Comprehensive Economic and Trade Agreement

Comprehensive Economic and Trade Agreement

Canada (orange) and the European Union (green)
Type	Trade agreement
Signed	30 October 2016
Effective	Not in force
Negotiators	Canada  European Union and its 28 member states
Languages	All official EU/Canadian languages

The Comprehensive Economic and Trade Agreement (CETA) is a tentative free-trade agreement between Canada and the European Union.^[1][2][3] If enacted, the agreement will eliminate 98% of the tariffs between Canada and the EU.

The negotiations were concluded in August 2014. The ministers of foreign affairs of all 28 European Union member states approved CETA, with Belgium being the final country whose ministers approved it.^[4] Justin Trudeau, Prime Minister of Canada traveled to Brussels on 30 October 2016 to sign on behalf of Canada.^[5] If ratified by the European Parliament, most of the agreement will take effect on a provisional basis. The remaining parts of the agreement are subject to ratification by national legislatures.^[6][3]

The EU claims the treaty will lead to savings of just over half a billion euros in taxes for EU exporters every year, mutual recognition in regulated professions such as architects, accountants and engineers, and easier transfers of company staff and other professionals between the EU and Canada. The European Commission claims CETA will create a more level playing field between Canada and the EU on intellectual property rights.^[7]

Critics oppose the treaty on the grounds that it will weaken European consumer rights, including those concerning food safety, and that tariffs are already very low.^[8] It has also been criticized as a boon only for big business and multinational corporations, while risking net-losses, unemployment, and environmental damage impacting individual citizens.^[9][10] The deal also includes a controversial investor-state dispute settlement mechanism. The agreement has prompted protests in Europe and Canada.^[11]

History

CETA is Canada's biggest bilateral initiative since NAFTA. It was hatched as a result of a joint study "Assessing the Costs and Benefits of a Closer EU-Canada Economic Partnership",^[12] which was released in October 2008. Officials announced the launch of negotiations on 6 May 2009 at the Canada-EU Summit in Prague.^[2][13] This after the Canada-EU Summit in Ottawa on 18 March 2004 where leaders agreed to a framework for a new Canada-EU Trade and Investment Enhancement Agreement (TIEA). The TIEA was intended to move beyond traditional market access issues, to include areas such as trade and investment facilitation, competition, mutual recognition of professional qualifications, financial services, e-commerce, temporary entry, small- and medium-sized enterprises, sustainable development, and sharing science and technology. The TIEA was also to build on a Canada-EU regulatory co-operation framework for promoting bilateral co-operation on approaches to regulatory governance, advancing good regulatory practices and facilitating trade and investment. In addition to lowering barriers, the TIEA was meant to heighten Canadian and European interest in each other's markets.^[14] The TIEA continued until 2006 when Canada and the EU decided to pause negotiations. This led to negotiations on a Comprehensive Economic and Trade Agreement (CETA), and this agreement will go beyond the TIEA toward an agreement with a much broader and more ambitious scope.

An agreement in principle was signed by Canadian Prime Minister Stephen Harper and European Commission President José Manuel Barroso on 18 October 2013. The negotiations were concluded on 1 August 2014.^[15] The trade agreement was officially presented on 25 September 2014 by Harper and Barroso during an EU - Canada Summit at the Royal York Hotel in downtown Toronto.^[16] The Canada Europe Roundtable for Business has served as the parallel business process from the launch to the conclusion of the CETA negotiations.

