Pia Acconci (Professor of International Law, University of Teramo) “The Connection between the ‘Right to Regulate’ and ‘Regulatory Cooperation’ within the Implementation of the CETA”

A Discussion Paper on ‘CETA Implementation’ published by the EU Commission last year underlines that “[t]he European Commission has negotiated the Comprehensive Economic and Trade Agreement (CETA) with a view to establishing a state of the art, privileged and forward – looking trade and economic relationship with Canada. To this end, the EU and Canada have reached an ambitious agreement which offers companies new opportunities for trade and investment whilst safeguarding their respective standards of protection for the environmental, health, food, safety, labour and consumers” (see E03556.2018.0033.C – 27.6.2018).

Complex policy issues arise from the interaction between economic and non-economic concerns at this stage of the world-wide process of liberalization and interdependence. Conflicts of interest owing to the competition between these concerns have become a relevant investment and/or trade risk.

To tackle such a risk certain economically-advanced States and the European Union have included a clause on the ‘right to regulate’ of the host Contracting Party in their international treaties on trade and investment. This kind of treaty clause aims at safeguarding the exercise of the regulatory capacity of the host Contracting Party in the pursuit of public interests, like the environment, public health and/or cultural heritage (so-called, ‘legitimate public objectives’). The CETA is also directed to the safeguard of such a capacity. Its Preamble and its Annex X.11 on ‘expropriation’ are particularly relevant this regard.

Besides, as other international trade agreements concluded by the European Union after the entry into force of the Lisbon Treaty in 2009, the CETA provides for a few relevant provisions on ‘regulatory cooperation’ in order to mitigate, or even better approximate, differences in regulatory and technical standards and in protected values, as ‘barriers’ to the freedom of investment and trade (see Chapter Twenty-One of the CETA). These provisions aim at facilitating market access, as to trade, and admission, as to investment, as well as at preventing conflict of norms.
Dr. Acconci’s presentation will focus on the connection between the ‘Right to Regulate’ and ‘Regulatory Cooperation’ within the implementation of the CETA with the purpose of showing if these innovations of the typical drafting of international trade agreements might be seen together as an effective tool for the safeguard of so-called ‘legitimate public objectives’ as common values.

Aakriti Bhardwaj (Marie-Curie Early Stage Researcher and PhD Candidate School of Law, University of Nottingham) “Collaborative Integration Between State and Multinational Economic Actors in Trade: Addressing Climate Change Concerns through CETA”

Negotiations on the Comprehensive Economic and Trade Agreement (“CETA”) between the European Union (“EU”) and Canada were concluded before the signing of the Paris Agreement on Climate Change (“Paris Agreement”) and therefore, CETA does not carry an express obligation to address climate change. Subsequently, the Parties undertook the commitment to implement the Paris Agreement by adopting a resolution to this effect based on CETA’s Trade and Sustainable Development (“TSD”) chapters. The EU is the world’s largest importer of oil and gas products and services. Canada is one of the largest producers of oil and gas in the world. Canadian exporters of oil and gas expect benefits from CETA because of duty-free, quota-free market access to the EU. Thus, there is a conflict between climate change concerns and economic objectives of the agreement.

This paper proposes Collaborative Integration (“CI”) as a framework for state actors, represented by the Canadian government and the EU institutions on the one hand and economic actors, represented by multinational corporations on the other to strengthen action on climate change. Currently applied on provisional basis, CETA awaits ratification by all EU Member States whereas, Canada has completed the ratification process. Civil society organisations (“CSOs”) assert the subordination of environmental provisions to investment protection and criticise the promotional approach of the TSD chapters. The Court of Justice of the European Union has confirmed that the mechanism for the resolution of disputes between investors and States under CETA is compatible with EU law. However, criticism of the CSOs is related to the ‘sweeping’ right of private investors to sue governments, threatening their right to regulate, and favouring economic interests of multinational corporations. From this perspective, governments and businesses are on the same side making developments under TSD chapters at the inter-governmental level appear superficial.

