Ljupcho Grozdanovski , 21 mai 2014

Upon invitation of the CEJE, Prof. Armand de Mestral gave a conference, on 20 May 2014, on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU).

Prof. de Mestral began the conference with an overview of the law and practice regarding the conclusion of Regional Trade Agreements (RTA). He reminded that there are, to date, 5000 air transport bilateral agreements, 2700 bilateral investment agreements, 2500 double taxation agreements, over 500 trade agreements and over 200 environment and human rights treaties.

He defined the notion of RTA with reference to the basic WTO principles, namely the principle of non-discrimination, the mutual granting of trade advantages between partners, the formation of customs unions such as the EU and the conclusion of free trade agreements. He noted that most of the RTA are bilateral free trade agreements concluded between neighbouring countries, but also between regional groups, as is the case with the EU - Mercosur agreement. Prof. de Mestral further outlined the provisions that are commonly included in RTA. The latter comprise, namely, the reduction of trade barriers, the free movement of goods, services, persons and capital - the EU being an example of a highly perfectioned customs union on this point - ‘0’ tariff rate on goods covered by the RTA, prohibition of export taxes, elimination of trade remedies or safeguards and dispute settlement provisions. He also mentioned provisions relative to subjects not covered by the WTO, such as the protection of Human rights, the protection of the environment, labour standards and competition law provisions and observed a growing tendency to include investment clauses in the RTA.

In the light of the general scope of RTA, Prof. de Mestral focused his presentation on the CETA between Canada and the EU. He premissed his analysis with the fact that there is currently an agreement on principle, officially announced in November 2013 by the two contracting parties, but no final draft of the agreement has been made available. It is however possible, at this stage, to present the motives and interests that have driven the stated parties to the conclusion of the agreement at issue. The main reasons of the Canadian government relate to the need to improve access to the EU market, in order to diversify the export of Canadian products. At present, 70% of the latter are being exported to the US, thus creating a great economic dependance between the two North American countries. Only 10% of Canada’s exports are directed toward the EU.

The main reasons of the EU for the conclusion of the CETA deal with enabling EU-based companies to get increased access to procurement markets in the Canadian provinces as well as to Canadian energy supplies, and to increase import of Canadian agricultural and dairy products in the EU.

The absence of a final draft of the CETA is due to the fact that there are ongoing negotiations on a number of issues such as the commitment of some EU Member States to agree on investor-state arbitration. The points upon which agreement has been reached relate, inter alia, to the elimination of tariffs, mutual concessions on agricultural goods, rules of origin on goods, the access of EU traders to provincial service markets, elimination of barriers caused by technical, health and environmental issues, cooperation and enforcement of competition laws and access to Canadian energy markets.

Prof. de Mestral concluded his presentation with the question of the impact that the CETA would have on the multilateral trade system, considering that since the creation of the WTO in 1994, there has been a constant increase of bilateral RTA, both in number and in size of the partners, thus creating a complex system of bilateral trade agreements, concluded within the broader WTO multilateral context.

Prof. de Mestral proceeded to answering two questions: one relative to the influence of the NAFTA provisions on the Investor-State arbitration clause in the CETA, and one relative to the impact of the latter on the USA-Canada trade. In his response to the first question, Prof. de Mestral considered that the CETA will go further than the NAFTA on the Investor-State arbitration issue, since the contracting parties intend to be more open and transparent. In his answer to the second question, he underlined that the USA-Canada trade has somewhat decreased due to the restrictive measures taken by the American government after 9/11. Therefore, the CETA will have a positive effect on Canadian economy, since it would no longer depend primarily on the state of the the American economy.

Ljupcho Grozdanovski "The Competitive Economic and Trade Agreement (CETA) between Canada and the European Union", www.ceje.ch, Actualité du 21 mai 2014.