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Ministry of Foreign Affairs, Regional Integration

& International Trade

September 2014

2

WTO appoints new Appellate Body member

30 September 2014 The WTO Dispute Settlement Body (DSB) appointed on 26 September 2014 Mr Shree Baboo

Chekitan Servansing, of Mauritius, to the seven-member Appellate Body for four years commencing on 1

October 2014. Mr Servansing will replace Mr David Unterhalter, whose second term expired on 11 December

2013.

The appointment was made by the DSB on the basis of a Selection Committee’s recommendation and

following consultations with WTO members. Seven candidates for this position had been nominated by WTO

members and interviewed by the Selection Committee comprising the Director-General and the Chairpersons

of the General Council, the DSB, the Council for Trade in Goods, the Council for Trade in Services and the

TRIPS Council.

As indicated in its recommendation to the DSB, the Committee was pleased to note that its

consultations with members had confirmed its view as to which candidate had the qualifications required for

the position in the Appellate Body and would enjoy the support of the membership. The Committee met

individually with 51 delegations to hear their views on the candidates. It also received in writing the views of

seven delegations.

Mr Servansing was the Ambassador and Permanent Representative of the Republic of Mauritius to the

United Nations Office and other international organizations in Geneva, including the WTO, from 2004 to

2012. As Ambassador to the WTO, Mr Servansing served as Chair of the Committee on Trade and

Environment for two successive terms in 2005 and 2006 and as Chair of the Committee on Trade and

Development for three consecutive terms from 2007 to 2009. He chaired the Work Programme on Small

Economies and the dedicated session on Aid for Trade. He was also Chair of the African Group in Geneva in

2007 and the Coordinator of the African, Caribbean and Pacific (ACP) Group in Geneva over the periods

2004-06 and 2008-12. Since March 2013, Mr Servansing has been Team Leader of the Project Monitoring

Unit on the ACP-EU TBT Programme, where he is responsible for capacity-building assistance to ACP

countries to enhance their export competitiveness and improve quality infrastructure to comply with technical

regulations.

Source: WTO

3

Obama, Modi highlight TFA impasse concerns, call for "Urgent"

WTO consultations

2 October 2014 US President Barack Obama and Indian Prime Minister Narendra Modi concluded their leaders’ meeting in

Washington on Tuesday (30 Oct 2014), directing their officials to “consult urgently” with their fellow trading

partners in the hopes of resolving the current WTO impasse on the implementation of the Trade Facilitation

Agreement (TFA) and the issue of public food stockholding.

The two said that they discussed both their “concerns” about the ongoing stalemate, as well as its potential

effects of the multilateral trading system, according to a joint statement released following the meeting.

“We had a candid discussion on [the] Bali ministerial of the WTO,” Modi acknowledged to reporters on

Tuesday, referring to the December 2013 meeting whether the TFA text was agreed. “India supports trade

facilitation. However, I also expect that we are able to find a solution that takes care of our concern on food

security.”

The Indian premier added that he believes “it should be possible to do that soon.”

Neither leader went into further detail in their remarks, and it remains to be seen what impact their statements

may have on the ongoing WTO discussions.

Speaking at the New York-based Council of Foreign Relations on Monday ahead of his meeting with Obama,

the Indian premier had reiterated his stance that, while being in favour of the trade facilitation pact itself,

advancing its implementation would need to go “hand-in-hand” with a result on food stockholding.

“It cannot be that you do this first and we will see the other later on,” he said.

Months of discord

The highly-anticipated summit in Washington, which was the first between the two leaders since Modi took

office in May, had been looked to by trade observers as an opportunity for potentially resolving the conflict,

which has dominated WTO talks in Geneva for the past couple of months.

Efforts to advance the implementation of the TFA – one of the main deliverables from last December’s WTO

ministerial conference in Bali, Indonesia – screeched to a halt in late July, after India refused to back the

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adoption of a Protocol of Amendment that would have incorporated the text of the deal into the global trade

body’s legal framework.

