Could EU elections save Canada's troubled trade agreement with Europe?
After 7 years, CETA’s fractious reception from EU countries isn’t likely to improve
At a summit in Brussels in 2016, Prime Minister Justin Trudeau took the stage with European leadership for what he called a "historic occasion" — the signing of the Comprehensive Economic and Trade Agreement (CETA), billed as one of the world's most ambitious free trade agreements.
With its promise to generate "vast opportunities for Canadians and Europeans alike," CETA was supposed to be an easy win, creating a huge new market for Canadian products in exchange for lower prices on premium European goods like wine, cheese and vehicles.
Instead, many of CETA's promised benefits have failed to materialize, with politicians left and right preventing its full ratification in 10 of 27 EU member states.
Now, CETA is back on the radar amid new threats of a French veto that may sink it altogether, and the expectation that international trade will become a key issue for the new European Parliament following elections from June 6 to 9.
Still only provisionally implemented more than seven years after signing, European politicians are increasingly questioning whether the EU can be trusted to usher new trade agreements across the finish line.
"In other words, it's the very conception of the European Union that's being shaken," said Geneviève Dufour, a professor of law and expert in international trade at the University of Ottawa.
Troubled road to ratification
CETA remains unratified in 10 EU member states: Belgium, Bulgaria, Cyprus, France, Greece, Hungary, Ireland, Italy, Poland and Slovenia.
Since it was first drafted in 2014, opponents have raised myriad concerns, blocking its full ratification.
Farmers' groups in Europe feared free trade with North America would expose Europe's treasured agricultural sector to cheap, low-quality imports. Environmentalists and unions worried that the lack of exceptions for public goods and services could allow international investors to sue governments over green or labour-friendly policies.
Belgium was an early dissenter when, in 2016, one of its regional assemblies rejected the deal over concerns about controversial provisions in the deal that opened the door for investors to sue states for violations. But other states soon followed.
In 2020, Cyprus voted against ratifying CETA on grounds that it did not protect Europe's iconic regional products like Cypriot halloumi or Italian Parmesan cheeses.
The same year, Ireland's government postponed its vote because of public protests over fears that the deal would undermine small-scale farmers. Two years later, its Supreme Court deemed the agreement unconstitutional and said it violated national law.
Most recently, the French Senate voted overwhelmingly in March to reject CETA.
The bill must now return to France's lower house, the National Assembly, where changes in the balance of power following France's 2022 election mean it is now all but certain to fail a second vote.
"If France is against the treaty, then the treaty will be dead," said Fillip Tereszkiewicz, a political scientist at Poland's University of Opole.
That's the theory. But in practice, Europe's national governments have long delegated responsibility for the vast majority of the trade agreement's provisions to the European Commission, the EU's executive branch.
"These [national] parliaments are finding themselves in the worst spot possible because they cannot do anything," said Dirk De Bievre, a professor of international politics at the University of Antwerp. "They are completely bypassed."
Uneven trade
Some 95 per cent of the agreement is already in effect, including the tariff reductions and intellectual property protections that experts feared would drive up drug costs and greenhouse gas emissions, and drown markets with inferior products.
But while European governments have offered the loudest complaints about CETA, it's Canada that seems to be getting the raw end of the deal.
Since its provisional implementation, Canada's trade deficit with Europe has only increased.
Lucrative market access for beef and pork, for example, was supposed to be one major benefit of the agreement for Canada. But Europe continues to reject meat produced using growth hormones, which accounts for the bulk of Canada's production.
"Our exports to Europe are minimal, a far cry from what we expected," Reg Schellenberg, president of the Canadian Cattle Association (CCA), said in a 2022 news release marking the agreement's fifth anniversary.
Far from becoming Europe's supplier of cheap beef, Canada became inundated with European products. In 2022, according to the CCA, the EU exported 17 times more beef to Canada than Canada sent back.
Canadian dairy farmers have likewise suffered, with European cheeses now flowing tariff-free into Canada's market.
Will anything change?
European elections offer an opportunity for certain parties to capitalize on grievances about CETA, said De Bievre, but the status quo — provisional implementation — is likely here to stay.
If CETA is rejected by France's parliament, it could well be a fatal blow to the agreement, signalling the lack of necessary political support in one of the EU's most important members.
But it need not kill the agreement. French President Emmanuel Macron can simply decide not to notify the EU of the result, as Cyprus did, and bring the vote again at a more convenient time.
The same could happen in any of the 10 member states yet to ratify the deal.
That would keep the agreement in provisional status, with only the controversial investor court system — the issue raised in 2016 by Belgium — not in effect.
That has prompted criticisms from some parties that the EU's current approach to trade deals is undemocratic or undermines the sovereignty of national parliaments.
"On the one hand … it's totally coherent to say this is absolutely outrageously undemocratic," De Bievre said.
"Yet there is a little problem to this reasoning too — which is, you signed treaties, and you thought it was better to have a unified European market, and to have that… you will have to negotiate together."
But the attitude of the European Parliament could soon change. Next month's European elections are poised to empower many far-right parties that have frequently criticized the European Commission's expansive powers in the past.
For their voters, the issue of national sovereignty is not a minor one.
These parties, De Bievre says, have long been trying to position themselves as mainstream partners to the centre-right politicians that currently guide much of EU policy, including its approach to free trade.
Greater power could encourage them to abandon criticisms of trade agreements like CETA. Or they could double down and prevent future similar agreements, like a planned treaty with South America, in the future.
Which path they take is still anyone's guess.
"It's near impossible to predict. We don't know," said De Bievre. "And the point that is even stronger: they don't know themselves."
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