What is Ceta?
Ceta is the ‘comprehensive and economic trade agreement’ between the EU and Canada. The trade agreement is intended to facilitate trade between Canada and the EU, including by abolishing import duties. Its proponents say it is the ‘new gold standard’ for trade agreements worldwide. It is a so-called ‘mixed treaty’: it is largely within the competence of the European Union, except for the part on the dispute mechanism for companies. For that reason – except the European Council and the European Parliament – all EU Member States must also approve the treaty.
Negotiations on the treaty began in 2009. It was signed in October 2016 by Canadian Prime Minister Justin Trudeau and then-Presidents of the European Council and European Commission Donald Tusk and Jean-Claude Juncker. This signature also required the agreement of all EU member states. The state government of Wallonia almost threw a spanner in the works. This crisis was narrowly resolved by adding a ‘joint interpretative instrument’ to the treaty that allayed Walloon concerns.
It was a sign on the wall: not everyone is thrilled with the conclusion of new trade agreements – even if the complex system of international trade agreements (partly between countries, partly multilateral) is one of the pillars on which the post-war prosperity rest.
The treaty entered into force provisionally on 21 September 2017. ‘Provisionally’ as long as not all EU member states have ratified the treaty. That is, all the provisions of the treaty that fell within EU competence came into effect, including the agreement that 98 percent of Canada’s trade tariffs on EU goods would expire immediately. What has not yet entered into force are the two components under national sovereignty: investment protection and the new arbitration court (ICS), ie the dispute settlement mechanism.
Fifteen member states have ratified the convention, twelve have not yet. No country has yet rejected the treaty. In the Netherlands, the treaty was adopted in the House of Representatives in February 2020 with the smallest possible majority. Apart from the four government factions, only the one-man group Van Haga voted in favor of the treaty, with the majority remaining at 72 of the 141 MPs present. The PvdA voted against, even though Member of Parliament Liliane Ploumen had argued fervently for the treaty when she was still a trade minister.
The treaty is now up for a vote in the Senate. The senate party of the PvdA has announced that it will vote in favour. This seems to have resulted in a majority in favor of acceptance.
What are the main benefits of Ceta?
The EU considers trade agreements to be one of the jewels in its crown: they stimulate prosperity, promote better agreements with trading partners on how products and services are made, and they support a multilateral order governed by rules, not the right of the strongest applies.
The first claim to fame of any trade treaty is that it promotes trade. Because the treaty has been in force since 2017, a few things can already be said about the effects of Ceta. Trade in goods rose by 10.7 percent in 2018, the EU trade surplus with Canada even rose by 60 percent. The export of agricultural products also rose by 4 percent. Dutch exports of services to Canada increased by 22.2 percent in 2018.
For proponents, Ceta is an example for future trade agreements because it contains agreements on an improved dispute mechanism with regard to the old (ISDS) mechanism. The new arbitration court (ICS) is more transparent, works with independent judges, can hear activists and citizens as ‘friends of the court’, and limits the possibilities for companies to complain.
In agriculture, certain sectors remain closed to Canadian imports, such as the poultry sector. Limited quotas have been introduced for beef and pork imports (Canadian pork imports have been low so far), while the door to EU dairy products has just opened further.
The government insists that all products exported to the EU must meet European standards, such as requirements in the field of plant and animal health, food safety and labelling. Ceta does not change that situation. The rules for the authorization of genetically modified food will not change either. However, the EU and Canada will work together to strengthen agreements on ‘sanitary measures’ for the trade in animal products.
Also new is that Ceta contains chapters on sustainable development, the environment and labour, topics that until now never found their way into trade agreements. Rules about this are not set in stone, but they are ‘aspirational agreements’, about which the parties continue to discuss.
What are the disadvantages?
For Forum and the PVV, there are many drawbacks to Ceta, but the biggest drawback is that it is an EU treaty: a limitation of Dutch sovereignty, so these parties vote against it.
The left has very different objections to Ceta. The core is that it contains no guarantees for fair labour, the environment and animal welfare. The dispute mechanism for companies also remains a thorn in the side. ‘This cabinet is opting for multinationals, not for people’, says Kirsten van Hul of the PvdA. Certainly, Lilianne Ploumen (PvdA) first described Ceta as ‘a way to raise standards’ and Canada as a ‘country with which we organize a race to the top’. But now that the party is in the opposition, it believes that ‘the bar should be raised’.
Of course there are big differences. The Party for the Animals thinks economic growth in itself is suspicious, while GroenLinks and the PvdA think that trade agreements should dampen the excesses of modern capitalism more than they do now.
They believe that these treaties should offer firm guarantees regarding working conditions, the environment, animal welfare and climate. And all interest groups – from the FNV to Greenpeace and Milieudefensie – must have access to the arbitration court.
The left-wing opposition also fears that large companies could block regulations in the public interest (eg climate legislation). Minister Sigrid Kaag, then still Minister of Foreign Trade, who defended the treaty in the House of Representatives, calls this ‘a myth’. According to her, Ceta ‘confirms precisely that governments retain the right to regulate for the benefit of the public interest.’
GroenLinks also lacks a ‘level playing field’ for farmers. According to Jesse Klaver’s party, the EU only looks at ‘the steak, not the cow’. In other words, the end product must meet EU requirements, but where are the standards on how to treat animals? The concerns that the ChristenUnie has about genetically modified food seem surmountable: the import of beef is limited by quota and to 36 companies that have set up their production process entirely according to EU standards. Ceta allows a limited amount of pork to be imported from Canada, but so far that meat has mainly gone the other way.
A clash of worldviews
It should be clear: in addition to lubricating the global economy, trade agreements are also ideally suited to project concerns about the current state of globalization and of capitalism. That applies to left and right.
After all, it was the then US President Donald Trump who, with China in his sights, started seriously from 2016 on demolishing this old pillar of ‘the post-war international order’. He dumped trade deals, started a (successful) guerrilla war against the World Trade Organization and exchanged the multilateral trade model for one based on protectionism, bilateral deals and trade sanctions. So far this has been going reasonably well for the US, but how will such a trading system under the law of the strongest work out for weaker countries?
While for Trump the trading system was too multilateral, and too much in China’s favour, it has been dismissed for left-wing opponents in and outside Western countries as it addresses the ills of the modern global economy (too much fossil fuel-driven, too unsustainable, too unequal) does not cancel.
The old worldview in which trade was an inalienable part of Western freedom and prosperity is contrasted with a new worldview in which trade is sacrificed to other ideals: national sovereignty for the right, a better, clean and circular world for the left.
The result of those right-wing and left-wing objections added together is the same: a faltering multilateral trading system. The bar has to be raised, says the left. The bar is set higher and higher, say the proponents.
This is an updated version of a piece from 2020.