At the time, India explained that it would not be able to support the Protocol until it saw sufficient signs of

movement on developing a “permanent solution” on public food stockholding. This solution, it has said,

should be reached by the end of this year.

The latter issue had been a subject of protracted discussions during the December meeting in Bali, with India

having agreed to accept an “interim solution” on the subject while a permanent one was being negotiated in

advance of the 2017 ministerial.

Under the terms of the interim solution, WTO members committed to “refrain from challenging through the

WTO Dispute Settlement Mechanism, compliance of a developing member with its obligations under Articles

6.3 and 7.2 (b) of the Agreement on Agriculture (AoA) in relation to support provided for traditional staple

food crops in pursuance of public stockholding programmes for food security purposes.”

This commitment is subject to certain conditions, such as the notification of these programmes to the WTO’s

Committee on Agriculture by the developing country in question. The latter must also take steps to make sure

that the stocks procured under these stockholding schemes do not distort trade, nor affect the food security of

others.

Questions of trust

Back in Geneva, delegates have been meeting in various configurations in an effort to determine next steps.

A meeting of the WTO’s Trade Negotiations Committee (TNC) – which is tasked with the overall Doha talks

– is scheduled next Monday, with the TFA stalemate set to be the main focus on the agenda.

Director-General Roberto Azevêdo has instructed the chairs of the negotiating groups to report back on their

discussions at that time.

The WTO chief has warned that a prolonged stalemate could have a “freezing effect” on the global trade

body’s other work, including on efforts to advance the remaining parts of the Doha Round negotiations.

Sources say that meetings of the agriculture and non-agricultural market access committees have already

shown signs of this difficulty, with members unable to agree on how – or whether – to advance any post-Bali

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work, given the current impasse. Many have reportedly raised the question of whether too much trust has been

lost.

During the global trade body’s annual Public Forum this week, Azevêdo told a packed conference hall that the

Bali deal – of which the TFA and interim solution on food stockholding were a part – is “this kind of

construct that, when you touch one piece, everything moves.”

“The biggest gain from Bali was the recovery of trust,” he noted, given the long-running struggles of the Doha

Round of trade talks, which have been underway since 2001. “We’re beginning to lose that trust once again,

and we cannot let that happen.”

TF Committee hits snag

A recent meeting of the Preparatory Committee on Trade Facilitation – which was established following the

Bali ministerial, and is tasked with shepherding the trade pact into force – saw notable divergences among

members over its future work.

The US said that discussions on TFA implementation are now at the General Council level, and should not be

continued in the Preparatory Committee. Furthermore, the US delegation said that the Committee had

completed its work and should thus not host further meetings – a statement that reportedly drew considerable

pushback from other members, with some saying that the committee still has more to do.

Others reportedly said that it is up to the chair – Ambassador Esteban Conejos of the Philippines – to

determine when the next meeting should take place, and asked him to get clarification as to whether a single

member could block the hosting of a meeting. The ambassador had suggested 7 November as a tentative

meeting date.

While Australia reportedly agreed that the situation is a political one, and the Preparatory Committee is a

technical body, the EU reportedly urged fellow members to wait until next Monday’s TNC before deciding

whether to proceed with another meeting.

Source: ICTSD

6

WTO/SADC Regional Workshop on Scheduling of Commitments

on Trade in Services

22 September 2014

The WTO in collaboration with the SADC Secretariat organised a scheduling workshop in Windhoek,

Namibia from 23 to 26 September 2014. The workshop was attended by all SADC Member States. Mauritius

was represented by Ms Z. Chaumun, Trade Policy Analyst, Ms M. Rambaccussing, Trade Policy Analyst

from International Trade Division and Mrs S. Narayanen, Senior Tourist Planner from the Ministry of

Tourism and Leisure.

The objectives of the workshop was three fold, i.e.

• deepen members’ knowledge on trade in services

• take stock of schedules submitted by Members in the context of SADC negotiations, with a view to

improving the offers and eliminating any inconsistencies.

• Consider potential areas that could be negotiated with the EU in the context of the SADC Economic

Partnership Agreement.