After it had been leaked by German public television on 14 August, the 1634 pages long Consolidated CETA text was published on the EU's official website on 26 September 2014.^[17]

Completion, translation of the final text into 24 EU languages, and ratification is expected to take two years since the passage of the deal may require not just the approval of the European Parliament and the European Council but the individual 28 EU member states as well.^[18][19]

Research commissioned by negotiating parties

The EU-Canada Trade Sustainability Impact Assessment (SIA), a three-part study commissioned by the European Commission to independent experts and completed in September 2011, provides a comprehensive prediction on the impacts of CETA.^[20][21][22] It predicts a number of macro-economic and sector-specific impacts, suggesting the EU may see increases in real GDP of 0.02–0.03% in the long-term from CETA, whereas Canada may see increases of 0.18–0.36%; the Investment section of the report suggests these numbers could be higher when factoring in investment increases. At the sectoral level, the study predicts the greatest gains in output and trade to be stimulated by services liberalization and by the removal of tariffs applied on sensitive agricultural products; it also suggests CETA could have a positive social impact if it includes provisions on the ILO's Core Labour Standards and Decent Work Agenda. The study details a variety of impacts in various "cross-cutting" components of CETA: it advocates against controversial NAFTA-style ISDS provisions; predicts potentially imbalanced benefits from a government procurement (GP) chapter; assumes CETA will lead to an upward harmonization in IPR regulations, particularly changing Canadian IPR laws; and predicts impacts in terms of competition policy and several other areas.^[22]

Economic ties between the EU and Canada

Canada and the EU have a long history of economic co-operation. Comprising 28 Member States with a total population of over 500 million and a GDP of €13.0 trillion in 2012,^[23] the European Union (EU) is the world's largest single market, foreign investor and trader. As an integrated bloc, the EU represents Canada's second largest trading partner in goods and services. In 2008, Canadian goods and services exports to the EU totalled C$52.2 billion, an increase of 3.9% from 2007, and imports from the EU amounted to $62.4 billion.

According to Statistics Canada, the EU is also the second largest source of foreign direct investment (FDI) in Canada, with the stock of FDI amounting to $133.1 billion at the end of 2008. In 2008, the stock of Canada's direct investment in the EU totalled $136.6 billion, and the EU is the destination of 21.4% of Canadian direct investment abroad. According to Eurostat, the EU identified Canada as its third largest destination and its fourth largest source of FDI in 2007.

Copyright provisions

Many of its provisions on copyright were initially thought to be identical to the controversial ACTA, which was rejected by the European Parliament in 2012. The European Commission has indicated^[24] that this is not the case.

Part of the Agreement is stricter enforcement of intellectual property, including liability for Internet Service Providers, a ban on technologies that can be used to circumvent copyright, and other provisions similar to controversial ACTA, DMCA, PIPA, and SOPA, as below:^[25] Electronic Frontier Foundation stated that this "trade agreement replicates ACTA's notorious copyright provisions".^[26]

• Copyright term extension. The current term of copyright law in Canada is life of the author plus 50 years. This is consistent with the term requirements under the Berne Convention. The EU is demanding that Canada add an additional 20 years by making the term life plus 70 years.
• WIPO ratification. The EU is demanding that Canada respect the rights and obligations under the WIPO Internet treaties. The EU only formally ratified those treaties [in the week of 16 December 2009].
• Anti-circumvention provisions. The EU is demanding that Canada implement anti-circumvention provisions that include a ban on the distribution of circumvention devices. There is no such requirement in the WIPO Internet treaties.
• ISP Liability provisions. The EU is demanding statutory provisions on ISP liability where they act as mere conduits, cache content, or host content. ISPs would qualify for a statutory safe harbour in appropriate circumstances. There is no three-strikes and you're out language (which presumably originates with the U.S.).
• Enforcement provisions. The EU is demanding that Canada establish a host of new enforcement provisions including measures to preserve evidence, ordering alleged infringers to disclose information on a wide range of issue[s], mandate disclosure of banking information in commercial infringement cases, allow for injunctive relief, and destruction of goods. There is also a full section on new border measures requirements.
• Resale rights. The EU is demanding that Canada implement a new resale right that would provide artists with a royalty based on any resales of their works (subsequent to the first sale).
• Making available or distribution rights. The EU is demanding that Canada implement a distribution or making available right to copyright owners.

