Comprehensive Economic and Trade Agreement (CETA) between EU and Canada [European Parliament impact 2014-2019]

The Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada entered into force on a provisional basis on 21 September 2017, and most of the agreement now applies. The ratification process is still ongoing at the Member State level.

CETA aims to increase trade in goods and services, as well as investment between the EU and Canada. Among other things, it improves EU companies’ public tendering opportunities in Canada, provides a framework for the mutual recognition of qualifications in certain professions in the EU and Canada (for example architects or crane operators) and removes customs duties on 98 % of tariff lines of products traded with Canada, except for certain sensitive agricultural products such as poultry and eggs. Statistics from the first period of provisional application of CETA (October 2017 to June 2018) showed that EU exports to Canada were up by over 7 % compared to the previous year.

The CETA negotiations started in May 2009, shortly before the Treaty of Lisbon extended the European Parliament’s competences in trade to require its approval of trade agreements. CETA became one of the early negotiations where the Parliament exercised its stronger monitoring function, tracking the talks actively and voicing its concerns throughout the process.

In June 2011, the European Parliament adopted a resolution setting out its position on key chapters of the CETA negotiations, including investment disputes, the right to regulate, regulatory differences and agriculture. The Parliament was particularly concerned about the investment protection provisions under CETA. With mounting opposition to the investor-state-dispute-settlement (ISDS) system, the Parliament maintained in its resolution that ‘a state-to-state dispute settlement mechanism and the use of local judicial remedies are the most appropriate tools to address investment disputes’, given the highly developed legal systems on both sides. In its resolution of July 2015, in the context of the negotiations for the Transatlantic Trade and Investment Partnership (TTIP), the European Parliament went a step further and asked for the replacement of the ISDS system with a new system that would be more transparent, with independent judges, and respecting the jurisdiction of EU courts. In a letter to European Commissioner for Trade, Cecilia Malmström, in November 2015, Parliament’s International Trade Committee Chair, Bernd Lange (Germany, S&D), welcomed the fact that the Parliament’s concerns were taken on board in the Commission’s new Investment Court System (ICS) proposal, while suggesting some further changes to the system. In part thanks to the European Parliament’s demands, even after the conclusion of the CETA negotiations, the controversial ISDS system was replaced with a permanent, transparent and institutionalised ICS. The Parliament went on to approve CETA in February 2017.

In its resolution of July 2016, the European Parliament also reiterated the need for a multilateral solution to investment disputes and considered CETA’s ICS as a stepping-stone to this end. Today, this process has been taken even further and active negotiations for the establishment of a Multilateral Investment Court (MIC) are ongoing. CETA also contains a commitment of both the EU and Canada to work towards the creation of the MIC.

Law-making powers

Together with the Council, the Parliament participates in the shaping of European laws in what may be seen as a bicameral legislature at EU level. The nature of the Parliament’s involvement depends on the area in question and may mean Parliament being consulted (consultation procedure), giving its consent (consent procedure), or legislating on an equal footing with the Council (the ordinary legislative procedure, or co-decision).

The latter procedure consists of the joint adoption of an act by the European Parliament and the Council on the basis of a proposal by the Commission. Here, both legislators need to agree on an identical text before it becomes law, which may take up to three readings in each of the two institutions. On average, it takes about 22 months for legislators to agree on a legislative file, starting from the Commission proposal until the signature of the final act.

The number of areas in which the Parliament co-legislates has expanded greatly over time and now includes the EU internal market, environment, consumer protection, food safety, regional development, agriculture, transport, energy and many others. Indeed, most legislative acts are now adopted following the ordinary legislative procedure.

Besides the power of consent with regard to legislative acts, the Parliament’s consent is required in many other instances not related to legislative acts in the strict sense. For example, it is needed before any new country joins the EU (Article 49, Treaty on European Union, TEU), but also before any withdrawal treaty can be concluded when a country decides to leave it (Article 50 TEU). The Parliament’s consent is also required before concluding agreements with third countries, for example association agreements, as well as before the Council determines that an EU Member State is breaching – or is about to breach – EU values (Article 7 TEU).

Read the complete study on ‘The power of the European Parliament: Examples of EP impact during the 2014-19 legislative term‘ in the Think Tank pages of the European Parliament.