EU and Canada are the world’s new best friends

The summit between the EU and Canada (16-18 July) did not simply serve to show their unity. Both countries wanted to demonstrate that they are able to thrive without the US.

The EU-Canada summit focused on the free trade agreement (CETA), saving the WTO and doubling investments in research and development for the energy transition. However, the meeting was more symbolic, confirming that Canada, rather than the US, is now the EU’s closest ally. EURACTIV Germany reports.

At the end of the two-day EU-Canada summit in Montreal (17-18 July), European Council President Donald Tusk said, addressing Canadian Prime Minister Justin Trudeau: “Justin, you are Europe’s best friend.”

Now, Canada is Europe’s most important transatlantic partner.

Tusk, Trudeau and EU Trade Commissioner Cecilia Malmström did not skimp on compliments at their summit meeting.

But showing unity between Canada and the EU was not the only goal. Both sides wanted to demonstrate that they can thrive without the US.

They had already shown this at the G20 summit in Osaka in June, where Trudeau was sitting at a coordination meeting between EU member states.

Amid geopolitical tensions, Canada and EU member states had moved closer together, an EU official told EURACTIV.

For example, the US wants more say when it comes to world trade. It also wants to have a greater say when it comes to nominating the organisation’s new judges. At the end of this year, two appellate judge positions will become vacant.

However, if the US continues to make such demands, replacements may not be found on time, meaning trade disputes will not be mediated.

For now, it appears unlikely that the US will back down.

The EU and Canada are now planning to set up a temporary dispute trade mechanism should the ‘WTO blockade’ actually occur in December. The Ottawa Group, which has been set up to modernise the organisation, is currently defining what such a temporary dispute settlement system would entail.

In addition to Canada and the EU, the Group also includes Australia, Brazil, Chile, Japan, Kenya, South Korea, Mexico, New Zealand, Norway, Singapore and Switzerland.

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France to vote on CETA next week

The summit also strengthened the partnership that exists through the Comprehensive Economic and Trade Agreement (CETA), most of which entered into force provisionally in September 2017 until ratified by EU member states.

The agreement largely abolishes tariffs on reciprocal trade, further liberalises trade in services and simplifies access to public procurement. Since the agreement provisionally entered into force, trade between the EU Canada has grown by around 8%.

“CETA goes far beyond lowering trade barriers and reaching new markets – although, of course, it does that too. It’s a blueprint that helps us achieve the kind of future that our citizens deserve,” Trudeau said.

The agreement also contains strict environmental requirements and labour standards.

A controversial part of the agreement, however, is the arbitration procedure for investor protection (ISDS). The long-term objective is to establish a multilateral investment trade tribunal between Canada and the EU.

Critics say, however, that the new court could confuse the autonomy of the legal system and oppose democratic decisions, for example when it comes to consumer protection and food safety. This could ensure parallel justice for corporations.

The EU and Canada made some improvements when they were faced with fierce criticism. As a result, they modified the selection procedure for arbitrators and set up an appeal body.

CETA Explained

It has been described as “the most ambitious” and progressive trade deal ever signed by the EU, but what does CETA do?

These new arbitration tribunals were cause for concern for Belgium’s Wallonia, who asked the European Court of Justice to clarify whether these were compatible with EU law.

On 30 April this year, the Luxembourg court gave the green light, stating that its “exclusive competence” would be maintained and its decisions not affected.

Now the agreement still has to be ratified by 40 national and some regional parliaments. Latvia, Denmark, Malta, Spain, Croatia, the Czech Republic, Portugal, Estonia, Sweden and Lithuania have already given their consent.

Meanwhile, Italy has been highly critical and has threatened to reject the agreement because it does not consider the geographical indications for products sufficient.

France will vote on whether to ratify CETA next week, and Germany has not yet decided on the matter.

The European Parliament adopted CETA in 2017 – by 408 votes to 254, with 33 abstentions.

Trudeau’s election campaign

However, the positive economic signals should not be overestimated, according to Marcel Fratzscher, president of the German Institute for Economic Research.

CETA symbolises a deepened relationship between the EU and Canada, according to him.

“The decision in favour of CETA is a strong signal that Europe remains open to the world and firmly rejects the ‘protectionism’ heralded by Donald Trump,” said Fratzscher.

Trudeau is showing that he has been able to do something significant for his country. And with Canada electing its new parliament at the end of October, Trudeau is in the middle of an election campaign.

The visit to the port of Montreal, whose average growth rate has almost doubled thanks to CETA, was therefore crucial for Canada’s prime minister.

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Europe must look for ways of incorporating the carbon content of imported products while avoiding import dependence on key technologies for the energy transition, said Maros Šefčovič, the European Commission’s Vice-President in charge of the Energy Union.

Doubling Energy transition investments

In the final declaration, Canada and the EU also announced that they would double investment in research and development of renewable energies.

They pledged to mobilise further climate finance for developing countries, for example, by strengthening the Africa Renewable Energy Initiative (AREI) launched in 2015. The initiative has the ambitious goal of providing access to renewable energy throughout Africa.

Malmström and Canadian Environment Minister Catherine McKenna also signed a new Canada-EU Ocean Partnership to protect the oceans on Thursday (18 July).

The partnership aims to combat problems such as pollution of the world’s oceans and illegal fishing and to protect biodiversity on the high seas.

[Edited by Zoran Radosavljevic]

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