Political Perspectives – Canada’s Trade Future with the EU and UK

Jesse Robichaud

The future of CETA, Canada’s massive trade deal with the European Union, is among the most pressing questions being asked here at home as the world adjusts to the repercussions of the Brexit vote.

After all, won’t the exit of the second largest economy in the EU impact this massive trade deal? Won’t it have to be re-opened yet again?

Earlier this week, following various reports on the status of CETA in the EU, Canada’s chief negotiator held a technical briefing to explain the updated landscape – at least how the Canadian government sees it.  The good news for pro-CETA backers is that it appears as though the deal will move ahead.  But in order to ratify the deal and bring it into force, the following steps now need to occur in both the EU and here in Canada:

EU PROCESS

1. The EU Commission will submit CETA to the EU Council – done earlier this week.

2. The EU Council will review and agree to advance the agreement based on consensus – as early as this fall.

3. The EU Parliament will debate and vote – will need 50% plus 1 to ratify.

4. Each EU member state (currently 28 countries, including the UK) will then need to ratify through their respective legislative bodies – a process that could take up to 5 years.

However, under EU law, once the EU Council and EU Parliament ratify, over 90% of the agreement will be provisionally in force.  The only parts that will not be are the very limited items outside EU jurisdiction.

CANADIAN PROCESS

1. Order in Council to ratify CETA coupled with federal implementing legislation – could come as early as this fall.

2. Implementing legislation will vary province to province according to each province’s obligations – a process that could also commence as early as this fall.

The most optimistic timeline is that CETA will be ratified by both sides and provisionally in force sometime in the first quarter of 2017.  However, the long and winding road of CETA to date – 7 years and counting – should give even the most optimistic observers reason to pause.  And while it is good news that CETA is moving forward, the potential removal of the UK from the pact – Canada’s largest trading partner in the EU by far – should not be understated.  

Either way, the gains for Canada are enormous and CETA represents Canada’s most ambitious trade initiative to date. The deal covers everything from trade in goods and services to intellectual property, procurement, regulatory cooperation, labour mobility and investment, and it is even seen as environmentally progressive. Canada’s trade minister Chrystia Freeland rightly calls it a “gold standard agreement.” To underscore the level of ambition, approximately 98 per cent of all EU tariff lines will be duty-free on the very first day CETA comes into force. By comparison, only 29 per cent of tariff lines were duty-free on the first day that NAFTA took effect.

– Adam Taylor, Ensight Director