Wallonia locuta, causa finita

In: European Union

26 Oct 2016

One could get the impression the last days that the refusal of the region of Wallonia to allow the Belgian government to sign CETA marks the end of a nightmare. In reality, we were far from a nightmare and the debate around CETA is not yet finished.

CETA is no nightmare. On the contrary, CETA is an international treaty, which intends to improve the trade relations between Canada and the EU. The benchmark for the quality of CETA is the international trade law as it stands today. Because if there won’t be CETA, we will still have the WTO law regulating trade between the EU Member States and Canada such as the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) specifying inter alia the famous ‘precautionary principle’, the WTO Agreement on Technical Barriers to Trade (TBT Agreement) or GATS. Furthermore, the seven currently existing bilateral investment treaties (BIT) between Canada and EU Member States (Croatia, Czech Republic, Hungary, Latvia, Poland, Romania, Slovakia) remain in force. At this point it is worth mentioning that these BITs contain the heavily criticised old-fashioned investment protection rules without transparency rules, truly independent arbitrators and an appeal mechanism.

The CETA chapter on investment protection (chapther eight) shows significant improvements and testifies that the EU listened and reacted to criticism put forward by Parliaments and the civil society. The revised chapter on investment protection provides now, for the first time in an investment treaty, for clearly defined grounds to initiate investment disputes. It establishes a tribunal, in which the judges are remunerated by the EU and Canada and not by the conflicting private parties. Proceedings are subject to transparency obligations such as public hearings and access to documents. Awards rendered by CETA tribunals can be reviewed by an appellate tribunal. CETA establishes an investment protection chapter that meets the high standards of European and Canadian rule of law.

Is the debate around CETA now finished after the Wallonian refusal? Certainly not, the Wallonian refusal is the consequence of a Common Commercial Policy that is implemented by mixed agreements, where the EU, on the one hand, and the Member States, on the other hand, form the contracting parties on the European side. This mixity is the result of the fact that even after the entry into force of the Lisbon Treaty it is difficult to determine, which policy areas in a comprehensive trade agreement are covered by Union competences and which would still fall under national competences. Mixity avoids petty debates defining the borders of Union competences. The Wallonian refusal will now intrigue the Union legislator to enter into this discussion once the Court of Justice of the European Union rendered its opinion on the draft EU-Singapore agreement (Opinion 2/15), in which the Court will state on the reach of EU’s competences in the field of the common commercial policy. The outcome of this discussion will be that only the Union legislator, the Council voting by qualified majority together with the European Parliament, will decide within the then clearly defined limits of its competences on the ratification of future trade agreements. Member States are then bound by means of EU law by the content of these agreements. The first trade agreement that will be adopted in this way will most likely be an agreement between the EU and Canada.

The Wallonian refusal would hence end up to be what the old Romans called a ‘Pyrrhic victory’.

Dr. René Repasi

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