Doing FTAs with the European Union
Business Mirror
February 1, 2017

Part Three

The EU’s process to start FTA negotiations

THE European Union can act alone to initiate and negotiate international trade agreements, as trade policy is an exclusive competence of the EU. The European Commission (EC), European Parliament (EP) and Council of the EU discuss any potential plan to negotiate a trade deal with a country. The EC starts a public consultation on the substance of the potential trade agreement and conducts an assessment of the impact of the agreement on the EU and a third country. Afterward, the EC starts an informal dialogue process known as a scoping exercise to determine the substance and feasibility of the agreement with the third country.

The EC then obtains formal authorization from the council (with tacit approval from the EP) to start the negotiations with the third country. This authorization is also known as negotiating directives, which set the main objectives of the negotiations.

The negotiation process is led by Directorate General for Trade of the European Commission by a chief negotiator and his team with support from the rest of directorate-generals. Based on the analysis of the Philippine Trade and Investment Center in Brussels, the typical length for negotiations to be completed is three years to five years. It generally takes around six years to conclude an FTA with the EU, from the scoping exercise to provisional application.

The general substance of the agreement 

EVERY trade agreement concluded by the EU is unique and does not cover the exact substantive content as other EU bilateral trade agreements, because it depends on the level of ambition and development of the countries involved, as well as the economic capacity of both partners. For example, an FTA with a developed country would be economically focused, whereas that with a developing country could be focused on development, as well.

The topics generally covered during the negotiations but may vary from agreement to agreement are: Market access for goods and services, trade remedies, technical barriers to trade, sanitary and phytosanitary measures, customs and trade facilitation, nontariff barriers to trade, investments, government procurement, intellectual property, competition and dispute settlement.

The EU-Canada Comprehensive Economic and Trade Agreement (Ceta)

ONE recent FTA negotiation concluded by the EU that caught the attention of international business, politicians and media was that with Canada.

The Comprehensive Economic and Trade Agreement (Ceta) between the EU and Canada was finally signed on October 30, 2016, during the EU-Canada Summit in Brussels.

But Ceta was not without plenty of drama from the launch of negotiations in 2009, to its near demise in mid-October, when the tiny Belgian region of Wallonia blocked the Belgian vote for the trade deal. This required marathon negotiations between the EC, Canada, the federal government of Belgium and the Walloon regional government. On October 27, 2016, Wallonia lifted its rejection of the trade deal, and Belgium was eventually able to join Ceta’s unanimous approval by the 28 EU member-states last October 30.

The climax in the Ceta drama started to build up in early September, when the EC conceded to the member-states’ demand this trade deal was one with “mixed” competences, particularly in matters that deal with investments, social protection and public transport. In short, in these areas, each EU member-state has a say in their implementation. And in the case of Belgium, the federal timber requires consensus among its three regional governments (Flanders, Brussels Capital Region and Wallonia). While there were also reservations from other EU member-states over certain provisions of Ceta, the commission was able to secure their acquiescence by crafting a joint interpretative instrument that became a legally binding part of Ceta.

As provided in the text of Ceta, the Council of the European Union approved the provisional application on February 17, 2017 of the provisions of the agreement where there is “EU competences,” provided the European Parliament (EP) gives its consent for its conclusion. The matter has been tabled for voting by the EP’s International Trade (INTA) Committee on December 5, 2016, and then for Plenary voting (under a single reading to formalize consent for conclusion) on February 14, 2017. To be continued