The European Union achieved a major success in the negotiations in the field of public procurement in particular. Under CETA, Canada will open up tendering procedures of the provinces and municipalities – the levels of administration at which the bulk of public contracts are awarded – to European bidders. Germany has long been open to foreign bidders for government contracts. Under CETA, this will also apply to German firms in Canada – particularly in key sectors like energy, telecommunications and services.

Cutting tariffs, opening up markets, reducing the burden on business

CETA will cut close to 98% of tariffs that still exist between the two economies. This will create new scope for selling goods and services on either side of the Atlantic: not only for industrial goods, but also for agricultural produce. With CETA, service providers will enjoy easier access to the postal and telecommunications sectors, for instance. Canada has also agreed to open up some routes in its maritime sector.

A joint agreement will generate a fresh stimulus for small and medium-sized firms: according to the European Commission, the tariff cuts could save European companies some €590 million in expenses every year. They will also gain the best level of access to the Canadian federal, provincial and municipal public-sector markets that has ever been granted to non-Canadian companies. The European Commission has estimated that CETA will boost bilateral trade in goods and services by some 23% across the EU, and that the EU’s annual GDP will be increased by approximately €12 billion a year.

CETA protects high standards on both sides of the Atlantic

CETA confirms social and environmental standards and protects special European and Canadian features and achievements, such as regional specialities, public services and cultural diversity. It ensures that measures are maintained and can be taken in future to shape public services and to regulate, e.g. in the fields of education, health, social affairs, water supply, culture and media. Germany has introduced wide-ranging special rules on shaping and organising public services and regulation. CETA does not create any obligation to privatise public services, and it will remain possible to bring such services back under the aegis of municipalities in future.

All the requirements in a contracting party’s laws and ordinances on labour and welfare protection will, of course, also remain in force – including the provisions on the minimum wage and collective agreements.

Cultural diversity and the precautionary principle remain in place

CETA will not impact on cultural diversity. The agreement confirms the desire of the contracting parties to protect cultural diversity. Cultural funding is safeguarded at several points in the agreement, and no market liberalisation commitments have been entered into for audiovisual services.

And the EU’s precautionary principle, according to which measures can be taken even if the scientific basis is still incomplete, in order to prevent dangers arising to human health or the environment, will continue to be applied. It is reflected, for instance, in the non-licensing of certain phytosanitary products or certain procedures in food production.

CETA: setting a benchmark for future agreements

CETA is a modern agreement which provides a huge opportunity to lay down fair and sound rules for ever deepening globalisation and to play an active role in it. The high standards agreed between the EU and Canada will form a benchmark for future trade agreements.Find out more.

In place of the traditional investor-to-state dispute settlement (ISDS) with arbiters nominated by the parties to the dispute, CETA provides for a publicly investment tribunal with 15 judges who are accountable to the public and appointed by the government. There will also be an appellate body. Both tribunals will take their decisions in transparent proceedings with public hearings. All of the main procedural documents, such as rulings and submissions, will be published.

The Federal Government pressed for the adoption of a Decision by the CETA Joint Committee on the restrictive interpretation of investment protection under CETA, so as to limit abuses of substantive protection standards in the field of investment protection. This Interpretative Decision is to better define certain investment protection standards (‘fair and equitable treatment’, protection against indirect expropriation) and thereby strengthen the right to regulate (in particular in the context of climate action). This will ensure a higher level of legal certainty and helps prevent instances of potential abuse of the complaints procedures available to investors under CETA.

The Federal Government successfully advocated for a corresponding Interpretative Decision vis-à-vis Canada and at EU level and initiated the negotiations between the European Commission and Canada on the subject. The text of the Decision has now been finalised by the European Commission and the Canadian Government and is now being coordinated between the EU Member States. Once the process has been concluded at EU level, the Decision will be tabled for adoption by the CETA Joint Committee. Once adopted, the restrictive interpretation of the CETA investment protection standards will become binding for the future investment tribunal.

Not all parts of CETA fall within the competence of the EU for common trade policy. Some parts remain within the competence of the EU Member States. For this reason, not only Canada and the European Union, but all EU Member States are contracting parties. So, before the free trade agreement can take effect, it must be ratified at national level by all 27 Member States. In Germany, the ratification process is governed by the provisions of the Basic Law. This states that a ratification act (also called a treaty act) must be adopted. The Bundestag and the Bundesrat are involved in this process.

On 15 February 2017, the European Parliament approved CETA and thus cleared the way for a provisional application of the “EU-only” part of the agreement. CETA has been provisionally applied since 21 September 2017. This, however, applies only to those chapters for which the EU undisputedly has sole responsibility. The agreement now needs to be ratified by the parliaments of all 28 EU Member States, in line with national procedure, before it can fully enter into force. Among the provisions that require ratification by all EU Member States are those governing investor-state dispute settlement procedures, which, under CETA, will be handled by an investment court that is held accountable by the public.

On 22 September 2016, the Bundestag spoke out in favour of concluding the free trade agreement (the statement can be found here (PDF: 888KB) (in German)). On 13 October 2016, the Federal Constitutional Court gave a conditional go-ahead for the signing of the agreement. Once compliance with the requirements imposed by that decision had been secured in the EU Trade Ministers Council, the Federal Cabinet also agreed to the signing of the agreement on 19 October 2016.

Regarding the provisional application of CETA

Only those parts of the agreement which fall indisputably within the competence of the EU are being provisionally applied. This covers, for example, the agreements on tariff reductions and public procurement. Their provisional application enables EU companies to benefit as quickly as possible from the new CETA rules. Those parts of CETA which are not subject to provisional application – particularly the sections on investment protection and dispute settlement – cannot enter into force until the agreement has been ratified by all EU Member States and the entire agreement has taken effect.