Comprehensive Economic and Trade Agreement (CETA)
2nd Meeting of the CETA Joint Committee

Joint Report

25 March 2021, by videoconference

The second meeting of the European Union (EU)-Canada Comprehensive Economic and Trade Agreement (CETA)’s Joint Committee took place by videoconference on 25 March 2021. The meeting was co-chaired by Executive Vice-President (EVP) and European Commissioner for Trade, Valdis Dombrovskis; and Canada’s Minister of Small Business, Export Promotion and International Trade, the Honourable Mary Ng. Representatives of EU Member States and Canadian Provinces and Territories also attended the meeting as observers.

The meeting was positive and constructive. The co-chairs praised CETA as a central pillar of the political, trade and economic partnership between the EU and Canada. They also welcomed CETA as a crucial tool to provide businesses on both sides of the Atlantic with stability and opportunities as they prepare for the global economic recovery in the aftermath of the COVID-19 pandemic.

Introductory points

The co-chairs formally adopted the agenda of the meeting.

The co-chairs exchanged views on the economic impact of the COVID-19 pandemic on global supply chains and stressed the importance of ensuring resilience, predictability and sustainability of supply chains by focusing on trade diversification while maintaining trade cooperation, openness and transparency, notably in the critical sectors of food and health. They also highlighted the good cooperation between the EU and Canada on global trade matters, notably as regards WTO reform. They welcomed the productive ministerial meeting of the Ottawa Group held on March 22, 2021 and took note of the topics on which the EU and Canada are cooperating to achieve concrete progress ahead of the 12th WTO Ministerial Conference. Notable cooperation exists on: the Trade and Health Initiative; reform of the WTO dispute settlement system; fisheries subsidies negotiations; the Joint Statement Initiatives on e-commerce, investment facilitation, and services domestic regulation; proposals to improve regular WTO work, such as notifications and consideration of trade concerns; and ongoing work on trade and environmental sustainability, trade and gender, and competitive neutrality.

The Chief Economists from the EU and Canada provided a presentation on CETA successes and an overview of EU-Canada trade performance since the provisional application of CETA began. It was noted that bilateral trade in goods and services had grown strongly, notably from the provisional application of the Agreement in September 2017 until the onset of the COVID-19 pandemic. They stressed that, even when taking into account the effects of the COVID-19 pandemic, EU-Canada trade was still 15% higher in 2020 than before CETA’s provisional application. They highlighted the increase in bilateral trade of environmental goods over the past four years, pointing to CETA’s contribution in facilitating the green transition on both sides. They also highlighted the increase in utilization of the Agreement’s preferences to 55%, for trade flows in both directions. The co-chairs welcomed CETA’s successes as evidenced by the positive gains and noted that further improvements in the use of CETA tariff preferences could be made.

Reporting from the Specialised Committees

The EU and Canada exchanged views on the reporting from the CETA specialised committees.

EU’s perspectives on reporting from the Specialised Committees, including on:

Management of the CETA Cheese Tariff Rate Quota

The EU stressed the importance of the Cheese Tariff Rate Quota (TRQ) for EU farmers. The EU reiterated its fundamental concerns about the management of the TRQ that allocates 50% to the Canadian cheese manufacturers and considered that the cheese TRQ management system has failed, in its view, to comply with the CETA commitment to provide a mechanism by which the TRQ should be allocated to operators most likely to use it. The EU welcomed the resumption of Canada’s TRQ comprehensive review and referred to its detailed submission. The EU expressed an expectation that Canada would address its concerns, including in particular the high rate of transfers and related transfer costs that, in its view, reflect the structural problems of the TRQ management system.

Canada reiterated its view that it is in full compliance with its obligations under CETA. Canada stressed the fact that the system is working well, noting the very high uptake of the TRQs (roughly 94%), which is nearly completely filled year after year with the available amounts increasing annually. Canada also reiterated that transfers are a useful mechanism that facilitate TRQ utilization. Canada committed to take into consideration the EU’s comments in the framework of the comprehensive review.

CETA provisions on geographical indications (GI)

The EU stressed that effective enforcement of GI protection was extremely important for EU stakeholders and for creating support for CETA, including in Member States which still need to ratify the Agreement. The EU expressed appreciation for the efforts of Canadian authorities to inform EU stakeholders about the enforcement tools available in Canada and the EU committed to encourage EU right-holders to use these tools. The EU reminded Canada of its longstanding request for a list of grandfathered users of names protected under CETA and expressed its view that GI groups could not enforce their rights adequately in the Canadian market if they did not know which Canadian producers had the right to use their names. Canada reiterated that GIs were a sensitive topic during CETA negotiations and it was clear that there is no obligation in CETA to develop a list of grandfathered prior users. Both Parties committed to making stakeholders on both sides aware of the scope and the nature of CETA provisions on the protection and enforcement of geographical indications. 

Access to the Canadian Wines & Spirits market

The EU welcomed Canada’s commitment that the outcome of the partial settlement reached with Australia in WTO dispute DS537 would apply to products imported from the EU. The EU asked Canada to send regular updates on the implementation of this settlement. The EU took note of the recent announcements that the new rates of the Cost of Service Differential (COSD) were published in both Ontario and Quebec. These rates will be implemented in Ontario as of April 1, 2021, while in Quebec they will come into effect progressively at different points of sale beginning on May 23, 2021. The EU stressed that there is, however, still more work ahead in order to fully implement the CETA declaration on wines and spirits. Canada welcomed applications for GI protection from EU rights holders and committed to providing all due care and attention to processing these applications, a necessary step for the amendment of the Annexes to the Wines and Spirits Agreement that will be launched by both Parties.

