How far CETA can – and cannot – go

Article by Lea Schiller

The EU is Canada’s second largest trading partner, trailing only the United States, making up for 10% of Canada’s external trade in goods. On the EU’s side is a big export surplus – the EU’s exports to Canada in 2017 were worth 14.4 billion Euros more than its imports (European Commission, 2020). It’s no wonder that both partners sought to make the most of this relationship. The Comprehensive Economic and Trade Agreement (CETA) does just this – by abolishing 98% of all tariffs between Canada and the EU, it gives valuable opportunities to both partner’s businesses, consumers and economies. Or so CETA’s advocates claim.

What is CETA?

CETA is a bilateral trade agreement between Canada and the EU. Its negotiations were initially launched in 2009, but it would take until 2017 for it to provisionally enter into force. Provisionally – because in the eyes of the EU, CETA is a mixed agreement, meaning that it includes issues that are under the competences of member states. In practice, this means that all member states have to ratify the treaty themselves before it can fully go into force. Currently, 12 EU member states still need to ratify CETA, including the Netherlands (European Council, 2020). The benefits of this treaty are obvious. It opens the door to the Canadian market for European businesses by reducing trade barriers; the elimination of tariffs will save EU companies millions of Euros every year (Carleton University Center for European Studies). But that’s not the whole story.

How far can CETA go?

Because CETA is currently only provisionally applied, not all parts of the agreement are in force yet – namely, provisions for investments and regulations for the transparency of administrative proceedings. Other parts of the treaty, such as the elimination of tariffs, will come into place gradually. However, based on both the contents of the treaty and its reception in both Canada and the EU, it’s possible to make a first assessment. Firstly, CETA doesn’t eliminate all tariffs. Exceptions apply for “the most sensitive agricultural products” (European Commission, 2017); among these are for example beef, pork and cheese. CETA’s limits are also already being tested in Canada as a response to the EU’s announcement that it would put export controls on COVID-19 vaccines. Under CETA, export controls are illegal – but there are exceptions to this rule, and these exceptions include essential supplies (CBC News, 2021). CETA is therefore, though a free trade agreement, not particularly constraining when it comes to delicate areas of trade.

Why is there so much opposition to CETA?

In Europe, there is concern that opening up the market to Canada will have negative consequences for environment and food safety standards. Public pressure prompted Emmanuel Macron to commission a group of experts to assess the impact of CETA on the environment and health if it were to be fully enforced. The report found that “it is not possible to entirely exclude the risk of undermining the EU regulatory framework concerning food, animal health and welfare … but it is also currently impossible to provide an objective assessment of this risk” (Foodwatch, 2017). In other words, CETA does not incorporate enough safety provisions to rule out the risk of compromising the EU’s high food and environmental safety standards – but there are also no explicit risks that can be derived solely from the text of the agreement.

Is it worth it? One thing is for sure – the pandemic will have significant negative effects on both the EU’s and Canada’s economy. Fostering trade with a country that the EU has an export surplus to will give a much needed boost to its exports. CETA also doesn’t mean a loss of control for the EU – after all, its most vital interests are protected by the exceptions that are granted in the treaty. Granted, there are legitimate concerns about the effects of CETA on the environment and consumer health. But considering that there were no explicit problems listed in the expert report on CETA’s impact on the environment and health – it’s a calculated risk that is worth taking for the EU.

waving Canada flag
Photo by Sebastiaan Stam published on Unsplashed

References

Carleton University Center for European Studies.Reception of CETA. Retrieved from: https://carleton.ca/ces/eulearning/reception-of-ceta/

CBC News (2021, February 1). No written guarantee on EU vaccine shipments, says international trade minister. Retrieved from: https://www.cbc.ca/news/politics/vaccine-eu-export-controls-assurances-1.5896223

European Commission (2020, April 23). Countries and regions: Canada. Retrieved from: https://ec.europa.eu/trade/policy/countries-and-regions/countries/canada/

European Commission (2017, July). Guide to the Comprehensive Economic and Trade Agreement. Retrieved from: https://trade.ec.europa.eu/doclib/docs/2017/september/tradoc_156062.pdf

European Council (2020, December 2). Comprehensive Economic and Trade Agreement (CETA). Retrieved from: https://www.consilium.europa.eu/en/documents-publications/treaties-agreements/agreement/?id=2016017

Foodwatch (2017, November 1). The impact of CETA on the environment, climate and health. Retrieved from: https://www.foodwatch.org/en/campaigns/free-trade-agreements/the-impact-of-ceta-on-the-environment-climate-and-health/