The Commission reiterated its preference for the promotional approach but sought to advance it through a 15-point Action Plan (“Action Plan”) to make TSD chapters more effective. CI as discussed under this paper is essentially a proposal for progressing on the Action Plan to also channel investment provisions towards climate change commitments. Seen from the perspective of governance, it is based on an analysis of the interaction between corporate and governmental actors in the EU and Canada. There is a focus on the energy sector because the climate change imperative necessitates promotion of energy efficient technologies and consumption and production of renewable energy products and services. EU institutions developed a set of binding legislation on climate strategies and targets for reducing greenhouse gas emissions progressively in the coming years. However, there are two challenges facing the EU: (i) implementation of the internal market legislation and (ii) strengthening its external relations in the field of energy. CI could resolve these challenges by reconciling trade and climate change goals.

The TSD chapters contain the substantive and institutional aspects of environmental obligations. There are environmental provisions outside the chapter, primarily based on the ‘general exceptions’ clause as under WTO Agreements. Taken together with the overarching objective of regulatory cooperation, covered by a separate chapter and applicable to TSD chapters of the agreement, CETA promises to have far-reaching implications for the trade-environment linkage. Accordingly, governments and multinationals will need to collaborate for integrating the economic and environmental objectives in CETA’s implementation. A normative approach is adopted to find linkages between the relevant chapters of CETA. The methodology comprises doctrinal legal analysis along with comparative legal research.

Kerrie Blaise (Canadian Environmental Law Association) “Safeguarding the ability of jurisdictions to enact strong environmental laws: reviewing the impacts of CETA on sustainable development and environmental protection”

All levels of government in Canada can and must act to protect the environment in diverse ways. As has been argued before the courts and recognized by the Supreme Court of Canada, Canada has a system which allows for action on environmental matters by municipal, provincial and federal governments, including First Nation governments. Action at all scales has proven essential in ensuring the protection of the environment and human health, and free trade agreements have become an ever-present part of the system. This paper will review the ability of jurisdictions to enact strong environmental laws in light of the Comprehensive Economic Trade Agreement (“CETA”) between Canada and the European Union, and explore the role of trade agreements in achieving the related purposes of sustainable development and environmental protection. Achieving these purposes requires public oversight and transparency and the inclusion of civil society, who traditionally have not had an equal role to that of multinational, private actors in trade negotiations. This paper will also consider the interpretative value of provisions external to CETA’s Trade and Environment chapter and their effects on the text’s pronouncements in support sustainable development and environmental protection.

Mark A. Camilleri (Presidenct, Canada EU Trade and Investment Association) “Regulatory Cooperation under CETA: An Early Assessment of the ‘Elephant in the Room’”

In September 2019, the Canada-EU Comprehensive Economic and Trade Agreement (“CETA”) will celebrate its second anniversary of provisional application. While some of the early economic indicators suggest that CETA has been slow in delivering the kind of economic results promised, it is still too early to determine the overall effectiveness of many of the more ambitious and innovative aspects of CETA, including, in particular, regulatory cooperation. That said, the issue of the implementation of the regulatory cooperation regime under CETA has not featured prominently since its provisional application despite featuring in many of the arguments for and against CETA prior to its provisional application. In this way, the issue of regulatory cooperation under CETA risks becoming the proverbial “elephant in the room” – an important and evident issue that no
one seems eager to address.

Regulatory cooperation, together with other attempts at eliminating non-tariff barriers to trade, is one of the key aspects of the “second generation” free trade agreements and is a central feature of CETA. CETA addresses regulatory cooperation in various chapters of its text and creates a new institutional architecture to support different aspects of regulatory cooperation.

Because so much of the debate about CETA was – and remains – about regulatory cooperation, it remains the key prism in which CETA is viewed by the wider public. As such, the success of CETA will, in no small part, be based on this very issue. A challenge to this success, however, is a lack of a generally accepted understanding of what exactly is meant by regulatory cooperation under CETA. This in turn creates ambiguity and confusion on what can – or indeed should be – achieved by regulatory cooperation under CETA by stakeholders and policy makers alike.

Laurie Durel (Université Laval) “European wine and spirit in Canada: Much ado about nothing?

The Comprehensive Economic and Trade Agreement (CETA) negotiation’s between Canada and the European Union (EU) have been another opportunity for the EU to further enhance rules pertaining to trade in alcoholic beverages building on the two previous agreements that Parties had already negotiated in this area.1 Liquor boards in Canada had to implement technical policy changes since the provisional application of CETA in order to comply with this new regime. How do these policy changes have affected EU exports of alcoholic beverages to Canada? If States are rational players in the international environment, one can presume that their actions are motivated by the expected optimisation of their benefits. Receive wisdom suggests that the EU insistence on policy reform in Canada was motivated by the prospect of significant economic gains for its wine and spirits industry.

