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A comprehensive Economic and Trade Agreement between the EU and Canada shall wait no more

Artis PABRIKS
10.12.2015 - 10:45
CETA

In August 2014, the European Union and Canada concluded negotiations on a modern and comprehensive trade agreement which should bolster economies on both sides of the Atlantic and provide our societies with better prospects for economic growth, sustainable development and wellbeing. The Comprehensive Economic and Trade Agreement between the EU and Canada (CETA) shall wait no more. Europe’s economy and its enterprises are in need of strong economic stimulus and international trade is the one tool that can make the difference.

It is estimated that the EU-Canada trade deal will lead to GDP gains for the EU of up to €11.6 billion per year Artis Pabriks

Canada, as the 11th largest economy in the world, has always been a like-minded, reliable, economic, political and even military partner of Europe. It is only natural to further enhance cooperation with partners who share the same value system globally, especially in terms of economics and trade.

One of the most advanced and modern trade agreements

Of course, just like with any trade agreement these days, there are critics who would like to delay or even abandon this agreement. However, CETA can be considered one of the most advanced and modern trade agreements proposed for ratification in the EU - and Canada. When ratified, CETA is expected to increase bilateral trade in goods and services by 22.9%. It is estimated that the EU-Canada trade deal will lead to GDP gains for the EU of up to €11.6 billion per year.

CETA will not lower the high EU food safety standards because companies on both sides will have to fully respect and comply with the food quality and safety standards on the other side of the Atlantic if they wish to export their products

When talking about the benefits of CETA, I would like to highlight just some, such as market access that will eliminate customs duties on nearly 99% of tariff lines; public procurement access also at the provincial level; strengthened intellectual property rights and the protection of more than 140 specific European high-quality agricultural products through geographical indications. And while most of the agricultural tariffs will be liberalised, special safeguards will be kept for the most sensitive sectors on both sides. Equally, CETA will not lower the high EU food safety standards because companies on both sides will have to fully respect and comply with the food quality and safety standards on the other side of the Atlantic if they wish to export their products. These all are huge benefits that cannot be overlooked.

European SMEs will be main beneficiaries

CETA is a trade agreement that mainly favours small and medium-size enterprises, which comprise 99% of all business in Europe and in the past five years have created around 85% of new jobs. Because of a lack of experience, and limited financial and human resources, tariff and non-tariff trade barriers have been the main obstacles to small businesses getting access to the Canadian market. A small bakery owner from Stockholm could not even dream of exporting his products to Canada due to very complicated border procedures, different food standards and other bureaucratic procedures. Fulfilment of his dream would probably cost his business in Stockholm.

Because of a lack of experience, and limited financial and human resources, tariff and non-tariff trade barriers have been the main obstacles to small businesses getting access to the Canadian market

The main beneficiaries of this agreement are not the big corporations who can hire professional law firms to guide them through the jungle of international trade and are likely to already have strong positions in both Canadian and EU markets. Large companies can accumulate resources for market investigation, standard alignment and all other relevant procedures. They can even afford to lose some investments, while for small businesses the price for such an experiment is simply too high.

Improved transparency and clear rules on the ISDS mechanism of CETA

Today, it is rather difficult to talk about CETA without mentioning the Investor-State Dispute Settlement (ISDS) mechanism, which has raised some debate in other international free trade negotiations. Whilst the CETA negotiations were concluded long before the European Commission’s proposal on the revised ISDS system in the form of the Investment Court System (ICS), many of the elements in the ICS are already included in the investment chapter of CETA, such as improved transparency and clear rules on when the ISDS mechanism can or cannot be used.

The EU’s economy and Europe’s businesses cannot afford to wait for an undefined period of time until ICS could be operational. They need CETA today

The two most substantial differences, namely public arbitrators and the establishment of an appeals tribunal, are issues that can eventually be discussed in depth and resolved at a later stage for CETA. The EU’s economy and Europe’s businesses cannot afford to wait for an undefined period of time until ICS could be operational. They need CETA today. To use an analogy, if we need a mobile phone, we normally buy the best and most advanced which is available in the shops today, rather than waiting another 5 years without one in the hope that a more advanced version has been developed by then.

It is important to listen to constructive criticism and CETA, as a modern, comprehensive agreement, provides for a possibility to review it after ratification, if both sides find it necessary to improve some of its elements. This is true in any deal which is not stagnant. However, it would be a grave mistake to argue that we should postpone ratification or implementation just because there is not 100 percent support, from every MEP or every single organisation.

I do believe that this is a very good, ambitious, comprehensive and balanced agreement that should serve as an example for 21st century EU trade deals

We set ideals in our lives to pursue permanent improvements, but such ideals should not constrain us from living today and making decisions today instead of waiting for an unforeseeable future. I would claim that, here, the bulk of the responsibility lies on the shoulders of the EU, as the much larger stakeholder of a deal in comparison with the economically-smaller Canada. Power and size must be used with care and responsibility on the side of the European Union.

It has been more than 6 years since negotiations on CETA started. Many concessions have been made by both sides and I do believe that this is a very good, ambitious, comprehensive and balanced agreement that should serve as an example for 21st century EU trade deals. The Commission and the European Parliament should make this agreement a functioning reality as soon as possible within the year 2016.

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