MPs must debate EU-Canada trade deal before it is implemented

13 September 2016

The European Scrutiny Committee says EU-Canada trade deal must be debated before it is implemented.

Comprehensive Economic Trade Agreement (CETA) has been described as the most ambitious external trade agreement ever negotiated by the EU. What are its implications for the UK both now, as a member of the EU, and after the UK withdraws from the EU?

Debate in the House

The Committee calls for an early debate of the EU-Canada trade deal on the Floor of the House for the following reasons:

It raises complex legal and policy issues for the UK, both while it is a Member of the EU and after its withdrawal from the EU, which the Government has failed to adequately address
Although there is parliamentary control over the ratification of treaties, such a debate would provide be the 'only opportunity' for the House of Commons as a whole to scrutinise and have a say on the Government's position on CETA before it is signed and then provisionally implemented
Significant public interest in and concerns about the deal and the need for more transparency in trade negotiations and their conclusion add to the urgency of an early debate

Background

The Comprehensive Economic Trade Agreement (CETA or Agreement) between Canada and the EU and its Member States is intended to address a wider a range of trade and investment barriers than other existing EU trade agreements. It includes tariff free access on most goods (certain sensitive agricultural products are, for example, excluded), new market access opportunities in certain services sectors, facilitation of the recognition of professional qualifications, investment provisions, and collaboration on environmental and labour standards. The Commission expects it to be signed at the EU-Canada Summit on 27 October 2016.

Although the Commission considers CETA falls within its sole competence, it has presented CETA as a 'mixed' agreement, following strong pressure from Member States. This means that it will require ratification by individual Member States as well as by the EU to fully enter into force. Ratification can take years or may never take place. In the meantime, CETA may be implemented before ratification ('provisionally applied'), if agreed by the Council by the requisite majority.

The Government broadly welcomes the Agreement from a policy perspective and notes that its provisional application could benefit the UK before it withdraws from the EU and set the basis for a future agreement with Canada after Brexit.

Although the CETA is ready for signature, important issues remain unclear. The Committee says Government should spell out its views on the following issues:

General policy issues

The breadth and depth of CETA – which UK sectors or stakeholders are set to benefit and lose from its implementation?
The Commission is currently running a public consultation on the new investor-state dispute settlement court system (ICS), to be included in future EU trade agreements. Yet ICS already features in CETA. Does the Government support its inclusion in CETA and do the new provisions adequately address UK public stakeholders' concerns over foreign companies' ability to sue Governments?

Legal/competence issues

The Government's policy is that the EU should, generally, only exercise exclusive EU competence (for instance in the area of tariffs and foreign direct investment), and not shared competence or exclusive Member State competence, which should be exercised by the Member States. Yet the draft texts do not make a clear distinction between areas of shared and areas of exclusive competence
The Committee says the Government should be clear which provisions it considers engage exclusive EU competence and which are shared competence. The Government has resisted this in the past, on the grounds that clarity could assist those who take a different view, but these issues could also affect provisional application to the extent that only the EU operates provisional application (see below)

Issues regarding provisional application

What is the process for triggering or limiting provisional application? Is it by signature of the EU alone, or signature by the EU and its Member States?
Which provisions are to be provisionally applied and do all such provisions fall within matters of exclusive EU competence?
Does CETA require any changes to UK law before it can be provisionally applied?
Does the Government support the provisional application of the controversial investment dispute clauses, particularly when (as currently drafted) they survive three years after provisional application?

Wider Brexit implications

What are the implications for future UK trading arrangements of provisionally applying and concluding a deal before the UK withdraws from the EU, and the implications if CETA is not provisionally applied and/or concluded before the UK leaves the EU?

Further information

Image: iStockphoto