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Opinion

CETA Is a Trade Deal in Trouble

Despite politicians' optimism, Canadian and European pact still faces enormous challenges.

By Michael Geist 12 Jul 2016 | TheTyee.ca

Michael Geist holds the Canada Research Chair in internet and E-commerce Law at the University of Ottawa, Faculty of Law. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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Canadian politicians still face a steep climb to turn CETA text into a binding agreement. Flag photo via Shutterstock.

The Canadian government has characterized the proposed trade agreement between Canada and the European Union (CETA) as its top trade priority. The deal would increase trade by removing tariffs from many products, but also create significant costs. The implications for digital and intellectual property issues are particularly important with chapters on e-commerce and telecommunications services, an extension of patent protections for pharmaceutical drugs could raise health care costs by millions of dollars, and protections for hundreds of geographical indications may restrict Canadian producers of common cheeses, wines, and meats.

The substance of CETA merits debate, but its most distinguishing feature during the seven years of negotiations has been the steady stream of unrealistic claims from Canadian officials about how close they are to concluding the deal.

In April 2010, the government said it would be finished in 2011. In 2011, reports said it would be done in 2012. In October 2012, the projection was a deal by year-end. It took until the fall of 2013 for a ceremony marking an "agreement-in-principle." That too proved to be premature as there was another event celebrating an official draft in 2014 followed by more legal drafting and the renegotiation of controversial investor protection provisions that led to the release of another text earlier this year.

Given this history, it was rather remarkable to see Canadian officials claim last week that the vast majority of the agreement should take effect by early 2017. In reality, CETA has been the target of vocal opposition in Europe and International Trade Minister Chrystia Freeland faces a steep climb to turn the text into a binding agreement.

Europe's plans keep changing

The enormity of the challenge became clear in recent weeks as European officials bowed to public pressure on its plan for ratification of the agreement. The initial plans were to treat CETA as a "EU-only" agreement, which would have allowed for approval from just two institutions -- the EU Council (essentially the executive of the EU comprised of a representative from each of the 28 member states) and the European Parliament.

After several European countries expressed opposition to the EU-only approach, officials backtracked by announcing last week that CETA will be treated as a "mixed agreement," which requires approval from the EU Council, the European Parliament and the parliaments of all member states (which run to 38 parliaments with regional parliaments in some countries). The change will mean that full implementation of CETA will take years, not months.

Despite the political opposition in Europe and the further complications created by Brexit that could undercut the benefits of the agreement (the United Kingdom represents roughly one-third of Canadian trade to Europe), Canadian officials insist that CETA will receive EU Council approval in the fall and Parliamentary approval by early 2017. If that happens, the agreement could take "provisional" effect soon after with officials claiming that approximately 90 per cent of the agreement would be operational.

Trade deal in trouble

Yet this plan seems certain to run into political and legal barriers. From a political perspective, several European parliaments have already expressed their opposition to CETA, suggesting that it will face a rough ride at each approval stage. European officials tried to pacify the opposition by shifting to a "mixed agreement" approval process, but the plan to still provisionally apply virtually all of the agreement seems certain to inflame further political backlash.

The legal barriers may be even more daunting. European officials claim that almost the entire agreement falls within their exclusive competence, but legal experts have raised serious doubts about that interpretation. In fact, the EU itself has referred another trade agreement -- the EU-Singapore Free Trade Agreement -- to the European Court of Justice to obtain guidance on which elements of that deal fall within its exclusive competence and which are shared with member states. That court ruling is still pending, but the decision could undercut attempts to broadly apply CETA on a provisional basis.

Even if the provisional application barrier is overcome, opposition from any of the national or regional parliaments could kill CETA altogether. Canadian officials have tried to downplay that risk, noting that such a scenario has never occurred before and suggesting that votes might be postponed indefinitely if defeat in a member state seemed likely.

But with rising opposition to trade agreements, the fallout from Brexit, and fears in Europe that a Canadian deal could pave the way for an even larger agreement with the United States, banking on past history or delayed votes suggests that CETA is in far bigger trouble than officials would care to admit.  [Tyee]

Read more: Politics,

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