On Thursday, 21 September, the Comprehensive Economic and Trade Agreement (CETA) between the EU and Canada enters into force provisionally.
Welcoming this milestone in the EU’s trade policy, President of the European Commission Jean-Claude Juncker said: “This agreement encapsulates what we want our trade policy to be – an instrument for growth that benefits European companies and citizens, but also a tool to project our values, harness globalisation and shape global trade rules. This trade deal has been subject to an in-depth parliamentary scrutiny which reflects the increased interest of citizens in trade policy. The intense exchanges on CETA throughout this process are testimony to the democratic nature of European decision making and I expect Member States to conduct an inclusive and thorough discussion in the context of the ongoing national ratification processes of the agreement. Now it’s time for our companies and citizens to make the most out of this opportunity and for everyone to see how our trade policy can produce tangible benefits for everyone”.
Commissioner for Trade Cecilia Malmström said: “Things are about to change for our exporters. The provisional entry into force allows EU companies and citizens to start reaping the benefits of this agreement right away. This is a positive signal for the global economy, with the potential to boost economic growth and create jobs. CETA is a modern and progressive agreement, underlining our commitment to free and fair trade based on values. It helps us shape globalisation and the rules that govern global commerce. Moreover, CETA underlines our strong commitment to sustainable development and protects the ability of our governments to regulate in the public interest. This agreement also vastly strengthens our relationship with Canada, a strategic partner and ally with whom we have deep historical and cultural ties.”
The provisional application of CETA on 21 September follows its approval by EU Member States, expressed in the Council, and by the European Parliament.
It will only enter into force fully and definitively, however, when all EU Member States have ratified the Agreement. The Commission will work with EU Member States and Canada to ensure its smooth and effective implementation.
What will CETA do?
CETA offers new opportunities for EU businesses of all sizes to export to Canada. It will save EU businesses €590 million a year – the amount they pay in tariffs on goods exported to Canada. As of 21 September CETA removes duties on 98% of products (tariff lines) that the EU trades with Canada. It also gives EU companies the best access ever offered to companies from outside Canada to bid on the country’s public procurement contracts – not just at the federal level but at provincial and municipal levels, too.
The agreement will especially benefit smaller companies who can least afford the cost of the red tape involved in exporting to Canada. Small businesses will save time and money, for example, by avoiding duplicative product testing requirements, lengthy customs procedures and costly legal fees. Member States’ authorities dealing with export promotion stand ready to help businesses to start exporting overseas, boost existing trade, and attract investment.
CETA will create new opportunities for European farmers and food producers, while fully protecting the EU’s sensitive sectors. The EU has further opened its market for certain competing Canadian products in a limited and calibrated way, while securing improved access to the Canadian market for important European export products. Those include cheese, wine and spirits, fruit and vegetables, and processed products. CETA will also protect 143 EU “geographical indications” in Canada, high quality regional food and drink products.
The EU’s 500 million consumers will also benefit from CETA. The agreement offers greater choice while upholding European standards, as only products and services that fully respect all EU regulations will be able to enter the EU market. CETA will not change the way the EU regulates food safety, including genetically modified products or the ban on hormone-treated beef.
The agreement also offers better legal certainty in the service economy, greater mobility for company employees, and a framework to enable the mutual recognition of professional qualifications, from architects to crane operators.
Moreover, EU Member States can continue to organise public services as they wish. A Joint Interpretative Instrument, which will have legal force, has further clarified this and other issues. It clearly and unambiguously outlines what Canada and the EU have agreed in a number of CETA articles.
Procedure and next steps
The EU and Canada signed CETA on 30 October 2016, following the EU Member States’ approval expressed in the Council. On 15 February the European Parliament gave also its consent. On 16 May 2017 the Canadian side ratified CETA. This paved the way for provisional application as soon as Canada adopted all the necessary implementing rules.
CETA will be fully implemented once all EU Member States ratify the deal according to their respective constitutional requirements. At the time CETA will take full effect, a new and improved Investment Court System will replace the current investor-state dispute settlement (ISDS) mechanism that exists in many bilateral trade agreements negotiated in the past by EU Member States’ governments. The new mechanism will be transparent and not based on ad hoc tribunals.
The framework for the EU-Canada relationship is set out in the Strategic Partnership Agreement (SPA), which allows for reinforced cooperation in strategic areas of shared interest and responsibility such as climate, security and foreign and security policy. The Strategic Partnership Agreement has been provisionally applied since 1 April 2017 and, together with CETA, enables an even further deepening of EU-Canada relations.
The EU’s free trade agreements have been proven to spur European growth and jobs. One example is the EU-South Korea trade deal. Since it entered into force in 2011, EU exports to South Korea have increased by more than 55%, exports of certain agricultural products have risen by 70%, EU car sales in South Korea have tripled and the trade deficit turned into a surplus. This agreement was also applied provisionally for several years following EU-level ratification, pending its ratification by all EU Member States.
31 million jobs in Europe depend on exports. On average, each additional €1 billion of exports supports 14 000 jobs in the EU.