EU, Canada Officials Review CETA Performance, Endorse Recommendations on Climate and Gender
The Canada-European Union Comprehensive and Economic Trade Agreement (CETA) celebrated late last month its one-year anniversary since its provisional entry into force, with officials meeting in a “joint committee” format to evaluate the accord’s implementation and adopt recommendations involving climate, gender, and small and medium-sized enterprises (SMEs).
Officials from several countries involved in the agreement have expressed their satisfaction with its application to date. CETA eliminated 98 percent of tariffs on goods traded between the two sides and involved the adoption of comprehensive rules across various trade and investment policy areas, including in relation to sustainability. However, some stakeholders have expressed concerns or suggestions for improvement as CETA implementation enters its second year.
The agreement is currently applied provisionally, meaning that some parts of it remain to be implemented once all EU member states ratify it. This includes CETA’s terms on investment protections and an investment court system. The EU member states that have ratified it so far include Denmark, Croatia, the Czech Republic, Estonia, Latvia, Lithuania, Malta, Portugal, and Spain.
The accord was able to take provisional effect after the European Parliament and the Canadian legislature ratified it last year. It is currently the largest trade accord for both sides that is in effect, though the EU-Japan deal and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) may ultimately surpass them once in force. (See Bridges Weekly, 21 September 2017)
EU Trade Commissioner Cecilia Malmström met with Canadian Minister of International Trade Diversification, Jim Carr, late last month for the first CETA Joint Committee Meeting in Montreal, where they reviewed the accomplishments and challenges of the agreement within the past year.
In a joint communiqué, the two sides highlighted progress in three main areas: SMEs, climate change, and gender, focusing mainly on how they can deepen their cooperation on these three fronts.
For example, their recommendation on climate specifically refers to a shared recognition on the value of implementing the UN’s Paris Agreement “in order to address the urgent threat of climate change, and the role of trade to this end.”
They also refer to a provision in CETA’s environment chapter on supporting the implementation of multilateral environmental agreements (MEAs) that each side is party to, with the joint committee naming the Paris Agreement as an example of such an accord. The original chapter made multiple references to supporting cooperation on the “trade-related aspects of the current and future international climate change regime,” without referring to the Paris Agreement by name at the times.
“In light of the above, the CETA Joint Committee recommends that the Parties cooperate, work together and take joint actions as relevant to address climate change and promote the mutual supportiveness of trade and climate policies, rules and measures thereby contributing to the purpose and goals of the Paris Agreement and the transition to low greenhouse gas emissions and climate-resilient development,” the recommendation says.
A separate European Commission press release notes that both parties had negotiated and signed CETA prior to the Paris climate accord’s entry into force, which was part of what motivated the joint committee’s recommendation on the subject. The European Commission has said that language supporting the implementation Paris climate accord should be an essential component of any trade deal that the bloc negotiates going forward. (See Bridges Weekly, 1 March 2018)
French President Emmanuel Macron similarly said at last month’s UN General Assembly that countries should make it mandatory to include compliance with the Paris Climate Change Agreement in all free trade agreements. The French legislature is expected to vote on CETA in mid-2019.
On gender, the joint committee’s recommendation calls for greater cooperation on the subject, both in exchanging information on efforts to support “women’s participation in the economy and international trade,” as well as in taking steps to “improve the capacity and conditions for women… to access and fully benefit from the opportunities created by CETA.”
This cooperation, they said, should begin through considering different ways for collecting and analysing gender-disaggregated data in relation to trade, along with how each side has previously reviewed the gender-related aspects of trade policy, and what both mean for current and future trade agreements. Canada and the EU have both been vocal proponents of considering the gender implications of trade policy and have been looking to include gender chapters in some of their more recent trade agreements. (See Bridges Weekly, 22 June 2017)
On SMEs, the EU and Canada will be setting up “contact points” and web tools that will support small and medium-sized enterprises’ efforts at using CETA, with contact points due to meet annually to review each side’s work to support SMEs.
A recent report issued by Global Affairs Canada provides a status update of the free trade agreement one year after provisional application. According to this report, two-way goods and services in Canada-EU trade increased by over six percent between October 2017 and June 2018 compared to the same timeframe the year prior.
“Nine months of data is by no means a long-term perspective. Yet, in this short time we do see significant increases in many areas of Canadian exports,” the report says. Aluminium, motor vehicles and parts, mineral fuels, and oil, as well as pharmaceuticals, have been included in the fastest-growing exports from Canada with the provisional entry into force of CETA.
A similar report from the EU specifies that the bloc’s machinery and mechanical appliances exports, which constitute about 20 percent of its exports to its North American partner, have increased by over eight percent during this period. Other notable increases include fruits and nuts, up 29 percent, and chocolate by 34 percent.
Some private sector analysts also suggest that CETA so far has yielded strong gains in import growth, especially in the European Union. The Director of International Policy from the Canadian Chamber of Commerce, Mark Agnew, recently described this trade trend to CBC Radio, noting that “what stood out the most is that the rate of European import growth in Canada [in this period] exceeded global import growth," he stated.
Experts say that higher imports in Canada could signify enhanced competitiveness and product choice for consumers, and possibly more trade with other partners instead. Officials from both sides have also touted CETA as ultimately being able to yield significant economic gains across the Atlantic, while also shoring up a relationship among like-minded trading partners with similar objectives regarding key sustainability matters.
The recent finalisation of the United States-Mexico-Canada Agreement renegotiations may continue to attract EU investors to Canada, some experts say, as it could provide the necessary certainty over their continued ability to access the wider North American market. (See Bridges Weekly, 4 October 2018)
Ratification still pending
About two dozen EU member states have not yet ratified the agreement, with Italy’s new government having openly expressed concerns over CETA earlier this year on subjects such as geographical indications (GIs) on certain Italian specialty foods. Deputy Prime Minister Luigi Di Maio spoke on the subject in July, suggesting that a majority of the country’s lawmakers will vote against the accord once it makes its way into parliament. (See Bridges Weekly, 21 June 2018)
“If so much as one Italian official […] continues to defend treaties like CETA, they will be removed,” Di Maio told Reuters at the time.
As the European Union country with the most GI labels on products such as Parmigiano Reggiano, CETA’s provision on these particular intellectual property rights protections have struck a chord with the newly elected Italian lawmakers. In the last year, 143 geographical indications have been implemented in the EU, protecting certain high quality food and drink products from being marketed and sold under the same name by Canadian producers.
On Italy, Malmström said that the EU’s executive branch was engaged in constant conversation with the country about CETA. "We're in dialogue with the Italian government to help them get maximum information about how this is benefitting Italy, and what Italy can do to take advantage of it," she told CBC Radio.
ICTSD reporting; “Italy says it won't ratify EU-Canada trade deal; Canada plays down threat,” REUTERS, 13 July 2018, “EU trade chief defends Freeland after Trump trash-talks 'Canada's negotiator,” CBC NEWS, 27 September 2018, “Lack of CETA awareness hindering opportunities for Canadian business: EU trade czar,” FINANCIAL POST, 27 September 2018; “Inclusion of Paris Agreement in CETA at risk,” EURACTIV, 8 October 2018; “Italy threatens to block CETA ratification,” EURACTIV, 14 June 2018.