The Power of Perspectives

The Canadian Bar Association

Erika Schneidereit

CETA is not a done deal yet

November 30 2016 30 November 2016


After months of uncertainty, CETA appears to be back on track. While the European Parliament has yet to formally back the agreement, it recently rejected a motion that would delay implementation, suggesting that lawmakers will consent to the treaty’s provisional application. So does that mean CETA is safe?

Although CETA’s future looks relatively secure, any international agreement can be derailed. Canadians caught a glimpse of this with CETA’s last-minute challenge from Wallonia, the French-speaking region of Belgium. Although Walloon Minister-President Paul Magnette (pictured above) eventually withdrew his opposition, this may not be the last roadblock CETA must face.

To secure Walloon support, Belgium agreed to ask the European Court of Justice to review CETA’s investment dispute settlement system, leaving the door open to one of CETA’s more controversial aspects. Regardless of the Court’s decision, the investment dispute settlement system remains outside the scope of CETA’s provisional application, meaning that all Parties must ratify the agreement before it comes into force. This leaves plenty of time for Wallonia, or any other region, to bring up new concerns.

The Walloon episode also highlights the influence of internal politics on international agreements. Magnette’s Socialist Party has been under increasing pressure from domestic opposition lately, and current investment figures provide little support for his concerns about the power CETA could hand over to multinational corporations. While Canadian investments in Belgium were worth approximately $1.1 billion CAD in 2015, Belgian investments in Canada were nearly five times that amount. In Wallonia, Canada doesn’t even rank among the top five countries of origin for investment. Even with a surge of Canadian investment in Belgium post-CETA, corporations would likely focus their efforts in Flanders (Belgium’s Dutch-speaking region), which in 2015 attracted three times more foreign investment than Wallonia. Given the shaky factual basis for his concerns, it seems domestic political interests (or regional tensions) may have been the real driving force behind Magnette’s protests. And with domestic politics at play, who knows whether the Minister-President will have further objections in future.

While the provisional application of CETA is significant, it can also be undone. CETA allows a party to terminate provisional application by submitting a written notice, with termination taking effect the following month. Given that all E.U. member states are parties, a domestic policy change in any of the 28 E.U. countries could seriously impact the agreement. While trade agreements generally assume a stable commitment from parties, a dramatic change in political leadership can have unexpected effects. A good example of this is the recent U.S. election won by Donald Trump, a president-elect who has vowed to pull out of the Trans-Pacific Partnership and renegotiate the North American Free Trade Agreement.

European and American politics are very different, but the protectionist rhetoric that charmed American voters could just as easily appeal to disillusioned voters in Europe. The protectionist impulse behind Trump’s win already played a major role in Britain’s decision to leave the E.U. earlier this year. Trump’s victory could also put wind in the sails of populist political candidates across Europe just in time for the continent’s rapidly approaching wave of elections. In Austria, for example, far-right candidate Norbert Hofer is in a surprisingly strong position leading up to a December 2016 presidential election. If elected, Hofer wants Austria to hold a plebiscite before ratifying any new trade deal, including CETA. Marine Le Pen, running in France’s 2017 presidential election, has stated that she shares Trump’s protectionist trade views. Eurozone pillar Germany, as well as the Netherlands (with its far-right populist candidate Geert Wilders), are also holding national elections in 2017.

It’s still unclear whether Trump’s victory will have any impact on European voters. But given the unexpected turns in this year’s most significant political events, nothing (including CETA) is guaranteed.

Erika Schneidereit is a JD candidate at the University of Ottawa - Faculty of Law and an MA candidate at the Norman Paterson School of International Affairs. The author's views are her own.

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