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EU and Canada free trade deal, not binding just yet

Canadian Prime Minister Justin Trudeau signed the CETA agreement with the EU Sunday, which should come into provisional implementation in early 2017. Photograph: (Getty)

Reuters Brussels, Belgium Oct 30, 2016, 02.02 PM (IST)

The European Union (EU) and Canada signed a free trade agreement on Sunday, the Comprehensive Economic Trade Agreement (CETA) though it must still clear some 40 national and regional parliaments in Europe in the coming years to enter fully into force.

Canadian Prime Minister Justin Trudeau signed the treaty along with the heads of EU institutions, a step that should enable a provisional implementation of the pact early in 2017 with the removal of most import duties.

CETA's passage has not been smooth.

Many critics, like The Guardian's George Monbiot, fear that the CETA uses too broad a definition of both investment and expropriation, and will give the largest corporations solid grounds to sucessfully sue governments when they believe their "future anticipated profits" might be threatened by any new law. In this sense, this removes power from a country's government to rule the country as it sees fit.

Monbiot cites the example of laws preventing banks from becoming too large to fail; if a bank believes a government restriction would limit their profit, they could sue the government.

Some 100 anti-globalisation protesters clashed with police outside the venue in Brussels, trying to break down barriers in front of the main entrance and hurling red paint. A Reuters photographer saw police detain some people.

French-speakers in southern Belgium, a minority within their own small country and accounting for less than one per cent of the 508 million EU consumers likely to be affected by CETA, raised objections that held up the deal until a breakthrough on Thursday, confirmed by regional parliamentary votes on Friday.

"All's well that end's well," said European Commission President Jean-Claude Juncker. "We have 20 ongoing negotiations and today we are fixing the global standards the European Union and the European Commission want others to accept."

 

The Canada agreement is seen as a springboard to a larger EU deal with the United States, known as the Transatlantic Trade and Investment Partnership (TTIP), which has been the target of labour unions and environmental and other protest groups.

EU Trade Commissioner Cecilia Malmstrom said TTIP talks were not dead, contrary to what some politicians in Germany and France have said. Belgian and Austrian politicians have said the same, but Malmstrom says it's necessary to wait for the next US president, taking office in January, to resume the process.

Supporters claim CETA will increase Canadian-EU trade by 20 per cent and boost the EU economy by 12 billion Euros ($13 billion) a year and Canada's by C$12 billion ($9 billion).

For Canada the deal is thought by some to be important for reducing its reliance on the neighbouring United States as an export market.

For the EU, it is a first trade pact with a G7 country and a success plucked from the jaws of defeat at a time when the bloc's credibility has taken a beating from Britain's vote in June to leave after 43 years of membership.

"This has been a very long process. A huge majority of people in Europe are in favour of Europe, but there are concerns and we need to engage with them," Malmstrom said. "The Commission cannot do that alone."

 

Not the last act

Sunday's signing will not be the last act. Assuming the European Parliament gives its assent, the CETA could come into force partially early next year. However, full implementation, which would include a contentious investment protection system, will ensue only after clearance by more than three dozen national and regional parliaments.

The Belgian experience shows this outcome is no given. One of the main focuses of protests against the CETA and the TTIP remains the system to protect foreign company's investments.

Critics say its provision for arbitration panels to rule on disputes with states can be abused by multinational companies to dictate public policy, such as on environmental standards. The EU and Canada say their investment protection system guarantees the right of governments to regulate, make use of independent judges and be more transparent.

The Guardian reported that the consultation process the EU only grudgingly launched regarding the TTIP proposal to grant new legal rights to corporations received as many as 150,000 responses, 97 per cent of which were hostile. "To say there is no mandate for such agreements is an understatement," said George Monbiot's in response to the above numbers. 

The deal will eliminate tariffs on almost 99 per cent of goods. The beneficiaries would include, for example, carmakers or the EU textile sector, for which Canadian duties of up to 18 per cent can be imposed at present.

Service companies could also benefit and EU companies would be able to tender for public contracts at Canadian provincial and municipal level, the first time Canada has offered this.

Canada would be able to send larger quotas of pork, beef and wheat to the EU market, and EU dairy producers would be able to export more than double the current amount of "high quality" cheeses to Canada.

($1 = 0.9107 Euros)

($1 = 1.3396 Canadian dollars)

(With inputs from Reuters)

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