CETA both upheld and defeated within 24 hours by divided EU internal political dynamics

Volterra Fietta Client Alert
20 October 2016

On Wednesday 12 October the Federation of Wallonia-Brussels Parliament voted to reject the Comprehensive Economic and Trade Agreement (“CETA” or the “Agreement”) between the European Union (“EU”) and Canada, citing concerns about agriculture and public service. On Friday 14 October Belgium’s Parliament of Wallonia did the same. These Belgian votes came in the face of a planned meeting of EU Trade Ministers on 18 October to vote on the conclusion, signature and provisional application of the Agreement. The formal signing of the Agreement by both the EU and Canada is scheduled to take place during the EU-Canada Summit from 27 to 28 October 2016.
The potential power of Belgian regional parliaments to block the CETA flows from a decision in July 2016 by the European Commission – under pressure from certain Members States – to designate the CETA as a “mixed agreement” requiring ratification by national parliaments. Under Belgium’s complex governance structure, all five regional governments are required to approve.
Signature of the CETA elsewhere survived a vote in the Dutch Parliament on 12 October, where it was supported by a majority in the face of strong opposition from civil society and trade groups. On 13 October Germany’s Federal Constitutional Court also rejected a request for an injunction against the Agreement’s signature, subject to certain conditions: notably, that provisional application of the CETA would be limited to elements “undoubtedly” under the EU’s jurisdiction, and even then subject to unilateral suspension by Germany.

Next steps

Negotiation of trade agreements is a core competency of the EU. Blockage of one of Europe’s major trade initiatives by the vote of a handful of regional parliaments – particularly a progressive agreement such as the CETA, widely seen as a model of Europe’s new trade and investment policy – would be a major blow. It will also strike a worrying note to UK government negotiators poised to enter BREXIT and related trade and investment negotiations with the EU.
It remains to be seen whether a Belgian compromise can be reached in advance of the planned 27 October summit, allowing the European Council to give its unanimous approval and the deal to go forward.
If so, provisional application of the CETA could begin in early 2017.