European Union: European Commission Presents CETA Proposal In The Wake Of Brexit

As Brexit creates shock waves of uncertainty around the globe, supporters of the landmark Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA or the Agreement) may, ironically, be getting an answer to the long-pressing question of how the Agreement will be ratified – even if it is not the answer they wanted.

In the wake of the Brexit vote, the President of the European Commission (EC), Jean-Claude Juncker, informed EU leaders that the EC planned to bring CETA into effect without individual member countries ratifying the Agreement. This was a welcome announcement for supporters of the trade deal. However, on July 5, 2016, the EC changed course and presented a proposal to the EU Council that the Agreement be put forward as a "mixed agreement" requiring ratification by all EU member states. The Agreement may, however, be provisionally applied pending its full entry into force.1

The ratification question

Prior to Brexit, the EC had not formally announced its ratification plan for CETA, despite the fact that the draft text was released almost two years ago and its legal review was completed this past winter. CETA is one of the first comprehensive trade agreements negotiated by the EC on behalf of the EU member states following the 2009 Treaty of Lisbon.

The looming question has from the outset been whether the Agreement covers only matters within the EU's exclusive competence, in which case it could be passed by the European Parliament and the EU Council, or whether it is a "mixed agreement" that must also be ratified by each EU member state. The ratification question relates to how much sovereignty individual member states retain in relation to trade agreements – a question that mirrors concerns inherent in the Brexit debate.

The EC has asked the European Court of Justice (ECJ) to determine which provisions of the EU-Singapore free trade agreement, negotiated in parallel to CETA, fall within the EU's exclusive competence and which fall within the jurisdiction of individual member states.2 The ECJ has not yet rendered a decision. However, the EC made a nod to this outstanding decision in its July 5 press release, indicating that the decision to push CETA forward as a mixed agreement is "without prejudice to its legal view" as expressed in the pending ECJ case. EU Trade Commissioner Cecilia Malmström explained that, while the EC's legal view is that the Agreement falls within exclusive EU competence, it is being put forward as a mixed agreement to satisfy political pressures:

...the open issue of competence for such trade agreements will be for the European Court of Justice to clarify, in the near future. From a strict legal standpoint, the Commission considers this agreement to fall under exclusive EU competence. However, the political situation in the Council is clear, and we understand the need for proposing it as a ‟mixed" agreement, in order to allow for a speedy signature.

The EC's decision to propose that CETA move forward as a mixed agreement will make the road to CETA's implementation more challenging. It opens the Agreement up to scrutiny by national parliaments, which could delay or threaten full and final implementation of the Agreement, particularly as the EU's competence in relation to foreign investment under the Treaty of Lisbon remains controversial. CETA contains novel investment protection provisions that proved contentious during negotiation of the Agreement. In fact, as part of the legal review of the Agreement, Canada agreed to modify certain of these investment provisions, presumably to keep the deal afloat. It is unclear whether even the modified provisions will satisfy all EU member state concerns in the proposed ratification process.

CETA and Brexit

Even with a ratification proposal, a great deal of uncertainty exists with respect to how the deal will be affected by Brexit going forward.

The Agreement could be ratified while the UK formally remains part of the EU – for the time being, the referendum has not sparked any changes in UK law and it officially remains part of the EU. However, if and when the UK leaves the EU, it would likely have to withdraw from CETA unless an agreement can be reached. CETA could conceivably continue as a UK-EU-Canada agreement or as two bilateral agreements – one with the UK and one with the EU – with necessary adjustments. Britain may also opt to completely re-organize its trading relationships, focusing, for instance, on deepening trade ties with the Commonwealth countries, which could benefit Canada.

If the UK withdraws from CETA altogether, Canada may be left facing a deal that from some angles looks little like the one it spent five years negotiating. Every trade agreement is an exercise in balancing the bargaining scales through compromises and concessions. Assuming CETA moves forward without the UK, the scales may be tipped off balance.

CETA is a significant agreement for Canada in large part because the EU is the largest integrated economy in the world that, at least when the Agreement was negotiated, comprised over 500 million consumers and a gross domestic product (GDP) of at least $CAD 17 trillion. The EU with Britain is also Canada's second-largest foreign investor, with investments in Canada reaching €225 billion in 2013.3 However, within that market, the UK is, in the Government of Canada's words, "by far Canada's most important commercial partner." The UK is also Canada's third most important trading partner after the United States and China.4 A British exit from CETA would mean the loss of 64 million potential consumers and a GDP of almost $USD 3 trillion.5

The EU post-Brexit looks quite different than it did when CETA was negotiated and while CETA provides for accession of new member states to the European Union, it does not provide for the departure from the EU of any member countries. The bargain struck in CETA will therefore require a careful evaluation to determine if the same net benefit to Canada can still be expected.

The UK also stands to lose important benefits conceded by Canada at the bargaining table, including: tariff elimination and elimination of non-tariff barriers; an increase in the monetary threshold triggering a pre-closing review of investments by Canada's minister of industry under the Investment Canada Act to ensure the investment provides a net benefit to Canada, and deeper and more favourable access to procurement opportunities – including at the provincial and territorial level.

Many EU nations may also be left wondering whether CETA still represents a fair bargain for them, for instance because certain concessions may have been made on the understanding that the burdens would be shared by Britain, currently one of the EU's largest economies.

Assuming the UK formally withdraws from the EU without putting in place a bilateral or multilateral trade treaty with Canada in its own right, the default regime would be the reciprocal application of Canada and the UK's most-favoured-nation (MFN) terms under the rules of the World Trade Organization, of which the UK is a member in its own right. There is no bilateral trade agreement between the UK and Canada. In terms of tariffs, the UK currently applies the EU's common external tariff to Canada;6 however this is likely to be replaced by the MFN tariffs at the time of withdrawal.


Ironically, Brexit may have had the unintended consequence of providing the EC with a much-needed impetus to announce a ratification proposal for CETA. Unfortunately, facing a fork in the road, the EC seems to have selected the riskiest route to implementation. The EC's decision – like Brexit itself – may seriously delay or threaten full and final implementation of the Agreement.


1 European Commission – Press release: European Commission proposes signature and conclusion of EU-Canada trade deal.

2 Commission Decision of 30 October 2014 requesting an opinion of the Court of Justice pursuant to article 218(11) TFEU on the competence of the Union to sign and conclude a Free Trade Agreement with Singapore, C(2014) 8218 final (2014).

3 European Commission: Questions and Answers.

4 Government of Canada: Commercial and Economic Relations.

5 Export Development Canada, Country Info.

6 Global Affairs Canada, Tariffs and Non-Tariff Measures.

About Norton Rose Fulbright Canada LLP

Norton Rose Fulbright is a global law firm. We provide the world's preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.

Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.

Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.

For more information about Norton Rose Fulbright, see

Law around the world

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions