The fate of Canada's landmark trade agreement with the European Union, known as CETA, may hinge on an obscure case due to come before the European Court of Justice that relates to a similar deal the EU recently struck with Singapore.
At issue is whether EU trade deals containing investment provisions can be approved simply by EU institutions or whether they also require ratification by each of the 28 member states.
If the latter process applies, the Singapore and Canada deals could be held up for years as politicians in each EU country debate the pros and cons of the agreements.
Nikos Lavranos, secretary-general at the European Federation for Investment Law and Arbitration, a think tank that supports investor rights, said the ruling "will be guiding for all [EU investment] agreements … CETA and Singapore."
Following the conclusion of CETA negotiations in September, Canada and the EU are proceeding with legal checks and translations, aiming for the agreement to be ready for ratification in the first half of 2015.
But the European Commission – the EU's executive arm – has kept the door open on the ratification process, stating in a memo of Sept. 26: "[CETA] will be sent to the Council for authorization for signature … [for] the consent vote in the European Parliament, and if necessary the approval of the parliaments of the Member States."
"CETA parties will wait for the outcome," Mr. Lavranos said. "It would be politically dangerous … to … ratify CETA knowing there is this ECJ opinion out there."
Clauses relating to foreign direct investment and investor protection are at the heart of the uncertainty.
The EU-Singapore agreement contains a similar investment chapter to CETA, and both include a mechanism for settling disputes between foreign investors and states.
These deals are the first of a "new generation" of comprehensive trade agreements for the EU, which gained authority to negotiate investment agreements in 2009 from the Treaty of Lisbon. Previously, member states signed more than 1,400 bilateral investment treaties with other countries.
The commission is preparing a formal request for the court to take up the Singapore agreement. Mr. Lavranos expects it will take between six and 12 months for a judgment.
The Department of Foreign Affairs, Trade, and Development (DFATD) does not expect the court case to delay CETA's ratification.
"[EU jurisdiction over CETA] … is something that's clearly for the EU and its members to decide," DFATD spokeswoman Caitlin Workman said. The commission has "the authority [to] bring into provisional effect the … majority of the agreement's elements."
Politicians in Germany, Austria, France and the Netherlands face sharp public scrutiny over EU-U.S. negotiations on the proposed Transatlantic Trade and Investment Partnership. A petition against liberalized trade with the United States and Canada has obtained more than 900,000 signatures across Europe since October.
Marc Bungenberg, professor of European law at the University of Siegen, believes it would be wise for the commission to wait for a court decision. "We have too many players in the game right now [and] undecided legal questions, beside political questions," he said.
German Economic Affairs Minister Sigmar Gabriel now expects Germany to back the CETA, but he is seeking minor improvements and changes to CETA's investor-state dispute settlement procedure, after acknowledging that it would not be possible to remove it.
However, DFATD says that negotiations on the investment chapter, including its investor-state provisions, are closed. "We will only negotiate an agreement that is in the best interest of Canadians. This complete text reflects that commitment," Ms. Workman said.