This paper uses imports data of wine and spirits in Canada in order to establish if there have been any changes since the implementation of CETA. This data, combined with sales statistics from the Société des alcools du Québec (SAQ) and Liquor Control Board of Ontario (LCBO) on wines and spirits, help determine whether EU wines have benefited from the changes required by CETA.

Findings do not point to a clear trend in EU wine sales and imports since the entry into force of CETA. This result suggests that, when consumer choices are not fully driven by price, products don’t benefit equally of tariff elimination, trade facilitation and regulatory changes brought by free trade agreements (FTAs). This conclusion raises important implications for the way states negotiate FTAs and the strategy they put forward in order to expand market for their products.

David A. Gantz (Samuel M. Fegtly Professor of Law, The University of Arizona) “Canada’s Approach to Investor State Dispute Settlement: the CETA, USMCA or CPTPP Model Prevail?”

In the past several years Canada has concluded three major trade agreements, the Comprehensive Economic and Trade Agreement (CETA) with the European Union; the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) (with Australia, Brunei, Chile, Japan, Mexico, Malaysia, New Zealand, Peru, Singapore, and Vietnam) and the United States-Mexico-Canada Agreement (USMCA).  CETA has been in provisional force since September 2017, albeit without the investment protection provisions; CPTPP entered into force for Canada and six other signatories December 30, 2018 (with the investment provisions more or less intact). USMCA remains to be approved by the three Parties.

These agreements are significant for a number of reasons, including because CETA and CPTPP represent a major effort by Canada to diversify its trade away from its traditional heavy dependence on the United States for 75% of export.. However, for those interested in investor-state dispute settlement and broader issues of foreign investment the three agreements represent a divergence (some would say “inconsistency”) in Canada’s investment policies. CPTPP incorporates in its Chapter 9 more or less traditional investor-state dispute settlement using ad hoc arbitration under ICSID or UNCITRAL rules. CETA in its Chapter 8 embodies the first effort by the EU to promulgate its investment “court”/appellate body system, substituting a standing investment court for more traditional arbitration (although those provisions will not enter into force unless and until they are ratified by the parliaments of all EU states). In USMCA, in contrast, the United States and Canada have agreed to eliminate ISDS entirely after a three-year transition period. The USMCA investment Chapter 14 incorporates the traditional protections relating to national treatment, fair and equitable treatment and expropriation but ISDS obligations apply only between the United States and Mexico.

Canada’s divergent treatment of ISDS raises issues that go well beyond Canada’s own approach to investment. Which of the three is likely to dominate investor protection chapters (if any) in future trade agreements?  Do the inconsistent CETA and USMCA mechanisms suggest the likelihood of a broader departure from the NAFTA/CPTPP models, and if so is the EU or the United States likely to ultimately prevail in agreements with third countries? What are the prospects for the EU’s efforts to conclude a broadly-based multilateral agreement embodying the investment court/appellate body mechanism, presumably with Canada’s support? Given Canada’s highly regarded domestic court system, will it really matter to potential foreign investors whether ISDS is incorporated in Canada’s future trade agreements?   Does the absence of functioning investor protections in CETA and eventually in USMCA mean that in the event of future investment disputes in Canada, the Canadian government will be subject to diplomatic pressures from the investors’ home governments in Europe and the United States?  These are among the issues that will be discussed after comparing the three investment protection alternatives supported by Canada to date.

André Gariépy ( Commissioner for Admission to Professions, Government of Quebec) “Labour mobility and qualification recognition under CETA: Lessons from a first implementation attempt”

Compared to traditional trade agreements, the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union includes innovative provisions and mechanisms on labour mobility and qualification recognition. A first Mutual Recognition Agreement (MRA) under CETA has been negotiated and it concerns the architectural profession. An April 2018 draft text has been submitted to the new CETA Committee on Mutual Recognition of Professional Qualifications, for its perusal and validation. Fundamental questions were raised by observers and stakeholders about this MRA.

Beyond the situation of architects, this first experience revealed the realities of both Canadian and European institutional and professional regulatory frameworks and how they could become an opportunity or a challenge in implementing CETA.

