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Are we there yet? Aquilina Law September 5, 2021

Are we there yet?

The long road to the Comprehensive Economic and Trade Agreement (CETA)

November 1 2016 Martin Aquilina, International Business Lawyer

If you have been looking at the news lately, you probably heard many mentions of the Comprehensive Economic and Trade Agreement (CETA), the trade agreement between Canada and the European Union that has been several years in the making. CETA, being the biggest trade treaty signed by Canada since NAFTA, would give Canadian businesses access to a market of over 500 million people, at least 100,000,000 more than the population of North America.

On October 30th, 2016, Prime Minister Trudeau finally signed the deal with the European Union leaders. However, the road to the CETA has been nothing but a rocky one. Just over a week ago, Chrystia Freeland, Canada’s International Trade Minister, walked out of a meeting with the leaders of Wallonia, a French-speaking region in Belgium. At the time, it seemed like the entire deal would collapse due to the decision of this single region. So, how did Wallonia hold the entire European Union hostage?

Wallonia

The Kingdom of Belgium operates under a federal system of government but, as opposed to most countries where the federal level of government is in charge of the country’s foreign affairs, the Belgian system gives its regional parliaments a say in Belgium’s foreign affairs and therefore, in the decision-making process with respect to the CETA. Belgium as a country could not agree to the CETA unless Wallonia and the country’s other three regions agreed. This allowed Wallonia to block the Belgian approval process, demanding that some of their concerns regarding its dairy farm industry and investor-state dispute settlement mechanism, amongst others, be met. Luckily, a compromise was reached and the CETA was signed, albeit few days later than expected.

Ratification still required

Although, the signing of the deal has brought CETA closer to the finish line, there are still many steps before the trade agreement is actually up and running. Indeed, in order to facilitate the adoption of CETA, the European Commission agreed that it was to be considered an area of shared competence with the EU member states under the Treaty Governing the Functioning of the European Union. The result is that the implementation of the entire treaty will require a vote of the European Council, the majority vote of the European Parliament and validation by all 28 (or 27 if Great Britain leaves the EU) Member States in accordance with their parliamentary processes.

This essentially means that all least certain parts of the CETA could still be shelved if Wallonia later chooses not to ratify the Agreement. On a similar note, each of the Canadian provinces will need to pass its own law in order to implement the Agreement’s provisions, insofar as they deal with matters of provincial jurisdiction, within their respective provincial boundaries. In sum, while the process is proceeding nicely, we should be careful not to count our chickens before they hatch.

This article is for informational purposes only and does not constitute legal advice. If you wish to seek legal advice, contact Martin Aquilina today.

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