CETA Held Hostage
On Brexit again, what’s clear is that even with a new U.K. government in place, things are still unclear. There’s no roadmap on how all of the issues surrounding the UK leave scenario will be sorted out.
In the meantime, the Canada-EU Comprehensive Trade and Economic Agreement (CETA) is held hostage to fortune, languishing in treat limbo following a decision by the EU Council that the CETA is a “mixed agreement” and requires approval by the 28 EU member states to enter into force.
What complicates things is that, as long as the UK remains a member of the EU, it is included in the 28 member CETA ratification process. And indications are that it will take many months – possibly years – for the groundwork to be laid before Britain triggers the formal withdrawal notification process and the two-year cut-off in the Lisbon Treaty begins for completing that withdrawal.
This has implications for the future of the CETA, with indications in European capitals that final EU action on the CETA has to be suspended until the UK situation resolves itself.
Some suggestion of progress on the CETA front, however, was indicated last month when Canada’s trade minister, Chrystia Freeland, and her European counterpart. Cecelia Malmstrom, talked about possible provisional implementation of the deal, pending member country ratification.
Clearly, provisional application is the way to go. Here are some further points of clarification on this idea.
Provisional application means all or parts of a treaty can be applied by the parties while the full ratification process remains to be completed. This is specifically allowed under international law. The Vienna Convention on the Law of Treaties – yes, there’s a treaty that even deals with treaties – provides for this. It’s fully legal.
There are good examples of treaties that have been provisionally implemented for years without being fully ratified. The most noteworthy is the General Agreement on Tariffs and Trade (GATT), which had been included as part of a larger multilateral agreement concluded in 1947 called the Agreement on the International Trade Organization (ITO).
The ITO was never approved by the U.S. Congress (sound familiar?), so the GATT was applied provisionally by all signatories, thereby by-passing the U.S. system. This situation lasted for almost 50 years, until the World Trade Organization Agreement came into being in 1994.
This illustrates that parties have a pragmatic option when it comes to treaty implementation, a way to avoid getting bogged down in technical, jurisdictional issues and allows for forward progress where mutual interests dictate. This should apply in the case of the CETA.
Critical Mass Within Brussels’ Competence
Comment has been offered to the effect that something like 90% of the CETA is within the exclusive competence of the EU organs – European Council and Parliament – and that these parts don’t require member State approval.
I’m not sure about the 90% figure, but under Article 3 of the Treaty on the Functioning of the European Union (TFEU), the EU bodies in Brussels have exclusive authority over the following matters: customs and tariffs; competition rules; monetary policy for the Euro area; conservation of marine biological resources under the common fisheries policy; and, importantly, all aspects of commercial policy.
While those specific aspects of the CETA that fall within these domains would have to be sorted out, there’s enough here to allow for significant parts of the CETA (maybe even 90%) to be provisionally implemented by Ottawa and Brussels alone.
Take customs matters. Brussels alone has the power to implement changes to the EU Common External Tariff, meaning, of course, all tariff reductions agreed to in the CETA. So these could be put into effect now, without needing any action by the member States.
In commercial policy and competition law, CETA provisions in these areas are outside the competence of EU member countries and so Brussels aloe could legislate any needed changes to bring CETA obligations into effect throughout the EU.
Gains Across the Atlantic
On the Canadian side, the federal cabinet (i.e., the Governor-in-Council) alone has the constitutional authority to negotiate and conclude treaties and, where internal implementation is concerned, Parliament can enact the necessary legislation. In matters of trade affecting Canada as a whole, there is no constitutional requirement for provincial legislation for Canada to ratify an international treaty.
In any event, all 10 provinces and three territories were at the negotiating table and signed on to the deal two years ago, so there are few issues on the ratification and implementation side in Canada. The problems are on the other side of the Atlantic.
Provisional application of the CETA is the pragmatic solution. The potential gains for the EU are real, not only in securing preferential access to the Canadian market for European goods and services (not inconsiderable, even though Canada is a small economy in relative terms) but in showing the world that the Brexit turmoil doesn’t impede real progress on the trade front.