Procedure over substance? CETA and the political economy of subsidiarity

ABSTRACT

Competing notions of subsidiarity can help to understand the intricacies of new types of trade deals as concluded between Canada and the European Union. From this perspective the Comprehensive Economic and Trade Agreement (CETA) balances two fundamentally different models of economic distribution and decision making authority either giving priority to private actors and their domestic communities or to political institutions aiming for a social embedding within global markets. Examining CETA as an unusual compromise in international regulatory cooperation, this article focuses on the settlement of highly contentious issues through complex procedural innovation. While this eventually made a final agreement between trading partners with two different polities possible, it could not settle widely diverging assessments about the long-term economic effects of the new deal. As a consequence, and to build bridges between distinct spaces of subsidiarity, the final agreement represents a flexible and open-ended approach to future trade relations.

KEYWORDS:

• Subsidiarity
• trade liberalisation
• Canada
• European Union

Disclosure statement

No potential conflict of interest was reported by the author.

ORCID

Günter Walzenbach http://orcid.org/0000-0002-7769-2733

Notes

1. The new US-Mexico-Canada Agreement (USMCA) replaces the North American Free Trade Agreement (NAFTA), first ratified on 1 January 1994.

2. A similar point could be made to explain the difficulties CETA negotiations created for trade unions and the labour movement on both sides of the Atlantic, see Healy (2014).

3. Specific types of investment regulated under CETA do not fall within the exclusive competence of the European Union as established by Article 207 TFEU, see Fahey (2017, pp. 4–5) and Mayer (2014, pp. 10–12).

4. On the politicisation of CETA negotiations through civil society activism and engagement, see S. Dierckx (2015), Hübner, Deman, and Balik (2017, pp. 852–853) and Trew (2013).

5. Figures provided by the Canadian Centre for Occupational Health and Safety. Retrieved from https://www.ccohs.ca/oshanswers/legisl/intro.html

6. For an analysis of CETA's compatibility with French constitutional law, see Larik (2017).

7. In a second preliminary ruling the Federal Constitutional Court (2016b) repeated the position taken by the German government to not approve a provisional CETA application for areas that remain subject to the competence of the Federal Republic. This affects, in particular, provisions on investment protection (including the dispute settlement system), on portfolio investments, on international maritime transport, on the mutual recognition of professional qualifications, and on labour protection.

8. Arguably, for this reason, a ‘Canada-style’ trade agreement, a ‘Canada-plus’ or ‘Canada-plus, plus, plus’ trade deal became a common point of reference setting out UK-EU relations after Brexit.

9. Of course, the composition of a permanent appeal tribunal could reflect legal traditions, customs and cultural sensitivities of the contracting parties in line with different notions of subsidiarity.

10. For a critical legal assessment, see Krajewski (2014).

11. In fact, CETA grants an ‘advisory role’ to a Regulatory Cooperation Forum to allow national regulators an exchange of experiences and relevant information. This is, however, not meant to restrict the decision-making power of administrators in EU member states, at EU level or in Canada (European Commission, 2017, p. 3).

12. By 2023 Kohler and Storm (2016, p. 285) predict rising levels of inequality as well as social tensions with workers missing out on average annual earnings of €1,776 in Canada and between €316 and €1,331 in the EU (depending on member state).