Ceta: way clear for provisional application

Members of the European Parliament have given the green light for Ceta with a clear majority. In so doing, Europe’s elected representatives have come out strongly against leanings towards isolationism and in favour of a rules-based and liberal trade policy.

BDI President Dieter Kempf stressed that globalisation should be shaped on the basis of western values and setting the course should not be left to others: “The announced isolationism route of the USA under President Donald Trump is an opportunity to gain acceptance of fair rules. Europe must not hand over the field to protectionists”.

With the vote in February 2017, the EU has cleared the way for provisional application of the bilateral free-trade agreement with Canada. Most parts of the agreement will now probably be applied from May or June 2017 depending on how quickly the Canadian side also gives its firm consent. From that time, Ceta will enter into force almost completely. Costs of several hundred million Euro will be saved every year thanks to the virtually complete elimination of customs duties alone. What will not be applied for the time being is in particular the investment protection regime including the investment tribunal as well as market access for investments insofar as portfolio investments are concerned.

Could Ceta still fail?

The agreement will enter definitively and completely into force only once it has been ratified in all EU Member States. Experience teaches us that this process can take a number of years. Given the critical nature of the debate in some Member States and bearing in mind that around 40 parliaments have to give their assent to the agreement in Europe, the final ratification could also fail.

Some Belgian regions announced back in 2016 that they would prevent the definitive approval of Ceta by Belgium if the agreement’s content on investor protection is not amended. Moreover, Belgium wants the European Court of Justice to verify whether the Ceta provisions on investor protection are compatible with EU law. The Federal Constitutional Court in Germany conditionally rejected an injunction against Germany signing the agreement. However, the ruling in the main case has not yet been issued. If ratification fails in one Member State, the areas of the agreement not yet in application would never enter into force.