekly, 3 March 2016)

Whether the CETA is a “mixed agreement” – one which has provisions that also fall under member state responsibility, rather than just under the Union’s exclusive competences – has also been a key question for the deal going forward, and was raised during the 13 May meeting in Brussels.

“Mixed agreements” require ratification by both the European Parliament and national parliaments, while deals not under this category do not need national parliament approval.

“The Council emphasised a view shared amongst ministers that CETA is of mixed EU and member state competence and should be signed and concluded as such,” ministers said last Friday.

Getting approval from national parliaments is set to be difficult, given both the ramifications of a separate dispute between the EU and Canada on visa-free travel, as well as concerns by individual member states on certain areas of the pact.

Canada requires a visa for citizens from Bulgaria and Romania, both member states of the EU, to enter the country. Citizens from other member states are not subject to this requirement. The discrepancy and lack of visa reciprocity for those two countries has proven controversial, given that the European Union supports a common visa policy across the bloc, with talks still ongoing among the EU institutions on how to proceed.

Meanwhile, the situation has led to statements from both countries affirming that they will find it difficult to approve CETA while the issue remains outstanding.

For separate reasons, the Wallonian Parliament in Belgium approved a resolution last month against giving the country’s federal government the power to sign the accord without more guarantees on certain issues. Wallonia is a self-governing region within the country of Belgium. (See Bridges Weekly, 14 April 2016)

After the Commission submits its proposal in June, the pact will likely be signed in October at a bilateral EU-Canada summit, according to the Council conclusions.

Trade officials have, however, said that overall the response to CETA has been positive, and hope to see it ratified in the coming year in order to see it in force in 2017.

“Member states are very supportive of this agreement,” said Lilianne Ploumen, the Dutch minister for foreign trade and cooperation who is serving as the current Council president.

TTIP: public support needed

The meeting last week also saw a discussion with the Commission on the ongoing negotiations with the US for a Transatlantic Trade and Investment Partnership (TTIP).

According to the Council conclusions, ministers reiterated their push for a deal to be reached before US President Barack Obama leaves office in January 2017 – “provided that the substance is right” – terming the upcoming months as “crucial for success.”

“Time is short if we are to finalise the talks before the end of the year, but we are striving for an ambitious outcome in all key areas of the agreement. EU interests must be reflected. There will be no 'TTIP-light’,” said Ploumen.

The need for boosting public support in the 28-nation EU for the trade deal was also raised during the 13 May discussions. The TTIP talks have long struggled to win public backing from some quarters, amid concerns that the deal’s provisions could affect the bloc’s ability to keep or develop strong social and environmental protections – concerns that trade officials have repeatedly attempted to assuage, pledging that nothing in the final agreement will lower such protections or hinder the right to regulate in the public interest.

Last month, the “leak” by Greenpeace’s Netherland branch of several purported TTIP documents fuelled this debate even further, dominating news headlines and sparking heated debate over what is currently on the table and what is the endgame for those talks. (See Bridges Weekly, 4 May 2016)

At the Brussels meet, EU Trade Commissioner Cecilia Malmström presented a new draft study on the deal’s potential impact, conducted by Ecorys, an independent consultant. The report is now open for public consultation, with a final version due by year’s end.

“In essence, this is a snapshot based on assumptions about a future TTIP deal,” she said in a related blog post. “Needless to say, being a draft version to now be scrutinised by stakeholders and others, this assessment should be taken with a pinch of salt.”

Among various other findings, the Ecorys draft report suggests that the EU’s GDP could see a 0.5 percent additional boost annually from TTIP, with a 0.4 percent increase for the US. Gains are also projected for national income; high-skilled and low-skilled worker wages; and exports and imports for both sides.

Breaking these results down by sector, Ecorys predicts that the EU will see gains through improved market access in leather, textiles, and clothing; drinks and tobacco; motor vehicles; water transport; and insurance. Losses will be seen in areas such as electrical machinery, non-ferrous and fabricated metals, and iron and steel goods, which the report credits to the likely boost in competition following cuts in tariff and non-tariff measures.

ICTSD reporting; “EU-Canada summit hangs in doubt, CETA fate uncertain,” EURACTIV, 13 May 2016; “Romania will veto the EU-Canada trade deal,” EURACTIV, 14 April 2016; “CETA runs into trouble with Dutch, Walloon Parliaments,” EURACTIV, 2 May 2016.

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