This presentation will present a critical view of the functional logic of CETA on labour mobility and qualification recognition. Based on the experience with the architects, it will discuss:

  • the content and the scope of MRAs under CETA;
  • the acceptable and less acceptable conditions for recognition to be included in MRAs;
  • the lessons and the critical conditions in developing a fair and effective recognition and mobility scheme under CETA;
  • the sensitive issue of reciprocity between intra-European and intra-Canadian mobility following recognition being awarded.

Jefferson Huebner (Balsillie School of International Affairs) “MNEs and CETA: A firm-centered examination of the implications of CETA”

Overall trade between Canada and the EU has increased since the implementation of CETA in 2017.  However, differences exist in the extent to which businesses on each side are capitalizing on new opportunities. Research literature on trade preferences predicts that larger MNEs tend to be more supportive of trade liberalization than SMEs, and that firms within industry sectors may be divided between support and opposition to freer trade. This paper examines these predictions by assessing how interests and activities of MNEs regarding CETA align across countries and within specific industry sectors, and how these interests differ between CETA and the recently renegotiated USMCA. The paper presents preliminary findings from primary interviews with Canadian and EU-based firms assessing how official government trade policy objectives for CETA correspond with resulting activities of MNEs regarding the implementation of CETA in various areas including procurement and trade in manufacturing, agricultural and other goods and services.

Isabella Mancini (PhD candidate, the City Law School) “Deepening Trade and Fundamental Rights? On the descriptive and normative intersection of Regulatory Cooperation chapters and Labour rights”

The degree of ambition of the latest EU trade negotiations has marked a new era of ‘deep integration’ in both scope and levels of institutionalisation. From a tradition of trade agreements mostly dealing with tariffs, the EU has recently negotiated a new generation of “deep” trade agreements, emerging from its “deep trade agenda” and aiming at deeper legal and institutional integration with its trade partners. Yet it has been observed that not every integration would necessarily reach the same degree of ‘deepness’ (Young, 2017). As these FTAs emerge as forms of global governance, having important repercussions on global standard-setting on human rights; and provided little is written about the place and consideration of fundamental rights in the deeper integration processes flowing from these agreements; exploration is warranted of the concept of “deepness” with respect to fundamental rights.

As part of a methodological exercise unfolding different ways of exploring rights in the EU FTAs, the paper particularly focuses on the descriptive and normative intersection of Regulatory Cooperation chapters – emblematic of efforts at deeper integration – and of fundamental rights, taking as a case study labour rights. A first set of questions emerges as to which voices and demands are being institutionalised in such mechanisms (Bardutzky and Fahey 2017); and to what extent and under which conditions regulatory cooperation would prove an effective tool to empower actors that embrace fundamental rights discourses. What venues are given to civil society actors in regulatory cooperation mechanisms and to what extent can they voice labour rights concerns therein? In this new era of deep integration and global reach of FTAs, how should we understand the deepness of EU fundamental rights agenda and the place of labour rights in regulatory cooperation?

Laurence Marquis (Université Laval) “Mapping the way for the reform of investment protection by the EU with the implementation of CETA: Making sense of recent cases from the Court of Justice of the European Union”

Ratification and implementation of CETA continues to be the subject of much debate and controversy in Europe, despite its provisional entry into force on 21 September 2017. At the heart of the matter lies the issue of investor-State dispute settlement and the now new model proposed by the EU in CETA, the Investment Court System (ICS). After Opinion 1/17, issued on 30 April 2019 by the CJEU, confirming the compatibility of the ICS with EU law, we could presume that the last road blocks to ratification from Member States are to be lifted, to allow for a full implementation of CETA. As a number of countries continue to hesitate to ratify, or have more directly expressed their intention to refuse ratification (as Italy), uncertainty continues to throw a shadow on a full ratification and implementation of CETA.

The Court, with recent Opinions 2/15 and 1/17, is attempting to balance the delicate equilibrium of exclusive and shared competences, in this field. The decision by the Council to ratify the EU-Singapore Free Trade Agreement as a mixed agreement, following Opinion 2/15’s findings that investor-State dispute settlement is a shared competence, has had an important impact on the EU investment policy. In July 2018, the Commission already put in place a new measure for commercial negotiations, separating trade and investment agreements, to avoid any delays with ratification. In line with the objectives set out in Article 21 of the Lisbon Treaty, increased coherence appears to be sought in the attribution of competences, and with the roles of the European institutions. This contribution will therefore seek to examine the legislative and programmatic changes that were made and continue to be considered for the EU investment policy, and which were brought about for CETA’s implementation.

