In 2006, representatives of Canada and the EU met to advance the Canada-EU Trade and Investment Enhancement Agreement (TIEA), which had stalled. The outcome of the meeting was a new negotiating framework for a Comprehensive Economic and Trade Agreement (CETA), which would go beyond TIEA and give negotiators a broader scope.
Then Commission president José Manuel Barroso and Canadian prime minister Stephen Harper officially presented the final deal during an EU-Canada summit in Ottawa, in 2014. After a comprehensive legal scrubbing, the final text was published in February 2016.
Nevertheless, CETA has since become extremely controversial, mainly because of the inclusion of the Investor-State Dispute Settlement (ISDS) mechanism. It was slightly modified and renamed into ‘Investment Court System’ (ICS) during legal scrubbing, to calm growing concerns. However, the re-branding was unsuccessful as public opposition kept growing. T&E has scrutinised ICS in CETA, see more here.
More and more evidence is emerging that agreement on CETA has been one of the key reasons for the delaying and watering down of the Fuel Quality Directive by the European Commission. This is an EU law that aims to clean up transport fuels, and if fully implemented it would make it more difficult for Canada to sell petrol and diesel made from its high-carbon tar sands in Europe. Read the joint report by T&E and ClientEarth on CETA and environment here.
The final text of the agreement, including translations, is available on the Commission website. The agreement was signed on 30 October 2016. Some part of the agreement entered into force provisionally in September 2017; while the remaining elements will need to be approved by each Member States’ parliament(s) (as a so-called mixed agreement) before it can be fully ratified. In the meantime, parts of the agreement will be applied provisionally as of summer 2017. CETA has already been adopted by eleven national parliaments in EU member states, including Croatia, Denmark, Latvia, Malta, Spain and Sweden. CETA is nearing its one year anniversary of provisional application, as such all eyes are on the real impact the agreement has had, positive and negative, and if the many promises in the Joint Interpretive Statement are being upheld.
TTIP
At the June 2013 G8 Summit, US president Barack Obama and several key heads of EU states and institutions announced the launch of negotiations for a comprehensive free trade agreement, the Transatlantic Trade and Investment Partnership (TTIP). The EU and the US annually trade around $2.2 billion (€1.95 billion) in goods and services, with an additional exchange of over $3.5 trillion in two-way direct investment per year. It is the world’s biggest bilateral trade relationship. Together with other environmental groups in the Green10, T&E wrote a TTIP position paper. T&E also published a study on a “new style” TTIP energy chapter that supports, not jeopardises, the EU 2030 objectives. Read the joint report by T&E and ClientEarth on sustainable development and environment in TTIP, which outlines the parameters under which trade liberalisation can be achieved sustainably.
The EU and the US had met for multiple negotiation rounds. However, since the latest US elections, TTIP has been put ‘on ice’ and it is not certain in what shape or form, if at all, it will resurface. Escalating global tensions in world trade will have significant implications and ramification for current and future EU-US trade relations. The adoption of unilateral trade measures by the Trump administration has called into question Washington’s commitment to the transatlantic alliance and led to the imposition of retaliatory tariffs by its main global trade partners, including the EU. It is yet to be seen what compromise the largest trading bloc would make in its pursuit to avoid an escalating trade war with the US and its potential negative impact on global economy. Some express the view that this could end up being the revival of the TTIP negotiations.
Trade, Energy and Raw Materials
Energy and Raw Materials (ERM) chapters have recently been added to trade agreements, making a first appearance in the EU-Ukraine Agreement but only really taking shape under the TTIP negotiations and subsequent agreement such as EU-Indonesia. The purpose of the chapter is to facilitate trade in energy goods and raw materials of strategic interest and eliminate trade barriers as to reduce the cost of importing them into the European market. T&E closely monitors ongoing negotiations of FTAs and works towards modernizing and greening ERM chapters. While, the European Commission is forging ahead with ERM chapters, an overview and strategy of what these chapters aim to achieve and how is totally lacking within the European debate.
These ERM chapters have focused on the ‘old style’ trade liberalisation, since the only energies that are easily traded and transported are carbon-intensive, such as coal, oil, gas, biomass and biofuels. In a post-Paris world, which requires mass global decarbonisation of the energy and transport sector, trade agreements should seek to support not limit or hamper these important but seismic changes. Thus, an ERM chapter needs to reflect the reality of leaving hydrocarbons in the ground and supporting sustainable, renewable energies and technologies along with exploring raw materials markets in a sustainable manner.
Recently the focus has been on the EU-Indonesia free trade agreement due to the controversial inclusion of palm oil in the agreement. In 2017, 51% of the palm oil used in Europe was burned in our cars. The environmental impacts of palm oil are devastating. From a climate point, palm oil biodiesel is three times worse than fossil oil. European lawmakers have recognised the problem and agreed on 13 June 2018 to reform the Renewable Energy Directive (RED) by ending the binding target for food-based biofuels and agreeing to first cap and then phase out high emitting biofuels, such as palm oil and soybean oil as renewable transport fuels in 2030 at the latest. The democratically agreed reform of the RED II must be respected and trade in ERM must in no way undermine the EU’s internal renewable energy policies. Free trade agreement negotiations and provisions must never be used to hamstring internal EU policy development and implementation.
Europe must undergo a serious transport revolution, in part this will mean replacing traditional vehicles with electric vehicles, leading to an increase in electric vehicle battery. There is an increased need of raw materials for batteries, such as lithium, cobalt and nickel due to lack in the EU. The Commission is currently negotiating free trade agreements with countries such as Australia and Chile that have an offensive interest in exporting their raw materials. Therefore, Europe needs a strong sustainable domestic battery policy that is supported by a strong sustainable battery trade policy that is good for the environment, for the EU economy and industries.