by Sabine Hanger

“We want to make clear in this vote that we do not want to build walls, we want to build bridges”, said Manfred Weber, a prominent member of the European Parliament to encourage to vote for CETA, the trade agreement between Canada and the EU, while simultaneously casting aspersions on Trump’s plans for building a wall between Mexico and the U.S.A. Presumably signing CETA and starting trade negotiations with Mexico became more a symbol against Trump than anything else, but does it really affect the U.S.A if the EU is having trade-agreements with everyone excluding the U.S.A itself?

A thing called Free Trade Agreement

Everybody seems to have an assumption regarding CETA and trade agreements in general; nevertheless, it is questionable if really everyone knows what they are arguing about.

CETA, short for Comprehensive Economic & Trade Agreement is a trade agreement between the EU and Canada in order to trade goods duty free. Before CETA entry into force, only 25% of EU tariff lines on Canadian goods were duty-free, after CETA the number will increase up to 98%. This will provide enhanced export opportunities into the EU market for Canadian producers, processors, and manufacturers, including fish and seafoods, agriculture, forestry goods, and the full range of industrial goods.

With respect to strengthening the trading relationship with Canada, not a lot of people are against it, but of course there is more to CETA than just trading.

CETA is a new type of free trade agreement, which some people celebrate as a positive and more progressive thing and others especially because of that see it as a dangerous pitfall.

The first and main concern is about the “corporate court” system which will afford many more corporations special legal process to sue European governments for passing laws they do not like.

As a matter of fact, that was one of the main reasons the Belgian region of Wallonia almost boycotted the signing of the contract. Belgians in general feared that agreeing to set up a special court for hearing foreign investor disputes would undermine national sovereignty, limiting the ability of local governments to enact environmental, safety, and health regulations.

A lot of people in favour of CETA agreed, that this might cause problems in the future, that’s why they did in fact change it.

The change relates to investor-state dispute settlement (ISDS) under Chapter Eight (Investment) of the CETA. Yet, it does not change the general dispute settlement procedures set out in Chapter Twenty-Nine of the Agreement (which apply to the interpretation and application of the CETA as a whole).

Another big issue seem to be severe concerns that the Standards for goods in Europe will deteriorate; particularly when it comes to meat, people fear that imported goods from Canada may cause harm. However, CETA does de facto have an article which specifies that the standards European citizens are used to will not be harmed. If Canadians want to import goods, they need to increase their standards, notably when it comes to food.

Jean-Claude Juncker, President of the European Commission, likes to remind people who are against CETA that the agreement with South Korea for example brought 200.000 new working places, in addition, he goes on to say that “Whoever thinks the EU is doing better while going back, is wrong”.

Although it is tough to pick a side, one thing seems to be clear – the EU and Canada did accelerate the negotiations as soon as Trump claimed his protectionism.

What is the difference between TTIP and CETA?

Initially CETA is already signed and ratified, unlike TTIP, short for Transatlantic Trade and Investment Partnership, which was already under sluggish development during President Obama and now under Trump, was stopped in January 2017. Regarding to the content of the Agreement EU has generally the same goals, even though one faces a totally different trading partner. With 509 millions inhabitants, the EU faces with Canada’s 35 millions inhabitants a compared small trading partner to the heavily populated U.S.A. with 310 million people living there. Of course not to mention, that Canada is only the 12th most important trading partner to the EU and the U.S.A is the most important trading partner. In fact, if TTIP was signed, it would cover a third of the world trade with it’s regulations.

As far as we know, TTIP has about the same controversial issues as CETA, but when it comes to sensitive topics like the corporate court system or the investors protection, the USA would not relinquish its policy, despite Canada who managed to compromise about those topics with the EU.

But as mentioned before, none of that really matters since Trump took over the Oval Office and declared, that TTIP will not be up for any more negotiations.

Despite all those difficulties, Germany however still believes, that TTIP will find its way and actually got a response from US-trading minister Ross saying, in contra to Trump that America’s interest in bringing TTIP back on track is there, particularly since CETA was signed.

Does CETA affect the U.S.A at all?

It seems that it has become a priority for the EU to set deals with all of Americas “Seconds” such as Canada and Mexico. As a matter of fact, that is something based on mutual interest. Since Trump became president, Cecilia Malmström, the European commissioner responsible for trading, is a well-received guest in Canada and Mexico. Building alliances seems to be a very important step to form a proper non-Trump economic bloc, considering TTIP is not the only Trade Agreement Trump threatens to throw over board. On August 16 2017 re-negotiations for NAFTA, the trade agreement with Canada, Mexico and the USA, started.

NAFTA, short for North American Free Trade Agreement, was signed 1994 by Mexico, Canada and the U.S. which quadrupled the trade within those three countries. Notwithstanding, Trump sees the Agreement as a catastrophe and if it the re-negotiations will not bring improvement, he threatens that the U.S. will resign from NAFTA.

CETA therefore does not play a magnificent role but with reference to Trump’s protectionism, CETA will actually be more helpful for the U.S than Canada, because CETA would open up Europe to direct challenge by US corporations in special corporate courts. About, 40,000 of the biggest US corporations have subsidiaries in Canada which could use CETA to sue European governments. Although rumour has it, that CETA was only signed so fast to make a point against Trump, it might also help him.

On the other hand, Canada sees itself more confident in its position against the USA since CETA is signed. Although they know that CETA is nothing like NAFTA, they did something supposedly unexpected by getting a very progressive Trade Agreement signed.

Canada presents itself confident, that by renegotiating NAFTA, they will bring the agreement into the 21st century by making it more progressive, such as CETA.

Concluding one can say CETA might have no influence on the negotiations about NAFTA at all, still, one shall not forget that CETA is just the small brother of TTIP, which means, if CETA is successful, the U.S. will have a tough time ignoring the EU much longer. And although Trump for sure will not abdicate his position, apparently as before mentioned trading minister Ross seems to be a bit more comprehensible.

So even after all the U.S. is first in competition, if there is nobody else competing, it might just be last as well.

07 October 2017
This text was published in Bullseye issue 69