The reform by the EU of investor-State dispute resolution with the introduction of the Investment Court System (ICS) is a clear illustration of changing paradigms. By introducing a permanent court with an appeal level, providing guarantees of independence and impartiality of the arbitrators, the EU has operated a fundamental modification to the existing system. The ongoing reflections at UNCITRAL for the establishment of a Multilateral Investment Court (MIC) are another illustration of an innovative policy position, and demonstrate the growing impact of the EU and its influence on the content and design of international trade agreements. Reforms proposed by the EU for the dispute settlement system could have the effect of diminishing the fragmentation in the field of international investment law and providing a uniform solution.
The object of this contribution is therefore, in a first part, to put in context the policy and legislative changes that were undertaken and continue to be necessary for the EU to implement CETA. In particular, it will emphasize new developments brought about by the ICS, and those that should be envisaged in the case of an eventual establishment of a Multilateral Investment Court. Then, in a second part, we will also examine whether Member States can refuse ratification, and which alternatives might be available in that case, whether it consists in additional instruments amending the treaty, a return to the negotiation table, a partial entry into force, or the extinction of the treaty itself.

Agnès Ruffat (University of Ottawa) and Patrick Leblond (University of Ottawa) “Why are barriers to public procurement under CETA’s Chapter 19 so difficult to remove?”

Since CETA entered into force in late September 2017, many barriers remain to access public procurement contracts in both the EU and Canada. If Canada and the EU have both committed to open up their government procurement markets to each other, why is it that obstacles remain two years after the agreement came into force? What are those obstacles and what can be done to remove them? These are the questions that this proposed paper seeks to answer.

It is important for Canadian firms to be able to take advantage of the opportunities offered by the EU’s government procurement markets and vice versa for EU firms. After all, this is why Canada and the EU agreed to chapter 19 in the CETA. But as with many other aspects of third-generation free trade agreements, a lot of work has to be done once the agreement is in force in order for its provisions to be effective. For public procurement, this includes ensuring that all levels of government have changed their administrative procedures and even laws or regulations so that there is no discrimination against EU firms in Canada and Canadian firms in the EU in deciding on which bidders to choose from or even invite into a bidding process. It also includes making sure that firms, especially SMEs, have easy access to the necessary information in order to bid on projects. For example, as part of its CETA commitments, Canada planned to develop a common online platform for all government (municipal, provincial and federal) contracts on offer, in order to make it easy for EU firms to have access to the Canadian market. So far, however, the platform is nowhere to be seen. Finally, Canadian and EU firms must be made aware of the fact that CETA now allows them access to government procurement contracts on the other side of the Atlantic.

The paper will research and analyse the existence of the above-mentioned obstacles in both Canada and the EU. To do so, it will use the following methodological approach:
• Use information provided by experts.
• Organize interviews with relevant organizations.
• Identify the barriers.
• Gather data and perform quantitative and qualitative analysis

After having seen how and why these barriers remain, we will propose solutions to remove barriers to public markets such as discrimination, respect of Social Development Goals, rule of local content, access, facilitate the information and free movement of
goods and people.

Saul Schwartz (Carleton University) and Elizabeth Schwartz (Memorial University of Newfoundland and Labrador) “Will CETA reduce home bias in local government procurement?”

Expanding access to Canadian local government procurement markets was an important goal of European negotiators of the Comprehensive Economic and Trade Agreement (CETA). The purchase of goods and services from the private sector by all levels of government represents 15 to 20 percent of GDP in developed countries and it is widely thought that there is a pervasive “home bias” in government procurement.

Will one of the most important potential effects of CETA be to reduce home bias in Canada?  This paper argues that home bias in local government procurement will not be eliminated by non-discrimination provisions in CETA (or any other trade agreement). Using detailed contract-level data from four Canadian municipalities, we estimate a statistical model of the probability of winning a contract as a function of the location of the bidder.  Then, using qualitative methods, we combine analysis of CETA and internal trade agreements with data from interviews with municipal procurement officials to suggest that the dominance of local firms in procurement does not arise from the formal exclusion of foreign firms or from discriminatory policies or decision making. We argue instead that the relative absence of non-local contract winners in Canadian local procurement processes is related to how business is conducted and regulated in particular provinces.