These are just the copyright provisions. There are sections dealing with patents, trademarks, designs, and (coming soon) geographical indications. These include:

• requiring Canada to comply with the Trademark Law Treaty (Canada is not a contracting party)
• requiring Canada to accede to the Hague System for the International Registration of Industrial Designs
• creating new legal protections for registered industrial designs including extending the term of protection from the current 10 years to up to 25 years
• requiring Canada to comply with the Patent Law Treaty (Canada has signed but not implemented)
• requiring Canada to establish enhanced protection for data submitted for pharmaceutical patents.

— Dr Michael Geist, Canada Research Chair in Internet and E-commerce Law, University of Ottawa^[25]

On 22 October 2012, five Polish NGOs criticized the secrecy surrounding the negotiations, the similarities to ACTA, and demanded more disclosures about the negotiations from the Polish government.^[27]

In the Consolidated CETA Text a long section on "Intellectual Property Rights", IPR, (p 339 - 375) deals comprehensively with copyrights, trademarks, patents, designs, trade secrets and licensing. Here reference is made to the TRIPS agreement (p 339 f ). In addition to the interests of the pharmaceutical and software industries CETA encourages to prosecute "Camcording" (the so-called "film piracy", Art. 5.6, p 343 ). Especially the negotiations on food exports lasted very long. The interests connected with European cheese exports and Canadian beef exports led to a protection of these kinds of intellectual properties and long lists of "Geographical Indications Identifying a Product Originating in the European Union" (p 363 - 347).^[28]

Non-tariff barriers

Agricultural

CETA does not alter EU non-tariff barriers such as European regulations on beef, which include a ban on the use of growth hormones. Canadian stakeholders have criticized the EU's delays in the approval process for genetically modified organisms (GMOs), and GMO traceability and labelling requirements, none of which are addressed in CETA.^[29]

Environmental

Both the EU and Canada will retain the right to regulate freely in areas of public interest such as environmental protection, or people's health and safety.^[30]

According to an op-ed by Maude Barlow, implementation of the agreement would have serious negative consequences for the environment in both Canada and the European Union.^[31]

Impact on fisheries

The enforcement of the Exclusive economic zone of Canada will be altered under the CETA.

The provincial government of Newfoundland and Labrador has argued that the Federal government of Canada in Ottawa reneged on a deal to pay $280 million in exchange for its relinquishment of minimum processing requirements as part of CETA. Those rules helped protect jobs in fish plants, especially in rural areas hit hard by the cod moratorium, which was instituted in 1992.^[32] The exclusive economic zone of Canada, which was the subject of the 1992 Canada–France Maritime Boundary Case dispute, will no longer be in force where fishing boats from Europe are concerned. Overly permissive Spanish fishing practices, as evinced by the Turbot War, have been reduced, and the European practice of Factortame Ltd will be pursued.

Visa disputes

The Czech Republic, Romania and Bulgaria had declared they would not endorse the agreement, in effect scuppering the entire agreement, until the visa requirements for their citizens entering Canada were lifted.^[33]All other EU countries already had visa free travel to Canada. Visas requirements were lifted for the Czech Republic on November 14, 2013.^[34][35][36] Canada has given a written undertaking to cancel visa requirements for Bulgarian and Romanian nationals visiting Canada for business and tourism, within a period no later than the end of 2017.^[37][38]

Investment protection and investor-state-tribunals

Section 4 of the CETA agreement (pages 158-161) provides Investment Protection to foreign investors, and guarantees a "fair and equitable treatment and full protection and security".

CETA allows foreign corporations to sue states before arbitral tribunals if they claim to have suffered losses because a state had violated its Non Discriminatory Treatment obligations (CETA, section 3, p 156 f) or because of a violation of the guaranteed investment protection.

This license exists only in one direction - states cannot sue companies in these investor-state arbitrations. Such investors complaints are nothing new under public international law (UNCTAD listed 514 such cases at the end of 2012, most from the United States, the Netherlands, Great Britain and Germany) but for transatlantic trade and investment, this comprehensive level of parallel justice is new.

