The success story of CETA

The European Union has today, the 15th of February , in Brussels, voted in favor of the Comprehensive Economic and Trade Agreement. This is a bilateral international treaty, aiming to establish free trade relations. Negotiations have started since many years but there was no concrete outcome (owning to Belgium’s opposition) until Saturday, the 29th of October 2016, when it was finally agreed with Canada. There is a big controversy around CETA, which needs to be analyzed thoroughly.

At first, what needs to be clarified is the background of the two parties’ relations in order to understand why surrogates of Canada and the EU Member States have been struggling for this agreement that much. It is important to know that Canada is the 12th most important trading partner of the European Union, while the latter is the 2nd biggest trading partner of the EU(after the US), accounting for 10% of Europe’s external trade. The EU exports mainly machinery, transport equipment and chemicals to Canada and Canada offers natural resources, energy, raw materials, as well as vacancies to European population, know-how and exports from EU to foreign markets. For that reason, CETA aims to help both trade and investment be conducted in an easier, amplified and more democratic way. In total, trade in goods and services comes up to €60 billion and more than €120 billion respectively, per year.

What could be healthier and more beneficial for the European Union rather than a treaty with a sizeable, healthy market, like Canada? In times of economic uncertainty, this agreement marches in parallel with the objectives set by the European Union within the “Europe 2020” Strategy, in terms of employing the 75% of the population aged from 20 to 64 years old, as well as making Europe a more sustainable place to work by creating conditions for a more competitive economy. The agreement is expected to increase trade in goods and services between the EU and Canada by nearly a quarter as the promotion of growth, the effective investment and the research innovation become priorities. Furthermore, CETA is a progressive treaty that, in terms of business world, will contribute to the elimination of import duties (European exporters will save around €500 million a year), the establishment of EU public contracts in Canada, the transfer of personnel between the two parties, the limitation of the unlawful copies Canada used to make with the European innovations, traditional food products and artworks. Concerning farming, the open market will allow consumers to have a variety when choosing the products they want, making the companies keep their prices low. As a major producer of high-quality food, the EU will become able to sell more to a high-income market and thus increase its income.

In case these were not enough to persuade, then the guarantees CETA is offering may be more encouraging even for the more skeptical European citizens. According to the draft resolution (Chapter 21, Article 21.1, par.2), there is going to be a Regulatory Cooperation Forum, which will ensure respect for the already existing treaties, like GATT for products or GATS for services, as well as the protection for human, animal and plant life or health and the environment. Its role will be advisory by suggesting technical solutions to legislators, but will never interfere in a country’s decision- making process and domestic policy. It will be like a conformity assessment body in the EU testing EU products for export to the Canadian market according to Canadian rules and vice versa, deterring even smaller companies from wasting money for that reason.  CETA will not even be able to influence food safety (no danger from grown hormones or GMOs) or the environment, as cooperation between the two parties is “limited” to policy developments issues. Furthermore, there is no possibility of influencing public sector, given the fact that there is no such task for CETA to put force on governments to privatize or deregulate public services. Equality, respect, transparency and democratic manipulation are also ensured through the counter investment dispute. The fact that a country has a strong legal system does not always mean the law will protect foreign investors from discrimination by governments.  In other words, CETA can prevent investors from being unfairly treated in foreign countries by establishing a strong and independent investment dispute settlement system and enacting rules on members of the tribunal to avoid frivolous claims. By setting such rules, investors will be enjoying the legal certainty they need, while making sure that the system cannot be abused.

Such a progressive treaty with a major world economy, like Canada, means a lot more than just addressing a wide range of issues about trade of products and services. The almost 1960-page draft promises a real, transparent and mutually beneficial environment for producers, traders and investors, against which no suspicious theories can ever speak.

S. Christofyllidis

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