The workshop was conducted by both WTO and SADC experts Mr Marcus Jelitto, Mrs Rosie Zhang

and Mrs Viola Sawere. The experts reviewed the key concepts under the GATS (General Agreement on Trade

in Services), including the modes of supply, limitations to Market Access and National Treatment, additional

commitments in the MFN principle under GATS as well as the carve-out allowed under Article V of GATS to

provide for preferential treatment among SADC member states. It was underlined that members needed to

ensure that there was substantial sectoral coverage. It was noted that SADC members agreed to negotiate in

six priority sectors namely Tourism, Communication Services, Financial Services, Transport Services,

Construction Services and Energy-related services. Discussion would be pursued in a second phase to cover

additional sectors. Several exercises were also conducted in view of deepening participant knowledge on the

scheduling of commitments in services.

Source: ITD

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Information session on 'Cross-Border Payment Systems in Africa' September 26, 2014

The MCCI, in collaboration with the COMESA Clearing House and the Bank of Mauritius, organised an

information session on the various payment and settlement systems operational in the region.

In his opening address, Mr. Sébastien Mamet highlighted the growing importance of regional markets for

Mauritian businesses and the need to have reliable, time-efficient and affordable regional payment systems.

A joint presentation was made by Mr. Mahmood Mansoor, Executive Secretary of the COMESA Clearing

House and Mr. Vikash Thakoor, Head-Payment Systems and MCIB at the Bank of Mauritius, to explain the

functioning and the benefits of using the COMESA Regional Payment and Settlement System (REPSS) when

doing business in the region. A presentation was also made by the representative of the Bank of Mauritius on

the SADC Integrated Regional Settlement System (SIRESS).

Source: MCCI

UNCTAD’s new report on implementation of trade facilitation in developing countries

18 September 2014

Launched by the UNCTAD in September 2014, the report, entitled ‘The New Frontier of

Competitiveness in Developing Countries: Implementing Trade Facilitation’, is based on research conducted

in 26 least developed and developing countries, and provides valuable insight into the status of

implementation of trade facilitation measures covered by the World Trade Organization's Bali Trade

Facilitation Agreement.

The report presents an overview of the implementation challenges in the countries researched and

concludes with general policy implications for implementing trade facilitation reforms. Trade facilitation aims

at cutting red tape to boost trade across borders. Trade facilitation is part of the World Trade Organization's

"Doha round" of negotiations.

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From 2011 to 2013, UNCTAD, in collaboration with the relevant national authorities, prepared

national trade facilitation implementation plans in 26 countries, comprising of least developed countries,

middle-income developing economies, landlocked countries, and small island economies in Africa, Asia, the

Caribbean and Latin America.

The aim of the project was for each country to assess:

• The status of implementation of the trade facilitation measures contained in the WTO Trade

Facilitation Agreement

• The activities required for their implementation to reach full compliance of these measures

• The countries' needs in terms of time, resources and technical assistance and capacity-building

(TACB) activities

The report consolidates the results of the 26 national plans and is designed to assist least developed

and developing countries as well as donor countries and agencies to gain a more factual view of the

implementation challenges, including resource and time requirements as well as technical assistance and

capacity building needs.

The report covers:

• Level of implementation of trade facilitation in the participating countries (chapter I)

• Implementation priorities and time and financial requirements (chapter II)

• Expressed needs for special and differential treatment (SDT) (chapter III)

• Use of selected implementation tools with a special focus on customs automation systems and national

trade facilitation committees (chapter IV)

The report highlights that for the 26 countries surveyed, in general the level of implementation of the

trade facilitation measures contained in the WTO Agreement is considerably lower in least developed than in

developing countries. However, none of the participating countries had an implementation rate beyond 76 per

cent of the totality of the measures contained in the Agreement. The lowest implementation rate was found to

be at 19 per cent (Figure 1).

