Canada-EU Trade Deal Ratified By European Union; Now Needs Approval By All Member States' National Parliaments

from the comes-complete-with-$1-per-person-annual-saving dept

As Techdirt reported last November, while TPP and TAFTA/TTIP appear to be dead, the trade deal between Canada and the European Union (CETA) has been slowly working its way through the system. Today, the European Parliament approved the deal, which means that the European Union has completed the formal ratification process. However, for certain aspects of the agreement, notably the corporate sovereignty chapter, further approval is now needed by the national parliaments of all the EU’s member states — which means another 30+ votes that must all go in CETA’s favor. That’s by no means certain, as resistance has been mounting in a few countries. One of them is Belgium, where the Walloon region won important additional rights that may still be invoked.

As we wrote last year, CETA’s economic effects are likely to be tiny — the official estimate is just 0.08% extra GDP in total for the EU — or even negative. The very limited economic impact is confirmed in the official press release from the European Commission, where the only quantified benefit singled out is the following:

CETA creates new opportunities for EU companies. It will save EU businesses over €500 million a year currently paid in tariffs on goods that are exported to Canada. Almost 99% of these savings start from day one.

To put that saving in context, it’s worth remembering that the EU population is roughly 500 million, so the only financial benefit that the European Commission mentions works out at around $1 per person per year. Since the European Commission would doubtless have trumpeted bigger benefits if there had been any, It’s fairly safe to assume that this is pretty much all it could find. As for the highly-controversial matter of corporate sovereignty, aka investor-state dispute settlement, here’s what the press release says:

The current form of investor-state dispute settlement (ISDS) that exists in many bilateral trade agreements negotiated by EU governments has been replaced with a new and improved Investment Court System. The new mechanism will be transparent and not based on ad hoc tribunals.

What it doesn’t mention is that the “new and improved” system hasn’t been fully worked out yet, and so any claimed advantages are purely theoretical at this stage. In a rather desperate attempt to justify a trade deal that has so few benefits, the Commission adds the following:

There is clear proof that free trade agreements spur European growth and jobs. As an example, EU exports to South Korea have increased by more than 55% since the EU-Korea trade deal entered into force in 2011. Exports of certain agricultural products increased by 70%, and EU car sales in South Korea tripled over this five-year period.

What the European Commission fails to say is that the EU trade deal with South Korea does not have any form of ISDS. If it offers “clear proof” of anything it is that successful trade deals have no need of a corporate sovereignty chapter, whether the old-style ISDS, or the “new and improved” lipstick-on-a-pig Investment Court System found in CETA.

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Comments on “Canada-EU Trade Deal Ratified By European Union; Now Needs Approval By All Member States' National Parliaments”

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Wendy Cockcroft (user link) says:

Re: Re: Re:

That Brexiteer prat Liam Fox has already signed us up to CETA. He did it while apparently negotiating terms for getting out of the EU. It seems it just didn’t occur to him to get Parliamentary approval prior to doing so, an attitude I’ve become accustomed to seeing from our authoritarian Tory government.

That said, I’d expect no better from a Labour government.

See the transcript of the parliamentary debate about debating it here:

We have a “two sides of the same coin” problem here, too.

Roger Strong (profile) says:

Re: Re: Re:2 Re:

Signing it is one thing, RATIFYING it is another.

Ratification is so last century.

UNESCO Glossary: Provisional Application

The growing use of provisional application clauses in treaties is a consequence of the need felt to give effect to treaty obligations prior to a state’s formal ratification of / accession to a treaty.

The vast majority of CETA’s provisions will be provisionally applied before the member states ratify it.

If Canada or the EU decides not to ratify CETA, they’re still bound by it for further three years. The member states – that is, the taxpayers – can still be sued if they pass or enforce any law that harms investors, from the time of signing to the time of deciding not to ratify, plus three years after.

If they ratify but later withdraw from the treaty, they’re bound for a further 20 years.

On the other hand the Investment Court System provisions will not be provisionally applied. They won’t come into force unless CETA is ratified by member states. (Yes, that somewhat contradicts the above. It’s not pretty.)

Anonymous Coward says:


To put that saving in context, it’s worth remembering that the EU population is roughly 500 million, so the only financial benefit that the European Commission mentions works out at around $1 per person per year.

Hey, that’s an extra $500 million we can use to challenge the constitutionality of the "new" ISDS system and to pay for that system.

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