If there was ever such a thing as an easy trade deal for the EU, Canada was supposed to be it.
As Chrystia Freeland, Canada’s trade minister, put it last month: “If the EU cannot do a deal with Canada, I think it is legitimate to say: Who the heck can it do a deal with?”
That question is now set to haunt the European Commission. Europe’s febrile politics and growing resistance to supranational authorities in Brussels are threatening to undermine not only the trade deal with Canada, but even EU trade policy itself — long prized as one of the Commission’s core competences.
In an extraordinary volte-face, the Commission on Tuesday yielded to pressure from France and Germany by deciding that national parliaments would have to ratify a landmark trade deal with Canada.
This so-called “mixed agreement” means passing the buck to almost 40 national and regional assemblies, raising fears that the deal could face delays or even, in extreme circumstances, a veto.
Juncker makes the call
Italy’s trade minister Carlo Calenda immediately condemned the move, calling it “a decisive step towards the stalemate of the union’s trade policy.” He added that protracted trade negotiations threatened to torpedo the far more controversial talks with the U.S.
France joined the fray, arguing that it was impossible for the Transatlantic Trade and Investment Partnership to be concluded this year as planned.
The European Commission rejected any suggestion that its trade agenda had been derailed. Despite losing the political battle to keep the approval procedure in Brussels, the commission insisted that the new ratification process would make little practical difference to the Canadian deal. One EU official noted that the accord would be implemented “provisionally” as soon as it received the green light from the European Parliament and governments represented at the Council.
The official suggested that opposition from any of the 38 assemblies would not necessarily reverse that implementation — a view supported by trade lawyers.
“If a national parliament rejects the agreement — or in the Belgian case, even one of the regional chambers — that country can’t ratify the deal,” said Jan Wouters, professor of international law at the university of Leuven. “In consequence, there’s no official ratification. But that doesn’t legally oblige the Commission to stop the provisional application of the treaty.”
However, Gabriel Felbermayr, director of the Munich-based Ifo Center for International Economics, said the need for so many approvals would still deter other countries from pursuing deals with the EU. “All the countries that want to negotiate a trade deal with the EU are going to think very carefully now about whether they are going to spend the political capital to do so … We’re at a turning point. It will be very difficult to conclude further agreements.”
Hosuk Lee-Makiyama, director of the European Centre for International Political Economy, said he was shocked how lightly Brussels had surrendered its exclusive competence on trade. In a tweet, he described the Commission as “traitors, not guardians, of the treaty.”
As recently as last week, the Commission was expected to treat the accord as an EU-only deal, meaning it would require approval from the European Parliament and national governments in the Council. The decision on Tuesday, taken during a meeting of the commissioners in Strasbourg, came as a surprise, and officials said it was made directly, “at the last minute,” by Jean-Claude Juncker, the Commission president.
For his part, Juncker said he hoped for a rapid ratification from the parliaments because “the credibility of Europe’s trade policy is at stake.”
After the shock of Britain’s referendum to quit the EU, politicians in Paris and Berlin have sought to reassert the sovereignty of their parliaments and have protested against the EU’s plans to ratify such a high-profile trade accord without consulting national assemblies.
“Neither [François] Hollande nor [Angela] Merkel wanted CETA [the Comprehensive Economic and Trade Agreement] to be an election issue. It is much easier to defer the issue to their national parliaments, so they have no personal responsibility ahead of elections,” said a legal expert consulted by the Commission. France and Germany both hold national elections in 2017.
The Canadian deal has stoked sensitivities across Europe, primarily because it is seen as a precursor to the far more contentious TTIP accord.
Matthias Fekl, France’s trade minister, said it was “unbelievable” that Brussels had been planning to treat the deal as an exclusively EU competence.
“I find it even more hallucinatory only a few days after the result of the British referendum that one could envisage this type of procedure at the level of the European Commission,” he told AFP.
Slow road post-Brexit
The tortuous path to approve the deal will sound alarm bells in London, where politicians are pinning their hopes on a quick settlement with the EU after Brexit. Debates in national parliaments could potentially add years of delay to an accord that has already taken seven years to finalize.
In an even more sobering signal for the British, Romanian politicians have threatened to oppose the deal because of a dispute over visa-free access to Canada. Many British parliamentarians insist they will be able to disentangle the question of immigration and access for EU workers from any trade arrangement with Brussels.
“This decision clearly gives more leverage to national parliaments,” said Socialist MEP Sorin Moisa, a Romanian member of the international trade committee. “They could use it to put pressure on potential trading partners, like the U.K. if it left the EU, to grant them benefits, for example on immigration.”
Striking an optimistic note, European Trade Commissioner Cecilia Malmström said she hoped “the deal with Canada can be signed, provisionally applied and concluded quickly.”
Negotiations on the Comprehensive Economic and Trade Agreement started in 2009 and were concluded in February after Canada accepted last-minute changes to the rules allowing investors to sue governments. This appeals procedure was improved to respond to public criticism about a potential lack of democratic accountability.
Matthew Karnitschnig contributed to this report.
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This story has been updated with additional reporting.