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Figure 1: Level of the implementation of the TF measures per country

The report also underscores that those measures that were most often mentioned as not yet implemented, were

those that require more advanced techniques as well as those requiring cross-sectoral or inter-agency

collaboration (Figure 2)

Figure 2: Top 10 least implemented measures for LDCs and non-LDCs

The conclusions of the report (chapter V) present a number of policy implication as regards the

implementation of trade facilitation reforms under the framework of the WTO Trade Facilitation Agreement;

highlighting inter alia that trade facilitation remains a major challenge for least developed and developing

countries.

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Less than 50 percent of the trade facilitation measures contained in the WTO Agreement are fully

implemented in these countries. Some of the major barriers for further implementation are lack of resources as

well as lack of existing legal frameworks.

UNCTAD has since 2004 supported least developed and developing countries with technical assistance and

capacity building in the area of trade facilitation. To this end a trust fund was set up in 2005, which has

received contributions from the governments of Sweden, Spain, Switzerland and Norway.

UNCTAD's Trade Facilitation Section, Trade Logistics Branch, Division on Technology and Logistics

continues to provide support in this field, presently thanks to support provided by the government of Sweden

and the European Union. Countries interested in technical assistance or capacity building activities in this

field are invited to contact the division: dtlinfo@unctad.org.

Source: UNCTAD

The World Investment Forum 2014

30 September 2014

The WIF 2014 will take place from 13 to 16 October in Geneva, Switzerland at the United Nations Office

housed at the Palais des Nations. The World Investment Forum (WIF) is a high-level, biennial, multi-

stakeholder gathering designed to facilitate dialogue and action on the world’s key emerging investment-

related challenges.

Its mission is to provide a platform where a debate on “investment for development” can take place and

ultimately to promote investment flows that contribute to sustainable and inclusive development. With its ties

to UN member States, the Forum is able to bring together a broad coalition of investment stakeholders at the

highest level who can influence the global investment landscape.

Source: WIF

11

Mo Ibrahim Foundation records improvement in overall African

governance but highlights some concerning trends

30 September 2014

The 2014 Ibrahim Index of African Governance (IIAG), launched in September, showed that between

2009 and 2013 overall governance improved on the African continent. However, over the past ten years, the

main drivers of this overall positive trend have changed.

“The results of the 2014 IIAG challenge our perceptions about the state of African governance. Africa

is progressing but the story is complex and doesn’t fit the stereotypes. Even if the overall picture looks good,

we must all remain vigilant and not get complacent,” said Mo Ibrahim, Chair of the Mo Ibrahim Foundation.

At the country level, the 2014 IIAG highlighted the potential of governance underperformers while

revealing the weaknesses of current frontrunners. Countries in the bottom half of the rankings registered the

largest improvements over the past five years. Côte d'Ivoire, Guinea, Niger and Zimbabwe have changed

course since 2009 from negative trajectories to become the biggest improvers on the continent. This progress

has been driven in large part by gains in Participation & Human Rights. Meanwhile, the historically strong

performers, Mauritius, Cabo Verde, Botswana, South Africa and Seychelles, have shown some deterioration

in at least one category over the past five years, notwithstanding that all these countries remained on overall

upward trends.

“The 2014 IIAG results show that high ranking countries cannot assume that future achievements will

necessarily follow previous accomplishments. More generally, let us make sure that the Africa Rising

narrative, that everyone is talking about, truly benefits all African people,” said Jay Naidoo, Board Member of

the Mo Ibrahim Foundation.

At category level, the 2014 IIAG also revealed that the main drivers of the overall positive trend in

African governance have changed. For the most recent five years, from 2009 to 2013, progress has been

jointly driven by Participation & Human Rights and Human Development, whereas the main driver of gains in

the previous period (2005-2009) was Sustainable Economic Opportunity, which has stalled in the most recent

period.

Progress in the Participation & Human Rights category has gathered momentum, making it the most

improved 2014 IIAG category over the last five years (+2.4). While in Rights and Gender the trends are both

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positive, it is in the area of Participation, particularly Political Participation, where the strongest gains in score

have been achieved for this latest period.

“With a growing electorate that has demonstrated a desire to be heard, the results of the 2014 IIAG

confirm that Participation & Human Rights is a crucial aspect of governance that governments cannot ignore,”

said Mary Robinson, Board Member of the Mo Ibrahim Foundation.