Felix Stern (German University of Administrative Sciences Speyer) “Legitimization and control of committee bodies in EU free trade agreements”

The recent development of international economic law has been characterized by a focus on bilateral free trade agreements. Promoting its common trade policy, the European Union is increasingly striving to conclude a new generation of free trade agreements. This type of agreements includes the establishment of committee systems with competences for regulatory cooperation that intervene “far beyond the border”. The bodies set up in this way will be endowed with a scope of authority that goes far beyond the decision-making mechanisms which are already known under international law. Since the underlying free trade agreements are concluded by the EU alone or as “mixed” agreements together with the EU member states, the decisions of such bodies are incorporated into European Law via Art. 216 (2) TFEU. Without a sufficient guarantee of democratic legitimacy, there are concerns that the parliaments of the EU and its member states could be bypassed when important regulatory issues are (pre-)decided by international bodies.

This research aims to critically take up the jurisprudential discussion unfolding on this topic and to analytically accompany it by means of a principal-agent model. CETA is currently the most important example. The central research question concerns the need for legitimation determined by the German constitution and by European Law, which is entailed by functionally distinguishable delegations of tasks to international treaty bodies.

In the first step, the delegations of authority taking place in the CETA are first classified on the basis of their respective capacity for problem-solving. The functional research grid developed for this purpose is based on the basic assumption of principal-agent theory, according to which a delegation of tasks only takes place if it is useful for the principal. This benefit can be found in the solution of problems created by the agreement and which a committee set up as an agent can solve more efficiently than the contracting parties (set up as principals) themselves. Such problems include the reduction of transaction costs incurred in the implementation of the Agreement. One central issue here is to enable the contracting parties to cooperate on a permanent basis under conditions of incomplete information. Furthermore, agreements that are intended to pave the way for a significant step towards closer cooperation and integration can only provide a more or less detailed framework for the future relations of the parties involved. They cannot exhaustively cover all conceivable problem constellations, which might arise within the decades of their application. Thus, they can be characterized as an incomplete contract which must be interpreted, supplemented and further developed on an ongoing basis. Another group of problems is the organization of agenda-setting to avoid the paralysis of future cooperation. In addition to the reduction of transaction costs, the promotion of credible commitments through the establishment of joint bodies should also be discussed.

Generally, the efficiency gains to be obtained by the delegation can only be achieved if the agent is granted a certain degree of discretion. Therefore, the involvement of agents also entails risks. These risks can be anticipated and described by the jurisprudential examination of the legitimacy issues entailed by the delegation. In the following step, the current legal debate on the committee bodies established by CETA will, therefore, be discussed in relation to the political science investigation described above. From the point of view of the Federal Republic of Germany, a central question is which provisions of the German constitution govern the delegation of powers to the committees provided for by CETA. Closely related to this is the question of whether the delegations taking place with the CETA represent a transfer of sovereign rights according to Article 23 (1) GG and
possibly Article 24 (1) GG. Furthermore, it is unclear according to which constitutional standards the establishment and operation of decision-making treaty bodies must be governed. Both for the assessment on the basis of German constitutional law and for the assessment on the basis of European Law, it is also relevant whether the decisions of the committees appointed in the CETA require (subsequent) acceptance by the contracting parties in order to have legally binding effects. At the center of the debate on European Law is the simplified procedure under Art. 218 (9) TFEU,
which allows the Council to establish a common negotiating position without involving the EU Parliament. (The latter just needs to be informed extensively as provided by Art. 218 (10) TFEU).

At the end of the project, legal solutions presented in the legal debate will be discussed. On the one hand, these should serve the demand for effective and flexible regulation on the basis of the agreement as well as facilitating the elimination of regulatory gaps. On the other hand, they must be able to guarantee a sufficient degree of democratic legitimacy.

