Trudeau signs CETA but final ratification still required by European Union

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Prime Minister Justin Trudeau has offered a passionate defence of the Canada-EU trade deal, saying it will provide immediate benefits to Canadians and Europeans, and help ease the growing opposition to globalization.

But even as the Prime Minister signed the agreement with European Union leaders on Sunday, it emerged the Comprehensive Economic and Trade Agreement could be scrapped at any time before final ratification, and the fate of its key dispute resolution system remains in limbo. That leaves CETA more vulnerable as governments across Europe respond to rising public anger about free trade and disillusionment over sluggish economic growth.

Mr. Trudeau flew to Brussels on the weekend to attend an EU-Canada Summit which had been delayed for three days because of opposition in Belgium to the trade deal. Belgium's regions came to an agreement on Friday, clearing the way for that country to join all other EU members in signing CETA.

Final ratification is still required by the European Parliament and the legislatures in each EU member country, but Mr. Trudeau and EU leaders held a ceremonial signing of CETA on Sunday as a show of support for the deal which is more far-reaching than any other trade agreement.

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Once the European Parliament approves CETA, which is expected in a few months, most of it will take effect on a provisional basis pending final ratification by EU members. That could take years but Mr. Trudeau is hoping that, in the interim, CETA's benefits will be obvious as tariff and non-tariff barriers fall and trade opens up in goods and services.

"Small businesses, consumers, will start to feel the benefits of this immediately even before all the 28 different parliaments proceed with their ratification steps," Mr. Trudeau told reporters. "So we are confident that demonstrating that trade is good for the middle class, and those working hard to join it throughout the region, will make sure that everyone gets that this is a good thing for economies but it's also a good example to the world."

Donald Tusk, who heads the European Council which represents EU leaders, took a more cautious approach, noting that the recent challenges in Belgium have shown how hard the ratification process could be.

"What we need is more information and credible information for our citizens," he said. The provisional application of CETA "will be the best form of education, much better than persuasion or words," he said. "This is for me the main grounds for our very cautious optimism. But of course after last week we have to be very cautious."

Mr. Tusk said CETA showed how countries, and particularly the EU, can still work together.

"Today's decisions demonstrate that disintegration of the Western community does not need to become a lasting trend, that we still possess enough strength and determination – at least some of us – to counter the fatalism of the decay of our political world," he said. "Free trade and globalization have protected hundreds of millions of people from poverty and hunger. The problem is that fewer believe this. Free trade and globalization protect humanity from total conflict. The problem is that few people understand this."

Much of the opposition to CETA surrounds the treaty's controversial dispute resolution system, which transforms the way countries deal with trade issues. CETA would create a new tribunal, called the Investment Court System, which would be staffed by a panel of judges who would hear disputes. There would also be an appeal process and the loser of any case would have to pay the legal fees of the winner.

Canada and the EU have hailed the ICS as a breakthrough in trade relations and there was hope that it would lead to the creation of an international trade court.

The ICS "was an attempt, together with the Canadian government, to create something new," said European Commissioner for Trade Cecilia Malmstrom, who is the EU's lead negotiator on CETA. She added that most trade treaties use a cumbersome dispute resolution process that dates back to the 1950s. "The whole world has been calling for something new. Lots of countries are calling me saying can we help because, of course, the aim is to create an international court."

But critics of the ICS say it gives too much power to foreign companies, who can sue governments if they change policies that hurt company operations. Opponents say that limits governments' ability to protect the environment, worker rights and health care. They also note that governments can't use the ICS to sue companies and that domestic firms can't use it either. And some argue the ICS is a dangerous move toward private courts and away from domestic legal systems.

Ms. Malmstrom said changes have been made to narrow the kinds of cases that can be heard and she insisted that governments would still have the power to regulate.

However, that has not satisfied politicians in Belgium and Britain, where opposition to the ICS is strong. To ease their concerns, the EU has said the ICS will not take effect provisionally and it will have to be approved by each EU member before it comes into force. Belgium has also asked the European Court of Justice to review the ICS proposal.

As a further guarantee, the EU and Belgium have now agreed that any one of Belgium's regions can scrap CETA at any time before the final ratification vote if MPs don't believe CETA is working or if the ICS doesn't meet European Court of Justice standards. That would effectively kill the treaty because it would mean Belgium couldn't ratify it.

"We have now gained the right to withdrawal [from CETA] without waiting for the ratification document to be discussed within the parliament," said Hamza Fassi-Fihri, a member of Parliament in Belgium's French community parliament. "Until now our regions had to wait [to reject CETA] until the ratification document was discussed in parliament. Now we can do it from today until the debate comes to parliament."

Olga Zrihen, an MP in the Socialist government in Wallonia, said the Walloon parliament won't back CETA without changes to the ICS. Wallonia, a French-speaking region in Belgium, had raised a series of objections to CETA last week that had threatened the entire deal. "We won't ratify if the ICS has not fulfilled all the standards asked," she said Sunday. Mr. Fassi-Fihri said his region also wouldn't ratify the deal without ICS changes.

There's also plenty of public opposition to CETA across Europe. Groups in Germany have challenged the agreement in court and demonstrations have been held across Europe against the treaty.

"We don't want it," said Jérémie de Clerck, an engineer who lives in Brussels and was among a group of noisy protesters who gathered outside the European Council building on Sunday as CETA was being signed.

"I wanted to be here to show that I totally disagree with this undemocratic treaty. What happens if we don't do CETA? Nothing. We already do trade with Canada. We are democratic countries. We have already courts. Why do we need this ICS? This is just gives more rights to multinationals and no obligations."