European Parliament Endorses EU-Canada Trade Agreement

16 February 2017

EU lawmakers voted on Wednesday 15 February to approve the Comprehensive Economic and Trade Agreement (CETA), a sweeping trade and investment accord with Canada. The trade deal passed the European Parliament by a sizeable majority, with 408 votes in favour, 254 against, and 33 abstentions.

The trans-Atlantic deal was negotiated over a span of nearly six years and was later signed by leaders from both sides on 30 October 2016, following a heated debate over subjects such as the inclusion of a new investment court system, which was designed to replace the previous investor-state dispute settlement mechanism (ISDS) that has become a common feature of many trade deals. (See Bridges Weekly, 3 November 2016)

Ahead of the 751-member legislative body’s vote in Strasbourg, France, the trade deal first went through multiple parliamentary committees, earning the backing of its international trade committee (INTA) and its environment, public health, and food safety committee (ENVI). While it faced a negative result from the committee on employment and social affairs (EMPL), that vote was non-binding, as was that of the environment panel. (See Bridges Weekly, 26 January 2017)

The two sides could begin implementing the accord on a provisional basis from as early as April, officials say. This means that most of the deal’s chapters would be in force, except for those relating to the investment court system and any others that do not fall under EU exclusive or shared competence.

In order for the deal to be implemented in full, CETA will also need to be ratified at the EU member state level, which depending on the country will involve the national legislature and in some cases regional legislatures as well.

“This trade deal has been subject to an in-depth parliamentary scrutiny which reflects the increased interest of citizens in trade policy. The intense exchanges on CETA throughout this process are testimony to the democratic nature of European decision making,” said European Commission President Jean-Claude Juncker after the vote.

Malmström: CETA to “upgrade” bilateral relationship

EU Trade Commissioner Cecilia Malmström was on hand for Wednesday morning’s plenary debate in Strasbourg, discussing the case in favour of the trans-Atlantic trade deal before lawmakers cast their official votes.

“Trade policy is about opening markets – but also about supporting our values. So CETA is a progressive agreement with a progressive partner… which upholds our standards and protects our sensitivities,” said Malmström.

Proponents of CETA have argued that the accord, along with being among the most ambitious ever negotiated by either trading partner, is also a litmus test for the future of European trade policy when it comes to inking deals with other countries. EU officials also say that approving CETA can serve as a sign of unity for a bloc that is increasingly facing demands to respond to domestic and international concerns.

The trade deal has drawn intense scrutiny over the last couple of years, as some critics questioned whether the reforms to the investor-state dispute settlement (ISDS) mechanism under the new “investment court system” go far enough to address concerns over protecting the right to regulate in the public interest and whether the deal will indeed lead to the growth and jobs that have been suggested.

EU officials, however, argue that the accord could yield significant economic gains on both sides, many of which will benefit small and medium-sized businesses by making it easier for these companies to engage in international trade. They have also touted its potential to answer some of the concerns raised more broadly on the merits of globalisation, along with the significant upgrade that the investment court system entails relative to the earlier ISDS mechanism, including the incorporation of an appellate review system. (See Bridges Weekly, 3 March 2016)

“We are at a time when many stand against what the EU stands for. Openness; international cooperation; the freedom to trade, and so on. Those who oppose those principles also question the foundation and the future of the EU itself,” said Malmström on Wednesday.

A way to counter protectionist forces, she added, would be to continue cooperating with “likeminded partners” such as Canada, both through approving the CETA as well as a separate deal with Canada known as the Strategic Partnership Agreement, which aims to boost political cooperation on topics such as sustainable development, among various others.

The latter agreement was also approved by lawmakers, with 506 votes in favour and 142 against, with 43 lawmakers abstaining.

Trudeau to speak in Strasbourg

Canadian Prime Minister Justin Trudeau is due to address EU parliamentarians on Thursday 16 February, according to a statement released by his office, as part of a trip that will also include two stopovers in Germany.

The Canadian leader is expected to discuss the expected benefits of CETA during his address to EU lawmakers. According to his office, this address will mark the first time that a Canadian leader has addressed the European legislative body.

“CETA is the most progressive trade agreement ever negotiated by Canada or the European Union. CETA sets a high standard for free trade agreements of the future,” said Trudeau on 9 February, according to the government’s statement.

Across the Atlantic, the CETA implementation bill is working its way through the Canadian parliament, having passed three readings in the House of Commons and now being considered in the Senate.

Brief overview

CETA spans 30 chapters, covering goods and services trade, public procurement, state-to-state dispute settlement, transparency, environmental and labour issues, state-owned enterprises, e-commerce, investment, and sustainable development, among various other topics.

On goods-related trade, the accord is due to eliminate duties on over 99 percent of industrial products for both sides upon entry into force, though some more sensitive goods such as automobiles and ships will see their tariffs progressively phased out over a set period.

According to a European Commission summary of the accord, CETA also commits Canada to eliminate agricultural tariffs either immediately or within a seven year period for 91.7 percent of tariff lines, though more sensitive products will either face tariff-rate quotas (TRQs) or are not subject to tariff cuts. The EU, for its part, will have eliminated 93.8 percent of agricultural tariffs within the first seven years, the bulk of these upon CETA’s entry into force. Like Canada, the EU will treat some more sensitive imports with either TRQs or exclude them from tariff cuts entirely.

The deal has several chapters specific to trade in services, including domestic regulation, maritime and financial services, and facilitating cross-border trade in legal, accountancy, transport, telecommunications, and tourism services. It also has chapters covering the temporary entry of business professionals from the two trading partners, along with setting up a framework that makes it easier to recognise professional qualifications earned on each side.

CETA also includes a chapter that builds on a previous bilateral agreement on regulatory cooperation, along with working to facilitate their work on the protection of intellectual property rights and covering various geographical indications.

On public procurement, CETA has also been welcomed as yielding significant advances, given that Canada has agreed for the first time ever in a trade accord to open up access to its procurement markets at both the federal and sub-federal levels of government.

ICTSD reporting; “Civil society makes final push to bloc EU-Canada trade deal,” EURACTIV, 15 February 2017; “MEPs vote on EU-Canada deal This WEEK,” EU OBSERVER, 13 February 2017.

This article is published under
16 February 2017
Japanese Prime Minister Shinzo Abe completed a two-day visit to the United States last weekend, holding talks with US President Donald Trump on how to deepen their countries’ economic relationship...
23 February 2017
GLOBAL COMPETITION AND THE RISE OF CHINA. By Caroline Freund and Dario Sidhu for the Peterson Institute for International Economics (PIIE) (February 2017). This new paper explores how global...