CETA’s long journey. Any end in sight?

Briana Chui // 15 February 2017

The Comprehensive Economic and Trade Agreement (CETA) has had a long journey to today’s vote of consent in the European Parliament. Most of the trade agreement between Canada and the European Union could be provisionally in force by this spring. However, even with such consent, because of the nature of CETA as a “mixed-agreement”, each Member State must ratify the deal in order for its full implementation to take place.


Negotiations between Canada and the EU began back in 2009, but reaching the EU-Canada summit in October 2016 was another part of the agreement’s difficult ride. Within a week before the summit was to take place for Canadian Prime Minister Justin Trudeau and the European Commission President Jean-Claude Juncker to sign, protesters in Belgium’s Wallonia region disrupted the progress. Protesters voiced their opposition on the grounds that freer trade with Canada would threaten domestic jobs, undermine labour laws, risk environmental damage, encourage corporate corruption in courts, and undermine democracy. On top of this, on December 5th, Paul Magnette, the current Minister-President of Wallonia, unveiled his so-called “Namur Declaration”, a statement whose aim is to “radically remake” EU trade policy.


However, all these concerns are ungrounded. For one, CETA is estimated to stimulate economic growth in part by supporting about 14,000 EU jobs per every billion euro in exports. Domestic labour laws are also to be protected, and CETA ought not to have any impact on working conditions. Further, CETA explicitly discourages trade and investments which do not adhere to domestic environmental policies. CETA’s opponents have nothing to fear. In fact, with the 98% of tariffs CETA will eliminate between Canada and the EU and the 500 million euro in annual savings of industrial and agricultural duties for EU exports, one would anticipate CETA providing much greater benefits than the imagined harms of protesters.


Opponents also fear corruption and lack of concern for national sovereignty in virtue of implementing the special commercial courts, which would allow for corporations to challenge foreign nations who pass laws to protect workers and the environment. Contrary to such criticism, FTAs containing investment arbitration mechanisms do protect the rights of governments to regulate in the public interest— including on public health and the environment — and do not undermine national sovereignty. ISDS/ICS provisions are merely a device to expand the rule of law to the international level and protect investors against arbitrary government action. Moreover, as UNCTAD data show, only 27% of concluded original arbitration proceedings were in favour of investors and the remaining ones were either in favour of states (37%); discontinued (10%); settled (24%) or decided in favour of neither party.


As for the concern that CETA will undermine democracy: if anything, the fact that Wallonia’s population of just over three million can nearly derail an agreement which would affect 508 million other Europeans and 36 million Canadians, could be described as undermining democracy. However, the fact that CETA is a mixed agreement—that is, it requires both consent of Parliament and consent of each Member State—gives Member States’ citizens a voice. Thus, CETA protesters’ voices are especially listened to within their own states.


On a larger scale, opposition towards CETA is part of the growing anti-globalisation sentiment across the world. This is problematic, since freer trade paired with technological innovation is a huge driver of increased productivity, growing incomes and decreased costs. Protectionism leaves a country with higher production costs, less efficiency, and less prosperity. While some argue that the EU is simply too ambitious in its free trade agreements, one might want to consider the unjustified anti-free trade and anti-globalisation attitudes rising within the EU.


So, the European Parliament has voted to consent to the Comprehensive Economic and Trade Agreement which would connect Canada—the tenth largest economy in the world—to Europe’s population of 508 million. With the European Parliament’s vote for CETA to move forward, it will only be in force provisionally until each Member State of the EU has ratified the agreement, a requirement which may keep CETA from reaching its full potential. Given that protesters in Wallonia nearly pulled the EU out of CETA before and given that there is similar opposition in at least Germany and France, it may be more difficult for all Member States to individually ratify the agreement.


One of the most problematic aspects of such opposition is that it misunderstands what CETA actually is. Besides, the anticipated results of CETA are publicly available. The European institutions which deal with trade agreements are generally very transparent not only with respect to the process and status of an agreement but also with respect to the purpose, logistics, and expectations for said agreement. In light of the rising “post-truth” attitude, those who hold such unjustified stances as the protesters of the Comprehensive Economic and Trade Agreement will only hinder the social, economic, and political benefits of friendly interactions between nations given by globalisation.

EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).


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