On June 23, 2016, Britain voted to leave the European
Union. Does the Brexit decision affect the Canada-EU Comprehensive
Economic and Trade Agreement (CETA)? The answer is most likely and
In October 2013, Prime Minister Harper and José Manuel
Barroso announced an agreement in principle. In August 2014, Canada
and the EU announced that they had completed the text of the CETA,
marking the conclusion of negotiations. In October 2014, Canada and
the EU released the completed text of the CETA at the Canada-EU
Summit in Ottawa. On February 29, 2016, Canada's Minister of
International Trade, Chrystia Freeland, and the European
Union's Commissioner for Trade Cecilia Malmström announced
the completion of the legal review of Canada-EU CETA. The Final
Text was released.
However, the Canada has not tabled implementing legislation in
Canada's Parliament. As a result, Canada has not taken steps to
ratify the CETA. The same holds true across the pond. The EU
Members States must each ratify the CETA under domestic laws (not
an EU law) and none have done so yet.
The good news for Canada is that each EU Member State signed the
CETA separately to commit to the negotiated agreement and EU Member
States signed separate side letters. However, the fact that each EU
Member State participated in the long negotiation process and
signed individually (rather than as a single entity) does not mean
that there is everything will remain on track. There is hope that
all EU Member States will see the benefits of CETA and continue the
ratification process – we have come so far.
That being said, Canadian businesses need to be realistic. The
Brexit decision will most likely put Britain's exit from the EU
(and potential other referendum campaigns) as a higher priority for
the EU Member State governments than the CETA.
In addition, and importantly, Britain was one of Canada's
best allies in the Canada-EU CETA negotiations. If Britain is no
longer pushing the CETA agenda, it may be that the changes within
the European trading relationship will be the priority for years to
come and CETA will never be ratified.
Chapter 34 of the CETA (Article X.09) addresses the accession
of a new member to the EU. It does not address the exit of a
country from the EU. The negotiators did not cover off that
scenario because no one thought it would ever happen.
Chapter 34 of the CETA (Article X.06) sets out the entry into
force provisions. The CETA will enter into force on the first day
of the second month following the date on which the Parties have
notified each other that the procedures to ratify in domestic law
of each signatory have been completed. The problem is that if
ratification does not occur in each of the Parties, the second
month will never come. It is drafted as an all-or-none
However, there is a glimmer of hope. Pursuant to Article X.02 of
CETA, the EU Member States and Canada may agree, in writing, to
amend the CETA. Any amendment shall enter into force after the
Parties exchange written notifications certifying that they have
completed their respective applicable internal requirements and
procedures, on such date as the Parties may agree. It may be
possible for the EU Member States, Britain and Canada to agree to
amend the coming into force Article X.06 provisions to allow for
the CETA to have effect on a country by country basis. Article X.06
of CETA specifically allows the Parties may by mutual agreement fix
another date for coming into force. This is not an ideal scenario,
but it is better than throwing the CETA text in the recycle
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