On March 21, the French Senate voted against ratification of the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU). The big question raised by this vote is: what does this mean for the future of the agreement and trade relations between Canada and Europe?
Termination of CETA under European law
Before answering this question, it should be noted that CETA has applied provisionally since September 2017. This means that around 95% of the Agreement is in force pending ratification by all the EU Member States’ parliaments. Once these ratifications have been completed, the Agreement will apply in full. The missing 5% relates mainly to investment and the investor-state dispute settlement mechanism, a so-called “mixed” competence within the EU shared by the Member States and the European supranational institutions.
To date, 17 EU Member States have completed national ratification: Austria, Croatia, the Czech Republic, Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Romania, Slovakia, Spain and Sweden. The following Member States have not yet ratified CETA: Belgium, Bulgaria, Cyprus, France, Greece, Hungary, Ireland, Italy, Poland and Slovenia.
The issue for Canada and the EU is what happens if one or more Member States are unable to ratify. If the European Council receives notification from a Member State that it is unable to ratify the Agreement, provisional application could be called into question.
According to a European Council Declaration dated 27 October 2016, “[i]f the ratification of CETA fails permanently and definitively because of a ruling of a constitutional court, or following the completion of other constitutional processes and formal notification by the government of the concerned state, provisional application must be and will be terminated.”
However, again according to the Declaration: “[t]he necessary steps will be taken in accordance with EU procedures.” This sentence opens the door to an adapted procedure to ensure that CETA can survive, at least the 95% of the Agreement that comes under the exclusive competence of the EU. In this case, the portions falling solely within supranational competence will continue to apply unless 15 EU countries, representing 65% of the population, vote against it.
It is therefore highly likely that, in the event of a notification, the EU Member States and the European Parliament will agree to transform the provisional application of CETA into permanent application for the portions falling within the exclusive competence of the EU.
Future developments in France
For the time being, the vote in the French Senate has no legal impact on the provisional application of CETA, which continues to govern trade relations between Canada and the EU. Trade between Canada and the EU can therefore continue.
However, the situation could change in the coming weeks if the issue is brought before the French National Assembly. The French constitutional pendulum now requires the National Assembly to vote again on the issue (it did vote in favour of CETA in 2019).
However, the date on which this might happen remains uncertain. The Communists are demanding that the government pass the bill ratifying CETA as soon as possible, threatening to use a procedural measure on 30 May to put the issue on the agenda.
Franck Riester, the French Minister for Foreign Trade, refuses to allow the issue to be exploited in the context of the European elections on 9 June. He wants to have a less politicized debate after 9 June.
Whatever the date, the issue will eventually have to be voted on again by the French National Assembly. The outcome of this vote remains uncertain, given the current political balance.
In the event of a negative vote in the lower house, President Emmanuel Macron will then have to choose whether or not to notify the European authorities of the result of the vote. The joint decision of the two chambers of the French Parliament will have to be notified to Brussels in order to take effect.
For Canada, the French Senate vote may be a cause for concern, but in reality there is nothing to worry about.
Without notification, the Agreement will continue to apply provisionally. This is the situation that has prevailed since the Cypriot parliament rejected ratification of CETA on 31 July 2020, without officially notifying the European Council and the EU Commission.
As with Cyprus, the French government is likely to wait until the political stars are aligned, possibly as a result of concessions from the EU, before submitting a new CETA ratification bill and restarting the process.
Should Canada be worried?
For Canada, the French Senate vote may be a cause for concern, but in reality there is nothing to worry about.
If ever the government of an EU Member State were to notify the European authorities that its country was unable to ratify CETA, one scenario is already conceivable. Negotiations would most likely ensue to extract the “mixed” portions of the agreement and thus transform the provisional application of CETA into a permanent one.
In the latter case, would Canada accept such an amendment to the Agreement unconditionally? The federal government could use the opportunity to demand certain concessions. However, “reopening the Agreement” could complicate the task of the Europeans, and thus jeopardise the Agreement itself. It is therefore unlikely that Canada would take such a risk.
In short, Canada-EU trade relations are not really under threat following the French Senate’s vote.
This blog was first published in French on April 22nd, 2024 on the Conseil des relations internationales de Montréal blog.
