National ratification Votes Threaten E.U.-Canada Trade Pact

Brussels has conceded that E.U. national governments should get a say in green-lighting a planned trade deal between Canada and the European Union. But with the fate of the pact now in the hands of 28 European national parliaments, the prospects of an agreement look dimmer than ever.
Protestors demonstrate against EU free trade pacts with the U.S. and Canada, in Berlin.

For Jean-Claude Juncker, the president of the European Commission, it’s time to start backtracking. Last week, the head of the European Union’s executive arm made waves when he argued that a trade pact between the E.U. and Canada, known as CETA, was a matter for Brussels to decide.

The reaction from European capitals came swiftly. Faced with the prospect of having their own parliaments excluded from the decision-making process, member states cried foul.

On Tuesday, the Commission gave in. E.U. trade commissioner Cecilia Malmström said the Comprehensive Economic and Trade Agreement had been deemed a “mixed agreement,” meaning that national legislatures would get the right to vote on it.

“From a strict legal standpoint, the Commission considers this agreement to fall under exclusive E.U. competence,” she said. “However, the political situation in the Council is clear.”

Ms. Malmström added that the decision would allow for the deal to be ratified quickly - but observers believe it will diminish the chances that CETA will win approval Europe-wide - since a no-vote in just one member state’s parliament stands to derail it.

The Commission is now seeking to counter the impression that its classification of CETA as a mixed agreement would mean that the same applies to TTIP.

Politicians in Berlin - and in Vienna - had balked at the Commission’s previous position on the issue. German Chancellor Angela Merkel had already pledged to move forward with a vote in the Bundestag, the country’s lower house of parliament, regardless of what Brussels ultimately decided.

The head of her coalition partners, the center-left Social Democrats, welcomed the Commission’s about-face on CETA. Sigmar Gabriel, who is also Germany’s economics minister, had described Brussels’ attempt to exclude national parliaments as “unbelievably foolish,” and said Germany would torpedo the deal if the Bundestag weren’t allowed a vote.

On Tuesday, Mr. Gabriel said he was pleased that the Commission has laid the foundation for member states’ involvement. “It is correct and important to involve the national parliaments in the ratification process,” he said. His party’s parliamentary liaison on CETA, Dirk Wiese, said that “anything else, in the current situation, would not have been acceptable.”

Concerns that free trade pacts with North America could weaken environmental and consumer standards in Europe have fueled strong grassroots mobilization in Germany, putting pressure on the country’s politicians.

Members of Germany’s Green Party were among those who had sounded the alarm. On Tuesday, their parliamentary leader Anton Hofreiter hailed Brussels’ U-turn. “The massive criticism over the past week has made an impact,” he said. “It’s good that the Commission revised its insensitive decision and now intends to involve national parliaments in ratification.”

 

European Trade with Canada-01

 

Mr. Juncker’s original assertion that the deal was an E.U. matter came just days after the United Kingdom’s Brexit vote to leave the bloc - and only seemed to underscore euroskeptics’ criticism of Brussels as less than democratic.

Had Mr. Juncker stood by his insistence that CETA was solely an E.U. issue to be decided by the European Parliament, member states could have tried to force his Commission to change its stance. That would have hinged on a unanimous decision in the European Council, however. Another possible option - a blockade by the E.U. Council of Economic Ministers - would have required only 16 votes.

CETA is viewed as a blueprint for a trade deal with the United States, known as the Transatlantic Trade and Investment Partnership, or TTIP. Both agreements are meant to stimulate free trade with North America.

The Commission is now seeking to counter the impression that its classification of CETA as a mixed agreement would mean that the same applies to TTIP. Officials in Brussels said each agreement should be examined individually.

Future deals, however, will hinge on how the European Court of Justice feels about the matter. It stands to set a precedent with a ruling on whether Brussels should be able to greenlight a trade deal negotiated in 2014 between the E.U. and Singapore.

Mr. Juncker wants the European Council to sign off on CETA by October, in order to allow the deal to go into effect provisionally. “The credibility of Europe’s trade policy is at stake,” he said. But the decision to allow national parliaments a say could make that difficult.

In addition to legislatures of the E.U.’s 28 member states - as Britain has yet to negotiate the terms of its exit from the bloc - 14 regional parliaments will have to approve the deal.

On that front, it appears Brussels could be facing opposition in its own backyard. The parliament in Wallonia, a self-governing region in Belgium, has already said it will vote no on CETA.

 

Dana Heide reports from Berlin on digital innovation and companies for Handelsblatt. Klaus Stratmann is the deputy bureau chief of Handelsblatt in Berlin and covers the energy market. To contact the authors: [email protected][email protected].