In contrast, after an improvement of +3.4 between 2005 and 2009, the largest of any category in this

time period, Sustainable Economic Opportunity has registered the opposite trend over the last five-year

period, with a deterioration of -0.2. This is due to a reversal of trends in two of the four sub-categories, Public

Management and Business Environment, and a slower pace of improvement in the other two sub-categories,

Infrastructure and Rural Sector.

“Perhaps some of the low-hanging fruit of better economic management have been garnered. The

challenge grows for the continent to become a fully competitive force in the global market at a time when

commodity price trends are becoming less helpful to many countries on the continent,” said Lord Cairns,

Board Member of the Mo Ibrahim Foundation.

Meanwhile, the Safety & Rule of Law category continued to expose concerning trends, with 12

countries showing their weakest performance since 2000, in 2013. Having shown a deterioration of -1.5

between 2005 and 2009, this dimension of governance registered another negative trend in the last five-year

period, although to a lesser extent (-0.8). Safety & Rule of Law was the only category in the 2014 IIAG to

have demonstrated two consecutive five-year period deteriorations in the last ten years. National Security has

been the only sub-category within Safety & Rule of Law to have shown progress over the past five years

(+0.5), driven in large part by Cross-border Tensions, the most improved indicator in the 2014 IIAG. This

aspect of improved citizen security was in contrast to the deterioration registered in Personal Safety (-1.1) in

the past five years, driven by declines in four of the six underlying indicators.

“Even if overall governance trends are positive, contrasting performance in the 2014 IIAG is of

concern. The strength and sustainability of Africa’s future prosperity will be defined by the continent’s

commitment to all governance dimensions, including safety, security, and the rule of law,” said Salim Ahmed

Salim, Chair of the Ibrahim Prize Committee.

On the other hand, Human Development has remained a consistent improver, showing positive

movement of +2.3 since 2009, after a positive trend of +2.2 between 2005 and 2009. All sub-categories and

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41 out of 52 countries have seen an improvement over the past five years, with a quarter of these having

improved by more than +5.0 points. Health was the most improved sub-category within the 2014 IIAG. In the

last five years, all of its underlying indicators, which measure issues such as maternal mortality, immunisation

and undernourishment, have registered progress. However, this largely positive picture masks the poor

performance of some countries, particularly in Welfare.

“The 2014 IIAG underscores the need to focus on building equitable and efficient institutions, such as

health systems, accountability mechanisms and statistical offices. Without these, we will not be able to meet

the challenges we face – from strengthening the rule of law to managing shocks such as the Ebola virus,”

concluded Hadeel Ibrahim, Founding Executive Director of the Mo Ibrahim Foundation.

Source: Mo Ibrahim Foundation

East African Trade Ministers reach consensus on EPA, bringing

process near close

25 September 2014

The five members of the East African Community (EAC) – Burundi, Kenya, Rwanda, Tanzania, and

Uganda – reached consensus on the draft Economic Partnership Agreement (EPA) following a ministerial

meeting in Arusha. To date, discussions to finalise the deal’s terms with the EU are still ongoing. Brussels has

already concluded two other such agreements involving African country blocs in July.

“We were able to agree and all of us were able to sign on to the economic partnership draft,” Kenyan

Foreign Affairs Cabinet Secretary Amina Mohammed told reporters following the decision, which occurred

after a ministerial meeting of the EAC bloc in Arusha, Tanzania. Further meetings are scheduled to finalise

the agreement, Mohammed added.

The process to establish EPAs between the EU and various regional groupings of African, Caribbean

and Pacific (ACP) countries began over a decade ago, with the goal of ensuring trade reciprocity, promoting

sustainable development, and advancing integration between the parties involved.

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In the case of Africa, two regional EPAs – those involving the Economic Community of West African

States (ECOWAS) and the Southern African Development Community (SADC), respectively – were

concluded this past July.

“SADC has signed and ECOWAS has signed so we’re the last ones to it but it’s also safe to say that

we probably got a very good deal,” Mohamed said.

