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CIArb Features

CETA - An Overview

16 December 2016 Features
By Sabina Adascalitei LLB, LLM, MCIArb, Research and Academic Affairs Coordinator

On 30 October 2016, the Comprehensive Economic and Trade Agreement (CETA) was adopted by the Council and signed at the EU-Canada Summit. Once applied, CETA will provide EU firms with better business opportunities in Canada as well as support job expansion in the EU.

Benefits for the EU

CETA will eliminate most of the import duties, saving European exporters roughly €500 million a year, and eliminate bureaucratic obstacles to trade. EU companies will be allowed to participate in the bidding process for public contracts in Canada, being the first ones to gain access to the Canadian public procurement markets. Furthermore, CETA will enable movement of company personnel and service-providers between the EU and Canada, which will represent an advantage for firms operating in both places.

Finally, the EU and Canada will recognise the results of each other’s checks to ensure the conformity of their products. This will have an impact on administrative costs, which will be significantly lower, as compliance with the technical regulations and standards will not have to be proven twice. This will also enable EU firms to compete with other US companies for Canadian clients.

Benefits for Canada

Canada will be one of the few countries in the world to have preferential access to both the US and the EU. Canadian goods that now face tariffs will become more competitive in the EU market, giving them an advantage over the other exporters and allowing them to create new markets for their goods in the EU.

Similarly, Canada will have access to procurement by local contracting authorities in the public sector which includes procurement of professional services, such as architecture, engineering, goods and construction services. CETA aims to prevent bureaucratic obstacles by reducing processing time at the border and making the movement of goods cheaper and overall, more efficient.

Investment Dispute Settlement

CETA will bring some changes to the dispute settlement arena, reflecting key elements of the EU’s approach to investment. It will replace the existing bilateral investment agreements between EU member states and Canada, providing for a single set of rules that investors and states can refer to.

The new investment protection system provided by CETA will take a step back from the ad hoc arbitration system by establishing a permanent institutionalised tribunal. This permanent tribunal will be nominated by the parties to the agreement and will hear breach of the investment protection standards cases. The panel will be selected randomly and will encompass three members, one from the EU, one form Canada and the presiding member from a third country.  

The new system will establish an appeal mechanism, similar to the one found in domestic law. In essence, once the agreement between the parties has entered into force, an appellate tribunal will be formed. This appellate body will have the power to hear and review decisions of the initial tribunal.

CETA will also ensure transparency of the proceedings. In this regard, parties’ submissions as well as the tribunal’s decisions will be publicly available. The oral hearings will be open to the public and interested parties will be able to make submissions.

Concluding remarks

Trade agreements are concluded with a view to lowering the costs of trade between countries. Essentially, the objective is to lower the costs of imports and exports of goods to stay competitive on the global market. This is what CETA is aiming to achieve, by tackling not only tariffs but also non-tariff measures that reduce access to markets and subsequently, competitiveness.