As EU-Canada Summit Approaches, Pressure Grows to Reach CETA Consensus

20 October 2016

The European Council is due to begin a two-day leaders’ meeting on Thursday, where they are expected to confirm whether they are in a position to sign a negotiated trade deal with Canada. The gathering is being pegged as a pivotal moment for the future credibility of the EU’s foreign trade policy and watched as a litmus test for global economic integration more broadly.

The news followed a flurry of activity in Luxembourg earlier in the week, as EU trade officials worked to reach a compromise that would allow all 28 member states to approve signing the accord, which ultimately proved elusive.

The EU and Canada concluded negotiations for the Comprehensive Economic and Trade Agreement (CETA), as the accord is known, in 2014. They subsequently revised the accord earlier this year to reflect some changes in the pact’s investor protections.

However, winning over support at the member state level has proven extremely difficult, given the anti-globalisation rhetoric that has become prominent over the last year, together with concerns over substantive aspects of the final deal.

Luxembourg talks

EU trade ministers met in Luxembourg on Tuesday 18 October, in an extraordinary meeting of the Foreign Affairs Council set up for taking decisions on concluding, signing, and provisionally applying the accord.

However, this attempt was put in jeopardy following the vote by lawmakers in the Belgian region of Wallonia against giving its federal government powers to sign CETA. Officials then worked round-the-clock to find an acceptable compromise – ultimately postponing decisions until leaders meet in Brussels on 20-21 October.

Wallonia is a francophone region covering over half of Belgium’s territory and is home to one-third of its inhabitants. Under Belgian laws, its parliament is one of the bodies that must give its sign-off to the federal government for approving trade deals.

The Walloon parliament had already suggested earlier this year that it had significant reservations regarding the final CETA deal, endorsing a resolution in April calling for additional guarantees on certain matters. Walloon officials say they are looking for additional “safeguards” to give their approval. (See Bridges Weekly, 14 April 2016).

Joint declaration

Proponents of the accord stress that the CETA is the most ambitious, forward-looking trade accord that the EU has ever negotiated, slashing tariffs, allowing major market access gains in public procurement, and improving intellectual property rights in areas ranging from pharmaceuticals to the creative arts.

The bilateral deal would also improve services market access for financial services, telecommunications, energy, and maritime transport. Furthermore, officials say, it would facilitate foreign direct investment while boosting investment protections – while at the same time ensuring the continued right of all levels of government to regulate in the public interest. This included incorporating a new investment court system, with an appellate mechanism, which the EU is hoping to feature in subsequent trade deals with other partners.

“In order to make sure all delegations feel comfortable signing it and listening to some specific concerns, the Commission has, together with the Presidency, worked on an interpretative declaration that would be attached to the agreement,” said EU Trade Commissioner Cecilia Malmström on Tuesday.

That declaration is meant to have legal value, with the EU trade chief saying that it will confirm to citizens “in plain language” the deal’s best traits, along with answering concerns raised over what the trade accord’s provisions will mean in terms of sustainable development and public services.

She reiterated, for example, that nothing in the EU-Canada deal will require the privatisation of public services, at any level, and that strong sustainable development provisions are a vital part of the accord.

Clock ticking before summit

European Council President Donald Tusk confirmed in his invitation letter to EU national leaders on Tuesday that this would be one of the focal points of the upcoming leaders’ meeting. “At the European Council we have a special responsibility regarding the agreement with Canada. There is still work to be done, but I hope we will find a way forward.”

An indicative programme for the event suggests that the European Council will debate trade issues on Friday morning, including the CETA.

Canadian Prime Minister Justin Trudeau is due to arrive in Europe next week of a planned EU-Canada summit, scheduled for 27 October. The event is meant to serve as the formal signing ceremony for the CETA, with officials warning that the summit will be cancelled if EU member states cannot strike a deal in time.

“The past days and hours have seen a lot of activity in order to move forward so we can sign CETA next week,” said Slovakian Economy Minister Peter Žiga at a Tuesday press conference. “The good news is that we are moving forward towards this clear objective – maybe it’s not a sprint, but it’s not a marathon either. It’s something in the middle.”

“We can waste no time and spare no efforts,” he continued, referring to CETA as a forward-thinking deal that simultaneously respects EU standards and promotes job creation.

Despite not being able to clinch a deal at the ministerial level on Tuesday, EU officials maintained that they were still optimistic that the concerns raised by Wallonia could be resolved in time for the EU-Canada summit next week.

“If I didn’t think we couldn’t solve the Belgian issue, we wouldn’t keep on engaging with them,” said EU Trade Commissioner Cecilia Malmström. Reopening the treaty is “not on the agenda,” with options instead being explored through interpretative declarations or other approaches.

“If we don’t manage to have this trade agreement, there will not be a summit at this occasion,” she added in response to reporters’ questions on what a failure to endorse CETA this week would mean.

Visa liberalisation

Following Tuesday’s trade ministers’ meeting, Žiga noted, 27 of the EU’s 28 member states are “on board in terms of substance,” referring to Belgium as the one with concerns in this area.

Yet while Belgium has been in the limelight this past week, two other EU member states have also raised their own concerns with moving forward. Efforts are also underway to sort out the “specific situation” of Bulgaria and Romania regarding visa-free travel.

While the topic is not directly linked to the substance of the CETA, the two Eastern European member states have made their approval of the accord “conditional” on reaching a solution with Canada on visa reciprocity.

They had previously warned on repeated occasions that it will be politically difficult for them to sign off on the trade accord while their visa concerns remain outstanding. Canada currently requires Bulgarian and Romanian citizens to obtain a visa for entering the country – a requirement which is not asked of citizens from other EU member states. The EU has long backed a common visa policy across its member states, and talks with Ottawa remain ongoing.

“Both delegations maintained their reservations,” Žiga said on Tuesday, calling for this matter to be resolved promptly.

Provisional application

Should the European Council meeting this week – and the subsequent EU-Canada summit on Tuesday – be successful, the next step will be to get lawmakers in the European Parliament to vote in favour of the accord.

Malmström confirmed on Tuesday that a vote is expected in either late 2016 or early 2017. Should lawmakers endorse the deal, the agreement can then be provisionally applied – in other words, the bulk of its terms would be in force, specifically those that fall under the EU’s exclusive competence.

Member state ratification will then be needed for the CETA to be fully implemented. In past cases, this process has shown that it can take years. For example, the EU’s trade accord with South Korea began provisional application in 2011, and was fully applied from last year onward.

ICTSD reporting; “Walloon parliament rejects CETA deal,” POLITICO, 14 October 2016; “CETA trade deal ‘not really there yet,’ but EU official still optimistic,” ASSOCIATED PRESS, 18 October 2016; “EU Battles to Save Canada Trade Pact Amid Belgian Hurdle,” BLOOMBERG, 17 October 2016.

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