Comprehensive Economic and Trade Agreement (CETA)
Quick Facts on CETA
- comprehensive EU-Canada economic agreement
- removing 99% of customs duties & many other obstacles for business
- to boost trade, strengthen economic relations and create jobs
- an expected €12 billion increase for Europe's GDP
- agreed text available for the public
- presented for EU democratic approval
The Comprehensive Economic and Trade Agreement (CETA) is a freshly negotiated EU-Canada treaty. Once applied, it will offer EU firms more and better business opportunities in Canada and support jobs in Europe.
CETA will tackle a whole range of issues to make business with Canada easier. It will remove customs duties, end limitations in access to public contracts, open-up services' market, offer predictable conditions for investors and, last but not least, help prevent illegal copying of EU innovations and traditional products.
The agreement contains also all the guarantees to make sure that the economic gains do not come on expense of democracy, environment or consumers' health and safety. The trade negotiating mandate was made public in December 2015
Outcomes of the CETA negotiations
Following the political break-through of October 2013, negotiators have now finished the negotiations on the EU-Canada Comprehensive Economic and Trade Agreement (CETA) in August 2014. In this section we present the complete outcome of the negotiations.
The legal review of the text has been completed and will now be translated into all EU official languages. At a later stage, the agreement will need to be approved by the Council and the European Parliament. The text of the agreement is not yet binding under international law and will only become so after a legal review and the completion of the ratification process.
Proposal for a Regulation implementing the EU-Canada Comprehensive Economic and Trade Agreement (CETA) accompanying the decisions authorising the signature of and concluding the CETA
What is CETA about?
Ending custom duties
CETA is going to eliminate all industrial duties saving European exporters around €470 million a year.
Duties will be eliminated quickly. Most of them will be removed as soon as the agreement enters into force. Seven years later, there will be no more customs duties between EU and Canada for any industrial products.
A far reaching elimination of customs duties will apply also to the farming and food sector. Nearly 92% of EU agriculture and food products will be exported to Canada duty-free.
Opening agricultural markets has the potential to keep prices down and provide consumers with more choice. As a major producer of high-quality food, the EU will benefit from improved access to the Canada high-income market. The outcome of the negotiations is especially promising for processed agricultural products (PAPs), which is one of the EU’s main export interests. With nearly all Canadian duties for these products eliminated, the EU food-processing industry is expected to considerably gain from CETA. As regards wines and spirits, tariff elimination is complemented by the removal of other relevant trade barriers which will significantly improve access to the Canadian market.
For a handful of sensitive products such as beef, pork, sweetcorn on the EU side and dairy in Canada, the preferential access is limited to quotas. Poultry and eggs will not be liberalised on either side. The EU entry-price system is maintained.
Thanks to tariff elimination the EU processing industry will have better access to Canadian fish. Sustainable fisheries will be developed in parallel, in particular with regard to monitoring, control and surveillance measures, and the fight against illegal, unreported and unregulated fishing.
Letting EU businesses bid for Canadian public contracts
With CETA, EU companies will be able to bid for public contracts in Canada at all levels of government. This includes the provincial authorities, responsible for a large public spending.
An EU-Canada Joint Study (2008) demonstrates that the overall value of contracts awarded by the federal government in Canada was estimated at C$ 15 to 19 billion per year. The value of contracts at other levels of government greatly exceeds this. For example, in 2011 procurements by Canadian municipalities were estimated at C$ 112 billion (approx. €82 billion) or almost 7% of Canadian GDP.
European businesses will be the first foreign companies to get that level of access to Canadian public procurement markets. No other international agreement concluded by Canada offers similar opportunities.
Canada will also create a single electronic procurement website that combines information on all tenders to ensure that the EU companies can effectively take advantage of these new opportunities.
Stepping-up regulatory cooperation
Under CETA, the EU and Canada have agreed to set up a Regulatory Cooperation Forum. The Forum will function as a voluntary cooperation mechanism to exchange experiences and relevant information among regulators, and to help identify areas where regulators could cooperate. It will not be able to change existing regulations or develop new legislation. Nor will it have any decision-making powers. The Regulatory Cooperation Forum will only provide assistance and make suggestions to regulators and legislators. It will in no way restrict the decision-making power of regulators in the EU's Member States or at EU level.
In addition, the chapter on technical barriers to trade (TBT) contains provisions to improve transparency and foster closer contacts between the EU and Canada in the field of technical regulations. The EU and Canada agree to further strengthen links between their relevant standard setting bodies. Both sides have agreed to accept the conformity assessment certificates issued by each other's conformity assessment bodies in a number of sectors, such as electrical, electronic and radio equipment, toys, machinery, and measuring equipment. This means a conformity assessment body in the EU can test EU products for export to the Canadian market according to Canadian rules and vice versa. This will avoid both sides doing the same test and could considerably reduce costs for companies and consumers alike. This will particularly help smaller companies for whom paying twice for the same test can be prohibitive
Protecting European innovations & traditional products
CETA will create more of a level playing field between Canada and the EU as regards intellectual property rights. For instance, the EU pharmaceutical sector can see tangible benefits thanks to developments in the Canadian patent system. Also, European innovations, artworks and brands will be better protected against being unlawfully copied.
The rules agreed in CETA will also benefit EU farmers and small businesses involved in food production. CETA recognises the special status and offers protection on the Canadian market to numerous European agricultural products from a specific geographical origin. The use of geographical indications (GIs) such as Grana Padano, Roquefort, Elia Kalamatas Olives or Aceto balsamico di Modena will be reserved in Canada to products imported from European regions where they traditionally come from. The agreement also provides for the possibility to add other products' names to the list in the future. In addition, thanks to the agreement, some prominent EU GIs such as Prosciutto di Parma and Prosciutto di San Daniele will finally be authorised to use their name when sold in Canada, which has not been the case for more than 20 years.