After much criticism of the hitherto often confidential arbitral proceedings, CETA now provides for a certain amount of transparency by declaring the UNCITRAL Rules on Transparency in Treaty-based Investor-State Arbitration applicable to all proceedings (article X.33: Transparency of proceedings, p. 174).

While there is no appeal mechanism against arbitration awards comparable to scrutiny of court judgments, awards made under CETA are subject to ICSID annulment proceedings if the claim is brought under the ICSID Rules, or setting-aside proceedings if the claim is brought under the UNCITRAL Rules or any other rules the parties have agreed on. Only after time limits set for these review mechanisms have lapsed, is the tribunal's final award to "be binding between the disputing parties and in respect of that particular case". (article X.39: Enforcement of awards, p. 177)

On 26 March 2014, German Economics Minister Sigmar Gabriel wrote an open letter to EU Trade Commissioner Karel de Gucht, stating that investment protection was central sensitive point, which could in the end decide whether a transatlantic free trade agreement would meet with German approval. He further stated that investment arbitration was unnecessary between countries with well-developed legal systems.

The CETA "Investor-State Dispute Settlement" (ISDS) provisions could create a precedent for similar arrangements within TTIP. Furthermore, critics allege that CETA would allow US companies to sue EU states through Canadian subsidiaries.^[39][40][41]

In 2016, the EU Commission announced that it had agreed with the Canadian government to replace ad hoc arbitral tribunals in CETA with a permanent dispute settlement tribunal. The tribunal will consist of 15 members named by Canada and the EU, dealing with individual cases in panels of three. An appeals mechanism will be established to ensure "legal correctness" of awards. The tribunal's members may not appear as experts or party counsel in other investment cases.^[42]

Signature and ratification

Banner opposing CETA at the Walloon Parliament in Namur on 19 October 2016.

It was initially unclear whether or not the EU member states had to ratify the agreement, as the European Commission considered the treaty to be solely in the competence of the EU.^[43] However, in July 2016 it was decided that CETA be qualified as a "mixed agreement" and thus be ratified through national procedures as well.^[44]

Shortly before the scheduled signature of CETA on 27 October 2016, Belgium announced it was unable to sign the treaty, as assent is required by all regional governments. The federal government and Flanders, which are governed by the centre-right Michel and Bourgeois governments respectively, are in favour, whereas the French Community, Wallonia and Brussels, which are led by centre-left parties that are in opposition at federal level, rejected signature in its current form. On 27 April 2016, the Walloon Parliament had already adopted a resolution in opposition to CETA. On 13 October 2016, David Lametti defended CETA before a Walloon Parliament committee.^[45] However, the next day the Walloon Parliament affirmed its opposition. Walloon Minister-President Paul Magnette led the intra-Belgian opposition shortly before the planned signature.

The intra-Belgian disagreement was solved in the final days of October, paving the way for CETA's signature. On 28 October, the Belgian regional parliaments allowed Full Powers to be given to the federal government, and the following day Minister of Foreign Affairs Didier Reynders gave his signature on behalf of Belgium.^[46][47] The next day, on Sunday 30 October 2016, the treaty was signed by Canadian Prime Minister Justin Trudeau, President of the European Council Donald Tusk, President of the European Commission Jean-Claude Juncker and Slovak Prime Minister Robert Fico (as Slovakia holds the Presidency of the Council of the European Union).^[48]

Following the signature and pending consent by the European Parliament, it will be possible to provisionally apply CETA, awaiting its ratification by Canada, the European Union and its member states.

See also

• Canada–European Free Trade Association Free Trade Agreement
• European Union free trade agreements
• Transatlantic Trade and Investment Partnership (TTIP)
• Free trade agreements of Canada

References

External links

• Comprehensive economic and trade agreement (CETA) between the EU and Canada
• Annexes to the comprehensive economic and trade agreement (CETA) between the EU and Canada
• Trading Away Democracy, How CETA's investor protection rules threaten the public good in Canada and the EU, November 2014 White paper from the Transnational Institute (TNI)
• Official EU CETA site