EU, Canada secure clearance to kick-start free trade deal

Full implementation needs votes of national parliaments

Strasbourg | Reuters — The European Union and Canada secured clearance on Wednesday for their contentious free trade deal and the removal of import duties that supporters say will boost growth and jobs on both sides of the Atlantic.

The two parties can claim a success for their open markets policy after months of protest and uncertainty and in the face of U.S. President Donald Trump, who has withdrawn from the Trans-Pacific Partnership (TPP) and wants to rework the North American Free Trade Agreement.

European Parliament lawmakers backed the Comprehensive Economic and Trade Agreement (CETA) by 408-254, meaning large parts of the deal, notably tariff reduction, will finally enter into force some eight years after negotiations began.

European trade unions and protest groups complain the pact will lead to a race to the bottom in labour and environmental standards and allow multinational corporations to dictate public policy.

The chief point of contention is the deal’s system to protect foreign investors, which critics say can lead to cases such as Philip Morris International’s challenge, albeit unsuccessful, of plain tobacco packaging in Australia.

Supporters say the right to regulate is enshrined in the treaty and CETA has replaced closed arbitration panels with transparent and independent courts to settle disputes.

In Ottawa, Canadian Prime Minister Justin Trudeau told reporters that “when you put forward a progressive trade deal that takes in account the responsibility of governments to create … inclusive growth, we can move forward on globalization.”

Trudeau, who met Trump on Monday, is due to address the European Parliament on Thursday.

Canada’s House of Commons on Tuesday passed legislation to adopt CETA. The upper Senate chamber will now study the proposed law and officials say they expect final approval next month.

Full implementation of CETA, including investment, will only ensue after clearance by more than three dozen national and regional parliaments, which is by no means a certainty. Opposition in the Belgian region of Wallonia threatened to kill the deal last year.

One left-wing group in the parliament said CETA still faced defeat in national assemblies, referendums or at the European court.

Backers say CETA will increase Canadian-EU trade by 20 per cent and boost the EU economy by 12 billion euros (C$16.6 billion) a year and Canada’s by C$12 billion.

For Canada the deal is important to reduce its reliance on the neighbouring U.S. as an export market.

For the EU, it is a first trade pact with a G7 country and a success at a time when the bloc’s credibility has taken a beating from Britain’s vote last June to leave the bloc.

The EU recognizes EU-U.S. trade talks are frozen, but wants CETA to be just one of a series of ambitious trade deals it plans with countries including Vietnam, Japan and Mexico.

Canada had signed the 12-nation TPP, which Trump has rejected, but remains in trade talks with fellow signatory Japan as well as with India and Singapore.

Canadian Prime Minister Justin Trudeau, who met Trump on Monday, is due to address the European Parliament on Thursday.

— Philip Blenkinsop is a Reuters correspondent based in Brussels, covering EU affairs.

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