On February 15, 2017, the European Parliament approved the Canada-EU Comprehensive Economic and Trade Agreement (CETA), paving the way for entry into force of the agreement on a provisional basis, which is expected later this spring.
The Government of Canada describes CETA as a “progressive free trade agreement which covers virtually all sectors and aspects of Canada-EU trade in order to eliminate or reduce barriers.” CETA is a broad agreement that not only eliminates most customs duties on goods traded between Canada and the EU, but also enhances market access by addressing government procurement, trade in services, regulatory cooperation through conformity assessment, mutual recognition of professional qualifications, investment protection, and enhanced intellectual property protection.
In the EU, the European Commission (the EU’s executive branch), has taken the position that the areas covered by CETA fall within the exclusive competence of the EU, with the effect that only EU Parliamentary approval is required to fully ratify the agreement and bring it into force. However, faced with disagreement by some national governments, the EU decided to propose CETA for signature as a “mixed agreement”.
This means that approval by the EU Parliament will permit the agreement to come into force on a provisional basis only. The agreement will not come into effect with respect to matters falling outside the exclusive competence of the EU until each individual EU national government has approved the agreement, which may take several years. The EU Commission has stated that the main exclusions from provisional application include: investment protection, investment market access for portfolio investment, the Investment Court System, and an article on camcording. Additional areas have been identified by the EU national governments. For example, a German constitutional court ruling also identified mutual recognition of professional qualifications and protection of workers as areas of national government competence.
Provisional application is expected to bring the vast majority of the agreement into force, and notably will result in duty free tariff treatment for almost all products that originate in the territories of the parties.
In Canada, the Federal Government has the executive power to ratify international trade agreements by Order in Council. However, since international treaties are not “self implementing,” but rather require incorporation through domestic law, implementing legislation normally will be prepared, tabled in the House of Commons, and approved prior to ratification of the agreement. The federal government initiated this process when it tabled federal implementing legislation for CETA (Bill C-30) on October 31, 2016.
On Tuesday, February 14, 2017, the House of Commons passed Bill C-30. The first reading of the bill in the Senate occurred on the same day. Once the bill proceeds in the Senate through second reading, committee and report stages, and third reading, and assuming that it is passed, the Bill will receive Royal Assent and will come into force on a day to be fixed by order of the Governor in Council.
According to the provisions of CETA, the agreement can enter into force “provisionally” on the first day after the month following the date on which the Parties have notified each other that their respective internal requirements and procedures necessary for the provisional application of the Agreement have been completed. For example, if the Parties notify each other that they have taken the necessary steps for provisional application of the agreement in March 2017, CETA can take provisional effect on April 1, 2017.