Charell van Rooy (Cardiff University) “The influence of foreign governments over domestic regulatory processes”

Through an assessment of regulatory cooperation in CETA, this paper argues that regulatory cooperation is potentially far-reaching and could impact domestic regulatory processes by providing access to foreign governments before entering into domestic democratic processes. Needless to say, this could potentially damage said democratic processes.
Whilst is it currently unclear how EU – Canada regulatory cooperation will take place in practice, CETA provides a rather long list of activities to achieve the objectives of regulatory cooperation. To establish an ongoing regulatory dialogue, the EU and Canada will have continuing bilateral discussions on regulatory governance, including on – but not limited to – regulatory reforms and its effect; lessons learned; exploring alternatives approaches to regulation and; exchanging experiences with regulatory tools and instruments, including regulatory impact assessments, risk assessment and compliance and enforcement strategies. Furthermore, the EU and Canada will consult each other ‘as appropriate’ and exchange information throughout the regulatory process, both ‘as early as possible’ in that process. Other activities of regulatory cooperation include, amongst others; sharing non-public information; sharing – proposed – regulations to allow sufficient time for interested parties to provide comments; exchange information regarding contemplated regulatory actions, measures or amendments at the earliest stage possible; assessing opportunities to minimise regulatory divergence; examining possibilities on using the same methodologies and date and; conduction cooperative research agendas to possibly establish a common scientific basis.

Providing endless activities to achieve regulatory cooperation, CETA goes beyond cooperation and towards convergence of regulatory standards and procedures. Moreover, to enhance convergence and compatibility between regulatory measures, the EU and Canada have obligated themselves to, ‘when appropriate’, consider the others regulatory measures or initiatives when regulating on a similar or related topic. This does not prevent the EU or Canada to regulate measures differently or pursuing different initiatives, ‘for reasons including different institutional or legislative approaches, circumstances, values or priorities’. However, since it is unclear what is meant with ‘when appropriate’, this could be interpreted in various ways. Considering current day’s risk regulation being in fact predominantly transnational, it could be deemed appropriate to consider regulatory measures of each other the majority of the time. Furthermore, it could be appropriate when concerning trade in one way or the other. This could mean that regulating any product covered by CETA – which, considering the broad application of the Agreement on matters of trade, are many of them – could call in the applicability of this article and thus call for the EU and Canada to discuss possible regulatory measures before proposing them to their respective bodies responsible for approving draft regulatory measures.

De facto – assessed through CETA and a comparative assessment of regulatory cooperation in the Transatlantic Trade and Investment Partnership of the EU and the US – this would lead to the responsible DG of the Commission to discuss a regulatory measure with DG Growth which then has to negotiate with the Canadian Technical Barriers and Regulations Divisions of the Department of Foreign Affairs on a majority of matters considering risk regulation. Whilst the regulatory cooperation activities are essentially procedural and voluntary by nature, CETA could potentially be far reaching. By agreeing to inform each other as early as possible in the regulatory process, even regarding non-public information, CETA will effectively give another government access to information before a democratic debate can take place regarding said process. This could lead to the European Commission consulting with Canada on a draft proposal before the draft is adopted by the EU College of Commissioners and thus before the EU Council and Parliament or the Canadian Parliament even get word of it. Ultimately, transatlantic regulatory cooperation is working towards a ‘global regulatory laboratory’. However, the question is if this is something worth striving for or if perhaps, national democratic processes need protection from the future of regulatory cooperation.

Wolfgang Weiss (German University of Administrative Sciences Speyer) “The implementation of CETA within the EU: Challenges for democracy and institutional balance”

CETA like other recent trade agreements entered into by the EU are living instruments that are self-evolving. They establish treaty bodies like Joint Committees that have binding decision making competences in order to facilitate the implementation but also alteration of the agreements. In case of CETA, the Committees´ competences have become substantial, go beyond mere execution of the agreements and include decision making on rather fundamental issues and norm generation, which implies exercise of political discretion. Hence, the CETA Committees enjoy public powers that were transferred to them by way of treaty making. This raises the question whether/how these decisions can be perceived as legitimate.

The legitimacy of this transfer of public powers appears contestable as the European Parliament (EP) hardly has a role to play in the decision-making of the Committees, nor in their monitoring. Hence, the transfer of decision making powers to CETA Committees implies a power shift to the benefit of the executive, and to the detriment of the EP. This does not reflect the new balance between the executive and the EP brought about by the last reform of the EU in the Lisbon Treaty. The Lisbon Treaty had considerably strengthened the role of the EP in legislation as well as trade treaty making. Whereas the EP thus became an influential actor in the negotiation of treaties, its role in the operation of treaties once concluded is very limited.
The proposed paper will demonstrate that democratic legitimacy and institutional balance in the EU require a strengthened role of the EP in the monitoring and control of the decision-making of CETA Committees, and will propose mechanisms that safeguard the necessary parliamentary control.

