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Trade talks between Canada and the European Union were concluded in 2014. The agreement was finally signed in 2016 and entered into force provisionally on September 21st, 2017. The agreement is being applied only provisionally because, as a mixed agreement (involving European and national-level responsibilities), it needs to be ratified by all national parliaments. It appears that some members of the Green Party are opposed to ratification, mainly due to concerns over the system of investment protection. This part of the agreement will not be applied until the ratification process has been fully completed.
There are four very good reasons why Ireland should ratify this agreement.
First, this is a deal that makes good business sense. Bilateral trade has increased considerably as a result of the virtual elimination of tariffs. Trade in goods alone between Canada and the EU was worth €59 billion in 2019. Ireland’s trade in goods with Canada reached €2 billion in 2019, an increase of 37 per cent compared with trade before the Comprehensive and Economic Trade Agreement (Ceta). Ireland has a positive trade balance of nearly €1 billion consisting mainly of chemicals, pharmaceuticals and agri-food products, particularly beverages. Services exports at nearly €2 billion have increased by 17 per cent.
Investment protection
Second, this agreement enshrines innovative approaches with regard to investment-protection rules. These were a major point of contention in the never-completed Transatlantic Trade and Investment Partnership negotiations with the US. As a result of that controversy, the EU proposed totally to revamp investment-protection rules moving away from behind-closed-doors arbitration panels in favour of a more court-like process. Canada was the first country to accompany the EU in this direction, and Ceta breaks completely new ground. The investment court system established in Ceta is a clear break from the ad-hoc system of private arbitration of investor-to-state dispute settlement which exists in many bilateral investment treaties.
Yet, there still seems to be a lingering perception in some quarters that Ceta’s clauses on services and investment protection could put at risk the key role of public authorities to regulate in the public interest. This could not be more wrong. Ceta fully protects the right of state and local authorities to regulate, and this applies to all fields where public policy objectives are at stake. Ceta does not under any circumstances require privatisation of water, public housing, healthcare or other public services. Nothing in it prevents governments from providing public services or bringing these services back to the public domain provided, in particular, that it is done in a non-discriminatory manner.
The Belgian government expressed doubts about the potential impact of Ceta on governments’ right to regulate and asked the EU Court of Justice to look into the matter. The court confirmed that there was no such risk in its opinion on Ceta delivered in April 2019. National and local legislators can, therefore, have full confidence that Ceta does not affect their ability to regulate in the public interest.
In its Ceta opinion of April 2019, the EU Court of Justice also confirmed that the investment court system is fully compatible with the principles of judicial independence and impartiality under the Charter of Fundamental Rights. Furthermore, Ceta is an important stepping stone to a multilateral investment court and will replace eight old-style investment agreements which are in place between Canada and EU member states.
Privileged partnership
Third, the significance of Ceta goes beyond its commercial dimension. Ceta reinforced a privileged partnership that the EU has had with Canada for many decades. Canada has an equal commitment to democracy, the rule of law, strong international institutions and open markets. Canada is one of Ireland’s most like-minded partners. We are working together closely as we confront global challenges on climate change, migration, international peacekeeping, economics and trade. Canada is an important ally in pushing for much-needed reforms to address the challenges facing the multilateral trading system, to which we believe that agreements like Ceta will contribute.
The EU also works closely with Canada in the G20 context on the role of trade policy on the post-Covid economic reboot and supply-chain integrity. And they have even graciously forgiven us for beating them to a seat on the UN Security Council!
Fourth, in EU terms, Ireland has benefited heavily from the support of other member states and the EU institutions in the Brexit discussions. We will need further goodwill in finding solutions to the practical problems caused by the Northern Ireland protocol. Fifteen member states have ratified the deal so far. There are, of course, debates about the merits of Ceta in those parliaments which have yet to pronounce. But Ireland should actually be leading the way in promoting this deal. Would we really wish to put ourselves in the situation of causing a crisis in relations with one of our closest allies and partners? We would surely struggle to explain to other member states why we wanted to block a modern, progressive trade agreement with such a like-minded partner as Canada.
So, Ireland should feel fully confident in ratifying this agreement. It brings tangible economic benefits. It represents important progress in reforming the system of investment dispute. Canada is a close partner and friend. And we will send the right signal about the kind of globally open EU we want to promote.
David O’Sullivan is a former EU ambassador to the US