As the seventh round of negotiations on the U.S.-EU Transatlantic Trade and Investment Partnership trade agreement took place, the EU Commission released a text of the EU-Canada Comprehensive Economic and Trade Agreement (CETA) as it existed at the close of negotiations in response to a German private group releasing a supposed final draft. The EU draft provides insights into some of the issues the U.S.-EU agreement may address.
The preamble has the usual clauses, but two of them stand out in the current policy environment. The first clause in this version includes “build on their respective rights and obligations under the Marrakesh Agreement Establishing the World Trade Organization and other multilateral and bilateral instruments of cooperation.” The WTO rules provide the underlying framework for the agreement and both have other trade agreements in force, like NAFTA. Near the end of the preamble is this language, “provisions of this Agreement preserve the right to regulate within their territories and resolving to preserve their flexibility to achieve legitimate policy objectives, such as public health, safety, environment, public morals and the promotion and protection of cultural diversity.” This will allow some level of regulatory cooperation, but most regulations will remain at the national level.
Tariffs are reduced and eliminated by putting all goods in four categories – A, B, C & D. Goods in category A are duty free when the agreement comes into force. Category B tariffs will be reduced by four equal amounts over four years. Categories C takes six years and category D eight years. Special provisions are made for agricultural products with intervention prices. Tariff rate quotas are also treated individually with increases access. The wine, spirits and alcohol agreements of 1989 and 2003 between the two parties are made part of this agreement.
The U.S. dairy industry has raised concerns that Canada reallocated 800 metric tons of its 20,412 metric ton WTO tariff rate quota for cheese to the EU. That reallocation will further restrict the limited access U.S. cheese exporters have into the Canadian market. Other industries may have similar issues after the agreement is closely analyzed and may seek redress in the U.S.-EU agreement.
The parties retain all of their rights under WTO rules for anti-dumping and countervailing measures and are not subject to the dispute settlement provisions of the agreement. Each side is to apply anti-dumping and countervailing measures in accordance with WTO requirements pursuant to a fair and transparent process.
Each party also retains its rights and obligations under the WTO Agreement on Safeguards and is not subject to the dispute settlement provisions of this Agreement. They do have an obligation of transparency and to implement safeguards to have the least impact on bilateral trade. When definitive actions are to be taken, the importer is to offer informal consultations with the exporter and the importer is not to take action until 30 days after the offer to consult was made.
The agreement has a separate chapter on Sanitary and Phytosanitary (SPS) Measures with three objectives: 1) protect human, animal and plant life or health while facilitating trade; 2) ensure that SPS measures do not create unjustified barriers to trade; and 3) further the implementation of the WTO SPS Agreement. There is a separate article for equivalence. The first sentence states, “The importing Party shall accept the SPS measures of the exporting Party as equivalent to its own if the exporting Party objectively demonstrates to the importing Party that its measures achieves the importing Party’s appropriate level of protection.”
Both parties have a notification and information exchange requirement to keep the other informed about food safety and animal disease issues. The parties have to be available for technical consultation when requested by the other party. The agreement establishes a Joint Management Committee for SPS Measures comprised of regulatory and trade representatives of each Party who have responsibility for SPS measures. The committee has broad authority to manage the relationship.
Export subsidies on agricultural products are specifically addressed. “A Party shall not adopt or maintain an export subsidy on an agricultural good that is exported, or incorporated in a product that is exported, to the territory of the other Party after the other Party has fully eliminated the tariff…”
There is a section on Bilateral Cooperation on Biotechnology. This will take place within the bilateral Dialogue on Biotech Market Access Issues which was established in 2009. The dialogue will include: biotechnology product approvals in Canada or the EU; the economic outlook for approval of biotech products; trade impact of asynchronous approval of biotech products or the accidental release of unauthorized products; legislation in the field of biotechnology and other issues.
The Chapter on Regulatory Cooperation affirms the two parties’ rights and obligations under various WTO/GATT agreements. The provisions of the chapter replace the Government of Canada – European Commission Framework on Regulatory Cooperation and Transparency and will govern the activities previously undertaken in the context of the Framework. A Regulatory Cooperation Forum will be established to facilitate and promote regulatory cooperation in accordance with the provisions of the chapter.
The Intellectual Property Rights Chapter includes a section on Geographical Indicators (GI). These are defined as “an indication which identifies an agricultural product or foodstuff as originating in the territory of a Party, or a region or locality in that territory, where a given quality, reputation or other characteristic of the product is essentially attributable to its geographical origin.” The EU seek to protect the names of certain wines, cheeses, sausages and other food items produced in other areas. This is a major issue for U.S. producers and the U.S. dairy industry has already commented on the GIs for cheese.
The document released by the EU is 1,634 pages long. While it is thought of as a standalone trade agreement, it is a snapshot of an ongoing relationship that is constantly changing. As noted before, much of it is based on WTO agreements and bilateral agreements. The U.S. agreement with the EU will be much the same, only still bigger. It will, undoubtedly, leave some issues unresolved.