Even with the EAC development, however, some uncertainty remains regarding how the EU will treat

East African exporters from 1 October onward. This date is the deadline that the European Commission

established three years ago for withdrawing the market access regulation “MAR 1528,” which currently

provides duty-free, quota-free (DFQF) market access to ACP countries.

Some analysts have warned of an elimination of preferential margins between 1 October and the

signature and ratification of the EAC EPA, which are the next steps in the process. Others have suggested that

it would be enough for these East African countries to have initialled the agreement before the deadline in

order to preserve their DFQF access to the European market.

Export taxes as sticking point

A week before the meeting, the EAC’s chief negotiator Karanja Kibicho said that the Eastern African

bloc “will remain firm on the issue of taxes on exports.”

In this context, he affirmed that the EAC was planning to negotiate with Brussels how long it will be

allowed to maintain export taxes. Moreover, Kibicho specified that the proceeds from the taxes on raw

materials would be channelled to the development of infant industries, food security, and currency

stabilisation.

The political dimension of export taxes has been one of the most contentious issues in the EPA talks.

Export taxes are perceived to be trade-distorting by some countries, while others insist on maintaining some

policy space for their use, given their potential as a tool for industrial development.

The latter position has been questioned by some experts, who argue that there is little evidence on the

welfare effects of export taxes. Since the text of the draft EAC EPA is not yet publicly available, it could not

be determined how negotiators resolved this contentious issue.

15

As an indication of how export taxes were addressed in other agreements, the European Centre for

Development Policy Management’s (ECDPM) comparative analysis of the SADC and ECOWAS EPAs

shows that both agreements contain flexibility provisions for countries to apply export taxes in exceptional

circumstances – such as for specific revenue needs, the promotion of infant industries, or for environmental

protection.

While the ECOWAS deal allows for temporary export duties on a limited number of products after

consultation with the EU, the SADC version contains more specific provisions on export taxes which can be

levied during a maximum of 12 years and for up to eight (HS6 tariff line level) product categories.

However, the SADC partners have also committed to ensuring that their export taxes do not reduce

supply on the European market below current levels in the first six years and below 50 percent of current

levels in the remaining six years. Therefore, the ECDPM concludes that – at least in the short term – export

taxes “may have only little effect to retain inputs for local production.”

Non-execution clause

Until recently, sources indicated that East African leaders were hesitant to sign a trade agreement that

includes a non-execution clause – in other words, a clause that permits the deal’s suspension in instances of

proven human rights violations.

A non-execution clause would entitle the European Commission to take trade measures against partner

countries failing to abide by the principles of humans rights, democracy, and good governance. These

measures are aimed at strengthening criminal justice both at the domestic level in Africa and globally with the

International Criminal Court (ICC).

Lately, the East African region has been confronted with a series of allegations of human rights

violations. For example, in 2011 the ICC decided to press charges against current Kenyan President Uhuru

Muigai Kenyatta for crimes against humanity in the aftermath of the election-related violence seen in

December 2007. A hearing on how to proceed with the trial is scheduled for early October in the Hague,

though whether Kenyatta would attend was still unclear at the time of this writing.

Based on the documents available, it could not be assessed whether human rights issues are explicitly

addressed in the draft EAC-EU EPA. With respect to the SADC and ECOWAS agreements, the ECDPM

16

found that both EPAs “do not contain an explicit non-execution clause,” noting instead that the deals refer to

the Cotonou Agreement “with no specific [mention of] human rights or the rule of law.”

High stakes for Kenya

The pressure for concluding the EPA negotiations is particularly high for Kenya, which is the only

economy in the region that is not a least developed country (LDC). If the European and East African

negotiators do not manage to secure a deal, Kenya would have incurred high costs due to the elimination of

preferential margins, given that it would have shifted to the EU’s Generalised System of Preferences.

Meanwhile, LDCs would have continued to benefit from DFQF access to the EU under the Everything But

Arms regime.

