EU Court: EU-Canada Trade Deal Stays in Effect
The EU-Canda trade deal, which has provisionally been in effect since 2017, will stay in effect. This was decided by the European Court of Justice earlier today.
According to the ECJ: “The mechanism for the resolution of disputes between investors and states provided for by the free trade agreement between the EU and Canada is compatible with EU law,”
Belgium Initially Against Deal
The ECJ ruled on the EU-Canda deal after Belgium filed a challenge in 2017. The Belgians feared that the deal would affect the role of the EU courts in trade disputes and even the access to impartial and independent courts.
Belgium’s foreign minister Didier Reynders welcomed Tuesday’s court’s ruling.
“With its opinion, the court dismisses the remaining legal concerns,” he said in a statement, pointing out that due to the Canada trade deal Belgium’s exports to Canada grew strongly in the first year, with an average increase of more than 30 percent compared to a European average of 6 percent.
Reynders said the court system is the first step towards establishing a multilateral court system that “will eventually become the competent legal forum for resolving the investor-state disputes”.
The EU commission has been pushing since 2015 for the establishment of a permanent body to decide on investment disputes, to move away from the ad hoc arbitration.
The commission’s ambitions have now been given a boost by the court’s ruling.
Both the EU-Canada deal and the EU-Vietnam free trade agreement foresee setting up a permanent multilateral mechanism.
Seal the deal!
The Canada-EU Trade Agreement (CETA) still needs to be ratified by the remaining European countries that have not yet done so.
The CETA has been working well, according to the press release the European Commission released in September 2018, after the deal had been in effect for 1 year:
In addition to removing virtually all customs duties, CETA has given a boost to the business climate between the EU and Canada, offering valuable legal certainty for EU companies looking to export. Although it is too early to draw any firm conclusions, the initial trade results are pointing in the right direction. Across the EU, the latest statistics available, covering the October 2017 to June 2018 period, suggest that exports are up by over 7% year on year.
CETA offers new opportunities for EU businesses of all sizes to export to Canada. The agreement eliminated tariffs on 98% of products that the EU trades with Canada. This amounts to approximately €590 million in saved duties per year once all the tariff reductions kick in. It also gives EU companies the best access ever offered to companies from outside Canada to bid on the country’s public procurement contracts – not just at the federal level but at provincial and municipal levels, too.
The graphic below gives a quick overview of the deal.
For more information on CETA, please visit the European Commission website on the deal, where you can also find this graphic.