Elizabeth Whitsitt (University of Calgary) “CETA investor-state dispute settlement:  Will reform enhance legitimacy?”

Investor-state dispute settlement (ISDS) is under attack. Discontent with the international investment law regime has led to the perception that its dispute settlement mechanism needs reform. The EU has responded to calls for reform by proposing, among other things, the establishment of an investment court system (ICS). Thus far, Canada and Vietnam have accepted the creation of a permanent investment court in recent treaties concluded with the EU. For proponents of this institutional innovation ICS promises to solve the legitimacy problems that have plagued traditionally ad hoc investor-state arbitration. Advocates of ICS envisage, for example, that introduction of an appeal mechanism similar to the WTO’s Appellate Body will enhance predictability of treaty interpretation, improve consistency in decisions, and ultimately contribute to greater legitimacy of ISDS. In so doing, some suggest that ICS will do a better job of attaining the ever elusive “balance” between investor protection and sovereign interests. But will this actually happen? Can CETA’s ICS mechanism really address all of these issues? This paper looks to answer these questions by focusing on the role of adjudicators in the traditional ad hoc ISDS and ICS dispute settlement models. To begin, this paper highlights some of the commonly held beliefs about the differences between adjudicators in each of the dispute settlement models and argues that adjudicators operating in each of these dispute resolution models perform a similar law-making function within international investment law. This paper then considers the adjudicative process (i.e. treaty interpretation) and the factors that are most likely to influence that process in traditional ad hoc ISDS and newly proposed ICS dispute settlement models. Given the variety of factors that can influence this process and the adjudicators operating within in, this paper posits that reform of ISDS by way of ICS alone will not solve investment law’s perceived legitimacy crisis.

David Wirth (Boston College) “CETA as a “Mixed Agreement”: Implications for the future”

Over the past several decades, the EU has been participating to an increasing extent in “mixed” agreements in such fields as environmental pollution, over which the EU as an entity does not have complete authority.  Because of the division of competence (jurisdiction) between them, both the member states and the EU become contracting parties to these “mixed” agreements.  In other words, both the EU as an entity and the member states individually negotiate, sign, ratify, and become party to the agreement in question.  (A crude analogy would be if Canadian provinces or states of the United States were to become parties to international treaties, along with the federal government).

This approach is particularly favored by the European Council, which under the Treaty on European Union represents the interests of the Member States, and drafts negotiating instructions for the European Commission, which represents the EU in actual negotiations.  There is also an expanding jurisprudence of the European Court of Justice on the potential, and in some cases necessity, for binding international agreements to be concluded as mixed agreements.  

The “mixed” format, however, can produce difficulties for third states negotiating with the EU, as in some cases it can be difficult to identify a unitary negotiating partner on the other side.  The “mixed” format can also complicate ratification and implementation, as the agreement enters into force only as quickly as the “slowest boat” among the EU’s Member States.
This issue has assumed greater theoretical and practical significance, as trade agreements – previously thought to lie within the exclusive competence of the EU – are increasingly being concluded as mixed agreements.  The reason, at least at the highest level of generality, is the tendency in recent trade agreements to include much more detailed requirements that reach further into residual national competence, especially with respect to investment.

CETA is probably the best recent example of this phenomenon.  The previously-contemplated U.S.-EU Transatlantic Trade and Investment Partnership (TTIP) – abandoned by President Trump at the beginning of his presidency, but now in the process of revival – would also have to be concluded as a mixed agreement.  This issue may have consequences for Brexit as well.

This paper will examine the evolution of the phenomenon of mixed agreements through and including CETA.  At a minimum, the paper will examine the evolving jurisprudence of the European Court of Justice on the topic, and consider the implications for future developments.  To the extent permitted by the format, the paper will also examine (1) specific case studies, to the extent not considered in the ECJ jurisprudence; and (2) a theoretical analysis through game theory, theories of two-level governance, and other relevant methodologies.

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