A long way to CETA

With little fanfare in Canada, a key vote took place in Europe this week in favour of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA). The European parliament’s Committee on International Trade (INTA) threw its support behind the agreement, with the committee’s rapporteur noting the backing was a rejection of spreading global protectionism and a move toward trans-Atlantic economic harmony.

The INTA decision was critical in that it will hold significant sway over the outcome of the European parliament’s own vote set to take place next month. While this is undoubtedly a positive sign for the fate of the agreement, Canadians for whom the trans-Atlantic deal is of any relevance should not yet resign themselves to the notion that free trade between Canada and the EU has been cemented.

Even a favourable vote from the EU parliament next month will not necessarily guarantee CETA’s future. Because of a decision last spring to classify CETA as “mixed agreement,” the trade deal will still need to be ratified by 27 of the union’s 28 states.

In the interim, the agreement will be enacted on a provisional basis, meaning approximately 95 per cent of the agreement could be put into tangible practice as early as April. The challenge for Canadian businesses, however, will be to adapt their supply chains, brokerage systems and customs compliance in rather short order, and possibly to have to readjust equally as suddenly as the agreement makes its ratification tour across Europe. Those who have already undergone this process to accommodate other shifts in Canada’s trade relationships know it’s no easy feat.

By no means should Canadians delude themselves into believing the agreement elections this year) and Italy have the potential to stymie efforts to ratify the agreement within their own nations, as well.

It should be noted that there is no historical precedent for an EU state voting against a European parliamentary vote. Then again, prior to the U.K.’s Brexit, there was no precedent for an EU member state voting to leave the EU. The only certainty in Europe today is uncertainty.

This is likely to have a chilling effect on businesses