European Lawmakers Approve Long-Awaited Trade Deal With Canada

The Wall Street Journal The Wall Street Journal

After nearly eight years of talks, CETA passes a critical step, but still needs vote to lift provisional status

By  Emre Peker

BRUSSELS—European Union lawmakers approved a preferential trade deal with Canada on Wednesday, seeking to bolster tepid economic growth as the bloc struggles with the fallout from populist backlash against globalism at home and in the U.S.

The EU-Canada Comprehensive Economic and Trade Agreement, or CETA, was adopted with support from 408 deputies in the 751-member European Parliament in Strasbourg, France, almost eight years after the start of negotiations.

CETA now goes into provisional effect, lifting tariffs on roughly 9,000 industrial, agricultural and food items, including beef and fish. Service industries, including banking and insurance, will also open up for competition.

The trade pact with Canada marks a rare victory for the EU, which has been struggling to rally policy support from its 28 member states. Brussels is pushing to expand the bloc’s global links and filling the void amid rising protectionism in the West, as Britain prepares to exit from the EU and President Donald Trump has criticized existing U.S. trade agreements while saying he would back other bilateral deals.

“This is a crucial step,” said Marietje Schaake, an EU lawmaker from the Netherlands with the Alliance of Liberals and Democrats for Europe. “While U.S. trade policy under President Trump is unpredictable, and he turns his back towards the world by raising tariff walls, Europe proves it is a reliable trade partner.”

The European Commission said CETA is expected to give a 23% boost to bilateral trade that was worth €63.5 billion of goods in 2015 and €27.2 billion in services in 2014.

The deal comes ahead of the U.K.’s plan to start talks to leave the bloc, which could disrupt trade as Prime Minister Theresa May extracts Britain from Europe’s single market.

CETA also goes into effect as the EU eyes Mr. Trump’s proposed border tax and his approach to the Transatlantic Trade and Investment Partnership, a proposed pact between the world’s two biggest economic blocs that was an important agenda item for the Obama administration.

After more than three years of negotiations, however, chances of an agreement between the EU and its largest trading partner are diminishing. Mr. Trump has already nixed the previous U.S. administration’s landmark deal with 12 countries that border the Pacific Ocean—meant to counter China’s rising economic clout. The president also pledged to renegotiate the North American Free Trade Agreement, signed by former U.S. President Bill Clinton with Canada and Mexico.

Meanwhile, the EU is also in talks with Japan for a similar trade deal and seeks to complete pacts with Vietnam, among other nations, as well as other regions in Asia and Africa.

Yet there is also significant resistance within the bloc. Before an agreement in October by all EU governments to back the pact with Canada, Belgium’s French-speaking region, Wallonia, blocked the accord for weeks, citing concerns over a court system designated to settle investment disputes.

The bloc’s initiatives are also feeling reverberations as populist anti-EU parties, from both the left and the right, gain in polls from the Netherlands to France and Germany ahead of pivotal elections this year.

Demonstrators gathered outside the European Parliament on Wednesday to protest the adoption of trade deal with Canada.

CETA’s full implementation, including dispute settlement, still requires ratification by more than 30 national and regional parliaments in the EU, which could take months or years.

“There is still a long way to go for this agreement,” said Anne-Marie Mineur, a lawmaker from a left-wing group that opposes the pact. “The people of Europe still get to have a say in the matter.”