Streamlining trade in services
Around half of the overall GDP gains for the EU are expected to come from liberalising trade in services. CETA will bring new opportunities for European companies by creating access to the Canadian market in key sectors such as financial services, telecommunications, energy and maritime transport. Overall, output gains for the EU could amount to €5.8 billion per year once the agreement is fully implemented.
The agreement will also facilitate the temporary movement of key company personnel and service-providers between the EU and Canada. This is particularly important for firms with overseas operations. Certain categories of professionals will also have easier access to temporarily supply services such as consultancy in a variety of sectors like accounting, architecture or engineering, in that latest case simplifying the fulfilment of after-sales maintenance and monitoring commitments.
The agreement provides a framework for a future mutual recognition of qualifications in regulated professions. At the moment, the lack of coherent requirements for professionals remains a stumbling block, especially for providing cross-border services. Under CETA, the relevant professional organisations or authorities in the EU and Canada will be able to further work together on the technical details for recognising diplomas
Promoting and protecting investment
CETA is the first EU trade agreement that brings broad benefits to EU companies investing outside the EU. This is made possible by the new competence that the EU gained on investment under the Lisbon Treaty.
CETA removes and alleviates barriers for investors to enter the Canadian market. Moreover, the agreement ensures that all European investors in Canada are treated equally and fairly. To improve the investment climate and offer more certainty to all investors, the EU and Canada have committed to key principles, such as non-discrimination between domestic and foreign investors. Canada and EU also commit that they will not impose any new restrictions on foreign shareholding.
Both the EU and Canada have strong legal systems and investors can, in effect, turn to the domestic judiciary with any concerns they may have. However, this may not always guarantee foreign investors will be adequately protected, for example, from discrimination. For example, a government could expropriate a foreign investor without proper compensation. An investor could also face restrictions to bring its case to the domestic court. Rules governing international arbitration that allow investors to raise such concerns have traditionally been covered by EU Member States in their bilateral investment treaties.
CETA includes an investment protection and dispute settlement system which matches the expectations of the EU’s and Canada’s citizens and business. The new system is fairer, more transparent and institutionalised. At the same time, it continues to resolve investment disputes in an expeditious manner.
CETA incorporates all the essential elements of the EU’s new approach on investment protection and investment dispute settlement, including:
- Strong language confirming the right to regulate for all levels of government.
- A clear move from the current arbitration system to a permanent and institutionalised dispute settlement tribunal. The members of the tribunal will no longer be designated ad hoc by the investor and the state involved in a specific dispute but in advance, by the authorities of the EU and Canada. The appointments will be based on high qualifications and proven ethical conduct. The three members of the tribunal dealing with a given dispute will be allocated at random, to guarantee their impartiality.
- Detailed commitments on ethics to avoid any conflicts of interest, whether perceived or real. Members of the tribunal and the appeal tribunal will, for instance, not be able to work as lawyers or experts in any other investment dispute.
- An appeal system comparable to what is found in domestic legal systems, meaning that decisions will be checked for legal correctness and reversed where an error arises.
- Joint commitment by the EU and Canada to work with other trading partners to set up a permanent multilateral investment court with a standing appellate mechanism.
Further information on investment protection and investment dispute settlement
Ensuring good cooperation in the future
CETA creates a framework to resolve any future disagreements that may occur between EU and Canada about the interpretation and implementation of the Agreement. It applies to most areas of the agreement. The system is intended as a last resort should the parties fail to find a solution by other means. It proceeds along a fixed set of procedures and time-frames. Should parties fail to reach an agreement through formal consultations, they can request the establishment of a panel, made up of independent legal experts.
As an alternative to formal dispute settlement mechanism, the EU and Canada set also rules that will allow for mediation to tackle measures that adversely affect trade and investment between EU and Canada. This can be used on a voluntary basis.
Protecting democracy, consumers and environment
The agreement contains all the necessary guarantees to make sure that economic gains do not come at expense of democracy, consumer health and safety. The trade negotiating mandate was made public in December 2015, social and labour rights, or the environment.
- CETA will ultimately replace the 8 existing bilateral investment agreements between individual EU Member States and Canada. In this respect, CETA has provided the EU with the opportunity to introduce further guarantees to prevent any abuse of the investment protection rules and investor-state dispute settlement systems. The Commission has taken public concerns expressed on investment very seriously. The improved investor-to-state arbitration system will be based on clearer rules. Those also include a code of conduct, government control over arbitrators and full transparency of proceedings. With CETA, investors will not be able to successfully challenge genuine state regulatory action. The right of governments to regulate in the public interest will not be affected.
- CETA will not affect food-related or environmental regulations in the EU. Canadian products can only be imported and sold in the EU if they fully respect the relevant European regulations - without any exemption. For example, CETA does not affect the EU restrictions on beef containing growth hormones or GMOs. Nor does CETA put specific restrictions on future rulemaking. Both the EU and Canada will keep the right to regulate freely in areas of public interest such as environment, health and safety.
- In CETA, the EU and Canada have also reaffirmed their strong commitment to the principles and objectives of sustainable development. The CETA Trade and Sustainable Development chapter sets up effective mechanisms for involving representatives of EU and Canadian civil society for implementing and monitoring of the agreement and include a dedicated arbitration mechanism, including government consultations and a panel of experts.