Analysts suggest that the potential move to the GSP could expose Kenya to an immediate 12

percentage point surge in duties for all products entering the EU.

The Kenyan flower industry, which accounts for approximately 25 percent of national GDP, was

reported to be highly concerned about a potential failure of the EPA negotiations. Specifically, the Kenya

Flower Council feared market share losses because competitors such as “Colombia, Tanzania, Uganda,

Rwanda, Burundi and Ethiopia [would have] continue[d] to enjoy their duty free-status.”

Challenging transition to implementation

Given the protracted nature of the negotiations, along with the results seen in the case of more mature

agreements such as the CARIFORUM-EU EPA, experts have suggested that the implementation of the trade

deals may pose its own series of challenges.

The CARIFORUM group, which is made up of 15 Caribbean countries, signed an EPA with the EU in

2008. In the years since, only some member states in both regions have ratified the agreement. In addition to

this asymmetry, several years passed before the envisaged development cooperation was put into operation

through programmes and projects.

Furthermore, besides needing to amass the necessary political will to implement an EPA, ACP

governments also need to have sufficient public revenues, which has not been the case during the most recent

financial and economic crisis.

Source: ECDPM

17

EU, Canada Sign Trade deal as Germany raises ISDS questions

2 October 2014

The EU and Canada signed their bilateral free trade pact last Friday, five years after launching the talks and

almost a year after announcing that they had reached an “agreement in principle” on the subject.

The deal, known formally as the Comprehensive Economic and Trade Agreement (CETA), was inked at a

day-long EU-Canada summit.

The occasion also provided the two parties the opportunity to take stock of bilateral relations in areas such as

energy and Arctic cooperation, as well as to sign a Strategic Partnership Agreement (SPA) set to facilitate

collaboration on a number of issues including international peace and security, as well as sustainable

development.

The CETA talks, however, faced several hurdles along the way. Since last October’s “agreement in principle”

announcement, negotiators had been working on ironing out the technical details in order to reach an

acceptable text for both sides. Moreover, controversy over the pact’s investor protection measures,

particularly from Germany, began brewing over the summer.

Launched back in 2009, the much-anticipated agreement is the first trade pact between the 28-member EU

bloc and a major industrialised economy. It also grants Canada substantial access to the world’s largest

consumer market. The deal eliminates almost all customs tariffs on both sides barring a few exceptions

sensitive to each party.

“Today marks a truly historic moment in the evolution of the Canada-EU relationship,” said Canadian Prime

Minister Stephen Harper, European Commission President José Manuel Barroso, and European Council

President Herman Van Rompuy in a joint statement.

Meanwhile, the negotiations between the two economic behemoths have been keenly followed by trade

watchers given the scale of the markets involved. Experts have also levelled claims that the CETA talks offer

a litmus test for the Transatlantic Trade and Investment Partnership (TTIP) negotiations currently ongoing

between the EU and the US.

Concurrent with Friday’s summit, the two sides released the consolidated text of the trade deal, which

numbers more than 1600 pages and will still have to undergo a legal scrubbing before being sent to each

side’s respective legislatures for ratification.

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For the EU, this means ratification both in the European Parliament and approval by the governments of the

bloc’s 28 member states, meeting as the European Council. For Canada, this involves approval by the

country’s parliament. If all goes smoothly, the deal is expected to enter into force in 2016.

Statistics cited by the European Commission place the potential increase in bilateral good and services trade at

23 percent – or €25 billion – on both sides as a result of the deal. According to data from 2012, bilateral goods

trade was valued at nearly €60 billion, with services trade amounting to €26 billion in that same year.

Features

The deal will eliminate tariffs on nearly all industrial products upon entry into force. The remainder will be

removed within seven years.

As agreed over a year ago, the deal opens up public procurement markets at all levels of Canadian

government, both federal and sub-federal.

Canada will allow EU access to a broad range of government tendered contracts, including a federal

government threshold of CDN$205,000 in the areas of goods and services and CDN$400,000 for the utilities

sector at all levels of government, covering 75-80 percent of major Canadian energy entities.

