It took eight years to get to this point, but the dramatic rollercoaster of Canada-EU free trade negotiations will soon start to bear fruit. On May 11, 2017, the Canadian Senate passed Bill C-30, the CETA Implementation Act. Royal Assent was received on May 16. Earlier, on February 15, 2017, the European Parliament approved the Comprehensive Economic and Trade Agreement (“CETA”). This means that the path will very soon be clear for most of the agreement to be applied on a provisional basis, pending institution of relevant Canadian regulations.
Provisional application of CETA means that European and Canadian companies will be able to use its terms to trade more freely and economically in each other’s jurisdictions. For example, 99% of customs duties will be removed, making exporting across the Atlantic cheaper. In addition, European companies will be able to bid for Canadian public contracts more easily, at the federal, provincial and municipal levels. This is the first time the billion-dollar Canadian public procurement market has been opened up to non-Canadian firms to such an extent, surpassing even access to U.S. firms under NAFTA. Beyond that, European producers of many branded agricultural products bearing “geographical indications” (“GIs”), such as alcohol, meats and cheeses, will be able to protect this intellectual property in Canada.
The EU Court of Justice released its opinion concerning the EU-Singapore FTA yesterday. The parallel considerations in this opinion indicate why provisional application is the most practical way to get the wheels of CETA moving. The Court has opined that the EU-Singapore FTA can only be concluded by the EU and its Member States acting together, as provisions relating to non-direct foreign investment as well as dispute settlement between investors and States do not fall within the exclusive competence of the EU. Considering that CETA contains those same types of provisions, it would be subject to the same process of conclusion, requiring the agreement of all Member States before entering into force.
For the moment, the more controversial portions of CETA are excluded from provisional application. Most notably, the proposal for an investment court system (“ICS”) cannot be applied provisionally. Despite numerous detractors – including the province of Wallonia in Belgium which famously blocked CETA’s signature for several days in October last year – the EU is actively canvassing support for this court system at the global level.
As part of last-minute internal deal-making to secure Wallonia’s assent to signature of CETA, Belgium has committed to ask the European Court of Justice to opine on the legality of the ICS under EU law. This future decision will have important implications for CETA and other EU trade negotiations but is not likely to materialize for a few (more) years. Wallonia has continued to emphasize that it will not support CETA’s ratification unless changes are made to dispute resolution processes.
If you would like further information on how CETA may affect your organization, please do not hesitate to contact us at: fclaprevote@cgsh.com, tmuelleribold@cgsh.com or schanallen@cgsh.com.