The Comprehensive Economic and Trade Agreement (CETA) between Canada and the EU, the first extensive trade and investment deal that the EU has negotiated with a third party may not become reality. On July 5, the EU Commission has given in to calls coming from Germany and France to have the national parliaments ratify the agreement text instead of going through the simple ratification procedure involving only the European Parliament and the representatives of the member states signing on it. This indicates that:

a) It will take longer for CETA to be ratified and enter force and it is possible that it is vetoed (Romania and Bulgaria announced they will veto if Canada doesn’t lift the visa requirements for their nationals);

b) Brussels is losing ground when it comes to governance within the EU, as the move confirms the power still belongs to the nation state;

c) TTIP negotiations will likely be negatively affected (if only psychologically) and hope for establishing the largest global trade and investment bloc diminishes.

The French and German calls follow Brexit and can be interpreted as a reaction of the elite leadership to the referendum result. The British vote was against the political elite as much as it was against the EU, something that resonated with European leaders who have likely become more sensitive to the electorate’s needs and less to those coming from Brussels. But it is not the first time that France and Germany reacts to CETA.

Back in January 2015, when negotiations between Canada and the EU were almost closed, Paris and Berlin called for the modification of the ISDS clause. Their request followed Brussels receiving a majority of negative responses on including ISDS in the TTIP text agreement, during a public consultation session. The ISDS mechanism is about moving the competence for judging a case between foreign companies investing in a host country from the hands of national courts into the hands of international arbiters (more on the ISDS clause and TTIP here). The mechanism was mainly developed conceptually in NAFTA jurisprudence in order to facilitate investment between the Treaty signatories. But in Europe, the clause was seen by many to dilute the national prerogatives of host countries and so the EU had to restart negotiations with Canada, following the French and German calls to modify the clause into a “lighter” format. In a surprise move, Canada had given in on the EU demands in February 2016, closing the negotiations and not only paving the way for its enforcement but also giving some optimism with regards to the TTIP agreement.

Both CETA and TTIP have been heavily supported by the UK. With Brexit, uncertainty has not only become the defining feature of British politics, but has also questioned the future of the projects the UK supported within the EU. However, the two major trade and investment agreements had their own particular negotiation challenges. As I have noted in other articles, while TTIP is a major geostrategic opportunity for both the US and the EU, it is the EU continuous socio-economic problems leading to fragmentation rather than integration that is the major obstacle for reaching a deal. And time comes close to such a negative conclusion.

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About: Global Perspectives - Antonia Colibasanu

Antonia Colibasanu is a geopolitical risk analyst. Currently she is Stratfor's regional partner for Europe as well as Honorary Adviser to Romania’s Minister of Energy. She also works closely with the bestselling authors George Friedman and Robert D. Kaplan. A supporter for educational activities, she's also taking any opportunity to discuss with students and fellow researchers. Antonia frequently speaks on international economics and security topics at conferences and events in Europe, and since 2012, she has served on the educational board of the International Academy of Advanced Studies in Greece. Prior to joining Stratfor in 2006, Dr. Colibasanu held a variety of roles with the World Trade Center Association in Bucharest. With a background in academia both in Europe and the US, she holds a doctorate in international business and economics from Bucharest's Academy of Economic Studies, where her thesis focused on country risk analysis and investment decision-making processes within transnational companies. She also holds a master's degree in international project management. She is an alumna of the International Institute on Politics and Economics, Georgetown University.