EU entities will also be able to bid for up to CDN$7.8 million worth of government construction services

contracts. These pledges form part of one of the most generous market access offers by Canada compared

with its other existing free trade agreements.

On the subject of agriculture, which proved particularly difficult in the negotiations, the two sides have agreed

to eliminate tariffs on 93.6 percent of tariff lines for the EU, and 92 percent of tariff lines for Canada.

Canada will receive immediate duty-free, quota-free access to the EU dairy market, while tariffs have been

removed for 50,000 tonnes of beef and veal. In return, Ottawa has signed off on a tariff-rate quota on imports

of up to 16,800 tonnes of cheese, a concession expected to be unpopular with the country’s dairy farmers. As

a result, the Harper government has promised compensation for Canadian cheese producers who raised

concerns in the course of the talks about being able to compete with subsidised EU farmers.

Around fisheries, the EU has agreed to duty-free treatment for 95.5 percent of tariff lines at entry into force,

with full trade liberalisation over a seven-year horizon. Stocks slated for free trade – currently subject to

tariffs of between 6 and 20 percent on the EU market – include salmon, frozen mackerel, and herring among

others. For its part Canada has eliminated tariffs on all its fish and seafood tariff lines.

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Significantly, sustainable development, environment, and labour chapters have also been included in the pact,

in each instance a first for Canadian free trade agreements.

For its part, the sustainable development chapter includes a commitment to review, monitor, and assess the

impact of the pact on green development for both parties.

Some other areas proved particularly tricky to navigate in the course of the negotiations.

For instance, the deal takes on the sensitive issue of geographical indications (GI), in other words, the

exclusive right to use a location as branding identification. The issue has been of crucial interest to Brussels,

and Canada has agreed to varying ways of addressing the EU’s requests in relation to 179 such terms.

However, a number of caveats have been added to these arrangements. For example, Canadian producers may

still deploy English- and French-language terms of some protected GIs where the original is in neither

language.

Furthermore, current Canadian producers of products such as feta, Gorgonzola, and Munster cheese will still

be able to use the label, while future users will need to add an accompanying expression signalling a

difference to the original.

ISDS provision final hurdle

Despite the fanfare, the ratification of the deal – which is essential for bringing it into force – could prove to

be a final sticking point, given the reported opposition from Germany to a provision in the pact regarding

investor-state dispute settlement, or ISDS.

Investor-state dispute settlement provisions offer a legal platform for foreign companies to file a case against

a host country in front of an international tribunal if the company finds that one of its key protections – such

as against expropriation or discrimination – has been violated.

Some experts support the inclusion of such clauses, arguing that they are necessary to provide security for

foreign investment.

A number of civil society and environmental groups in the EU have spoken out against the ISDS clause,

however, saying that it could result in the sacrifice of public protections on health or environment to business

interests.

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Under the terms outlined in the deal, consultations and mediation provisions are outlined to encourage swift

settlements, without recourse to arbitration. If the latter becomes necessary, submissions to an international

panel will be made public and the eventual hearings will be open. The text also allows for submissions from

participants not part of the dispute.

German economy minister Sigmar Gabriel told the country’s Bundestag – the federal legislative body -that he

intended to intervene to remove the ISDS clause from the final deal, while overall supporting the bilateral

trade pact.

Speaking the day prior to the EU-Canada summit, the German official urged against what he termed “double

standards.”

“It must not be that international investors have rights and influence before arbitration tribunals, which

national enterprises don’t have in their own country,” he said in comments reported by the Financial Times.

The move has thrown up uncertainty now around the safe passage of the deal through the ratification process.

The ISDS clause has also proved to be a hot issue with EU parliamentarians. A plenary debate in mid-

September saw MEPs air their concerns to EU trade Chief Karel De Gucht, calling for the ISDS clause to be

removed from the final text.

EU Trade Commissioner-designate Cecilia Malmström, who if confirmed with her fellow Commission

nominees later this month will take over from De Gucht, has said that it would not be advisable to remove

ISDS from CETA given that it could unravel the rest of the deal.

Source: ICTSD

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