Italian Official Suggests CETA Ratification Could Face Domestic Hurdles

21 June 2018

Italy’s agriculture minister has hinted that his country’s legislature might not ratify a major free trade agreement between the EU and Canada, citing concerns over whether the existing accord provides sufficient protections for signature Italian foodstuffs.   

“We will not ratify the free trade treaty with Canada because it protects only a small part of our PDO (Protected Designation of Origin) and PGI (Protected Geographical Indication) products,” said minister of agriculture Gian Marco Centinaio in an interview with La Stampa, an Italian newspaper. 

“We will ask the Parliament not to ratify the treaty and the others similar to CETA,” Centinaio warned, after a comment on the accord’s export promotion for industrial products. He claimed that this statement was not only the position of his own political party, which recently took office as part of a coalition government, but that “doubts about this agreement are common to many of my European colleagues.” He did not specify, however, which countries or country officials might share some of these views. 

Whether Centinaio’s position is that of the whole Italian government has also not been made immediately clear. 

Responding to Centinaio’s comments, Canadian Foreign Affairs Minister Chrystia Freeland said in a radio interview that she is confident that Italian lawmakers will grant their endorsement of CETA when they are ready to do so. Freeland was Canada’s political lead for CETA during the final stages of the accord, including by helping navigate the difficulties that emerged during the signing process. 

“I’m confident that we’ll have full ratification in the end and the important thing is this agreement has entered into force as an economic matter,” Freeland said. The Canadian official reportedly discussed the accord with Italian Prime Minister Giuseppe Conte during the G7 leaders’ summit in Charlevoix, Quebec, earlier this month, though the outcome of those discussions was not yet clear. 

The Comprehensive Economic and Trade Agreement (CETA) is one of the largest and commercially significant accords seen in recent years, and was the biggest trade deal negotiated by the EU since it began implementing its South Korea agreement in 2011. The treaty, which is provisionally in force, slashes over 98 percent of goods tariffs and imposes a comprehensive set of rules governing a wide range of trade policy areas, from intellectual property rights to environmental and labour issues. 

The CETA negotiations were concluded in August 2014, and all EU member states approved the text for signature in 2016, though that process required additional negotiations to ease concerns over investor protections and safeguarding the right to regulate further. 

In July 2016, the European Commission proposed that the deal be signed and concluded as a “mixed” agreement, which involves a trade accord where some aspects fall under the EU’s exclusive competence, while other subjects fall under the EU’s shared competence with member states. 

Submitting the accord as a “mixed” agreement means that on the EU side, it must have the approval both of the EU institutions, including ratification by the European Parliament, along with ratification by all relevant national and regional parliaments. Ratification by the EU institutions allows for provisional application of those parts of the deal within the Union’s exclusive competence. 

Potential implications

The majority of CETA has already entered into force since the end of September 2017, under what is known in trade jargon as “provisional application.” The deal currently applies to trade in goods, services, and public procurement between Canada and the EU, as well areas such as sustainable development and intellectual property rights. (See Bridges Weekly, 21 September 2017

If Italian lawmakers decide not to ratify the deal domestically, it would likely spark an intense debate over both the legal ramifications of such a move, along with the implications for other EU trade deals currently under negotiation or at the signature or ratification stages. While most of CETA’s content is considered as falling under the EU’s exclusive competence, it is not clear whether an Italian veto would affect the provisional application of those parts of the agreement as well. 

“The provisional entry into force means that nearly 100 percent of real economic impact and benefit of CETA is already being felt by Canadians, by Europeans,” said Freeland last week, in comments reported by Radio Canada International. 

The provisions that cannot enter into force until each of the EU member states has ratified the accord include investment protection; investment market access for portfolio investment, although market access for foreign direct investment is an exclusive EU competence; and the establishment of an investment court system (ICS). 

The latter sparked significant controversy during the deal signing process in 2016, when the Belgian regional parliament of Wallonia sought additional assurances on protecting the right to regulate and how the investment protection terms would be implemented before removing its opposition to the deal. Approval from Belgium’s regional parliaments was key before the federal government could give its endorsement. (See Bridges Weekly, 3 November 2016

So far, 10 European member states have already ratified the agreement. Those include Austria, Croatia, the Czech Republic, Denmark, Estonia, Latvia, Lithuania, Malta, Portugal, and Spain. In addition, France has approved an “action plan” for CETA, following a domestic review of the trade accord’s expected impacts on different public policy areas. (See Bridges Weekly, 2 November 2017

“I would also like to point out that this week brought some good news on CETA front because Austria has now ratified CETA,” Freeland said. “And I’d like to remind people that during the initial CETA process, Austria was one of the European countries that we had to have some good conversations to get them there.”

Food-related arguments 

Italy’s concerns voiced by the agricultural minister relate to food label protection and regulation in the Canadian market under the trade accord. CETA devotes Chapter 20 to intellectual property, with sub-section C focusing specifically on geographical indications. A separate annex lists the protected EU GIs by name, type, and country. 

Of the EU GIs listed in this annex, over 40 involve Italian foodstuffs, including different types of balsamic vinegar, prosciutto, cheeses such as Grana Padano and Gorgonzola, and a variety of fruits, meats, and oils. 

While CETA refers broadly to GIs, within the EU there are different types of “quality logos” for foodstuffs and drinks, including the PDO and PGI mentioned by Centinaio. The third involves recognising a “traditional production process,” according to the EU Commission, and is known as “Traditional Speciality Guaranteed.” 

Within the 28-member state European Union, Italy has the highest number of food products that enjoy these statuses, with 221 products protected. Within CETA, its 41 protected GIs make up over one-quarter of those protected overall on the EU side, a fact noted by EU Trade Commissioner Cecilia Malmström in the past when explaining the deal’s merits to the European Parliament

The products that Italy already exports to Canada in large amounts are ceramic tiles and textiles, flour, tomato sauce, vegetables, furniture and bakery products. The value of Italian exports to Canada is €5.1 billion euros annually, whereas the value of Italian imports from Canada is €1.9 billion, according to EU statistics.

ICTSD reporting; “Italy won't ratify EU free-trade deal with Canada: farm minister,” REUTERS, 14 June 2018; “Italy could try to block the EU-Canada trade deal to protect its famous foods,” NCBC, 14 June 2018; “Canada confident Italy will eventually ratify CETA, Freeland,” RCI, 14 June 2018; ““Non ratificheremo il trattato Ceta. Altri ci seguiranno”,” LA STAMPA, 14 June 2018.

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