CETA, EU trade politics

CETA: Commission caves in to member state political pressure, declares deal is ‘mixed’

Malmström

The Commission’s intentions to declare CETA an EU-only agreement, loudly announced last week by President Jean-Claude Juncker, have backfired. Amidst a pushback from powerful member states, including France and Germany, the Commission has decided to declare CETA “mixed” and prioritised its coming into force provisionally as early as possible.

 

The Commission wants to see international trade agreements ratified through the ordinary legislative procedure – i.e. ‘qualified majority voting’ in the Council and EU Parliament. But it has failed to do so in recent years as member states have always unanimously considered the deals to fall under their area of competency as well – i.e. as a ‘mixed’ agreement – thus requiring and extra ratification in national parliaments.

 

The extra layer of ratification concerns the areas in the division of labour in the EU that are not strictly related to the EU’s Common Commercial Policy. Depending on one’s reading of the Lisbon Treaty, this concerns among others trade agreement chapters dedicated to audio-visual services, labour and environment, or energy. These issues are issues now frequently covered in EU FTAs. Many member states also consider investor-state dispute settlement, which has only recently been introduced into EU trade agreements, to continue to fall under their remit. This the Commission disputes.

 

More actual legal clarity on the mixity of EU trade agreements is expected after a ruling on the 2012 EU Singapore free trade agreement by the Court of Justice of the EU. The verdict is not expected before 2017, however, leaving other trade agreements in a legal limbo that aggravates the current turf wars over trade policy in the EU.

 

CETA can now reasonably be expected to come into force provisionally after the Council and the European Parliament ratify the deal. European Parliament ratification appears likely but might be challenging as the centre-left group is divided on the deal. All these steps are expected to take place late 2016, and, if all goes, well, CETA to apply in its strictly “trade” parts in early 2017.

 

 

Member states’ responsibility

 

 

The Commission has clearly given the priority to CETA coming into force over battling member states over legal principles.

 

Before the Court’s verdict on the Singapore agreement “it is important that we can deliver on trade policy”, trade commissioner Cecilia Malmström explained to the press today. “Faced with the difficulty of having consensus among the member states in the foreseeable future, and the risk of dragging on, the Commission has decided to propose CETA for signature as a mixed agreement”, Malmström said.

 

The Commission considers the ball is now in the camp of the member states. “Now we call upon the member states … to also show the leadership vis-à-vis their parliaments and their citizens that this is a really good agreement”, Malmström stated today.

 

There is no doubt key European capitals consider CETA an excellent agreement. The deal significantly eliminates tariffs, and significantly opens Canada’s public procurement markets to European businesses, including at local level. CETA also endorses the EU’s new “court” system to replace international arbitration to settle disputes between foreign investors and host states.

 

Germany’s economy minister Sigmar Gabriel and France’s trade envoy Mathias Fekl have praised CETA for its depth and quality. Rome has supported the Commission’s view that CETA is an EU only deal, because it is worried CETA could be torpedoed by one single national parliament.

 

The French government said national ratification “is a question of principle to ensure citizens’ support for the commercial policies led in their name”. The French government is navigating complex waters back home. This spring, the French national assembly has called on CETA not only to be ratified by national parliaments but also to only come into force after they have all done so. Given that the latter option could last years, the French government has told MPs that it supports the provisional application of CETA – this is not necessarily a popular position to have in France.

 

MEPs are divided along left-right lines on the matter. Centre-right EPP members tend to support the Commission’s view that trade agreements are EU-only. After today’s announcement by the Commission, Artis Pabriks (EPP, Lavtia), stated: “I respect decision by the EU Commission. I would however like to stress how important it is that the EU remains a reliable negotiating partner. In these uncertain times, it’s more important than ever that the EU also delivers. It’s time to move on and start to discuss the real content and the opportunities that CETA will give”.

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