Canada’s perspectives on reporting from the Specialised Committees, including on:

CETA Conformity Assessment Protocol

Canada expressed its satisfaction with the recognition of the Standards Council of Canada as competent to accredit conformity assessment bodies for ATEX equipment. The EU also noted that EU conformity assessment bodies are eligible to be recognized by Canada’s Standards Council of Canada pursuant to CETA if they are interested.  Both Parties committed to continuing their cooperation to ensure the full implementation of the Protocol for the benefit of operators on both sides.

Transparency requirements in relation to temporary entry of business persons

Canada referred to the transparency obligations under CETA’s Chapter 10. While welcoming progress on the collection of information by Member States, Canada   claimed that the EU’s immigration portal is difficult to navigate and does not contain all of the information related to the Party’s commitments under CETA, including the manner in which individual Member States have implemented the provisions. The EU pointed out that, in their view, the information included in the portal complies with the CETA commitments, agreed to continue the discussions at technical level and noted that it is pursuing work with Member States to fill the remaining gaps in the EU Immigration Portal. 

Agricultural Issues

Canada thanked the EU for its help in drafting a guidance document on the EU’s meat TRQs that can be used by Canadian exporters and EU importers. Canada noted that it had concerns with respect to the administration of the TRQ and claimed that the licenses are not issued automatically on-demand. Canada also cited its concern about Member States’ country of origin labelling (COOL) requirements. Canada expressed interest in providing input on the rollout of the EU’s Farm to Fork Strategy and noted that it expects any proposed actions by the EU to respect and comply with international trade rules. Finally, Canada expressed concern over the length of time for the approval of applications for genetically modified organisms (GMO) authorisations in the EU.

The EU stressed that its shared management system for TRQ administration operates with automatic attribution of unused quantities in full compliance with CETA obligations. The EU responded that the reason Canada had not yet managed to benefit fully from its beef and pork TRQs was related to the need to ensure respect of EU SPS standards and, in particular, the ban on use of growth hormones. It also referred to the high demand for Canadian products in other markets.

With regards to country of origin labelling (COOL) requirements, the EU explained that new EU rules would be developed in the framework of the Farm to Fork Strategy and that it was aware that Canada was also developing its own rules on origin labelling. The EU indicated that imports of durum wheat from Canada had fully recovered and reiterated its view that the temporary decline of imports in 2018 was not related to a COOL measure but due to other factors.
Canada expressed further concerns relating to the impact of the reforms foreseen in the framework of the Farm to Fork Strategy for its exports, in particular, future measures relating to the extension of mandatory origin indications and setting of maximum residue levels for pesticides and import tolerances. In line with the Strategy, the EU reaffirmed its commitment to respecting WTO obligations and to engaging actively with Canada to receive its feedback on the impact of these reforms on its exports to avoid unnecessary disruptions in trade. The EU also noted that it was working very diligently and in accordance with due procedures for examining the GMO applications.

Joint Updates

The EU and Canada had an exchange of views on a number of joint updates concerning the following points:

Implementation of the CETA Trade and Sustainable Development Chapters and their Early Review

Both Parties noted that significant efforts had been made in the implementation of the Trade and Sustainable Development chapters of the Agreement in the fields of trade and gender, trade and labour, trade and environment and climate, and under the early review of such chapters, whilst recognizing the different approaches taken by the EU and Canada both as regards the process of the review and the question of enforceability of the chapters through sanctions. It was stressed that both Parties had ensured that the implementation of CETA’s Trade and Sustainable Development chapters was transparent and inclusive, by engaging regularly with the CETA Domestic Advisory Groups and with the broader civil society in the annual Civil Society Forum.

The EU and Canada committed to continue engaging on the early review of the CETA chapters on trade and labour and trade and environment including with a view to their effective enforceability, against the backdrop of the EU’s ongoing review of its own trade and sustainable development policy.

Canada underlined the importance of ensuring that Indigenous peoples can share in the benefits of CETA.  Canada also noted that increased participation of Indigenous peoples in trade and investment contributes to sustainable development and inclusive economic prosperity. Canada reiterated its request to the EU to consider working together to organise activities in this regard.

Implementation of the Joint Committee Recommendations on Gender, Climate and SMEs

The EU and Canada took note of the good progress made in implementing the three Recommendations, notably through the adoption and implementation of a detailed trade and gender work plan, the ongoing bilateral cooperation on trade-related aspects of the international climate change regime with a focus on the organisation of concrete events such as two clean-tech workshops, as well as the implementation of the comprehensive work plan on SMEs and the recent establishment of the Enterprise Europe Network in Canada.

Negotiations of a Mutual Recognition Agreement (MRA) concerning the professional qualifications of architects and progress of the work of CETA’s Regulatory Cooperation Forum (RCF) and the development of a new Strategic Partnership on Raw Materials under the CETA Raw Materials Dialogue 

The EU and Canada welcomed launch of negotiations towards the first MRA in the field of professional qualifications under CETA, addressing the profession of architects. They highlighted the unique role of CETA’s RCF in bringing concrete results on a number of complex regulatory issues and in providing a forum for voluntary collaboration and fruitful exchanges on issues of common interest such as animal welfare standards. They also acknowledged the geostrategic importance of the CETA bilateral dialogue on raw materials and its role on global supply chains and stated their willingness to continue cooperating in this issue.

Taking note of the adoption of four Decisions on the implementation of the rules on the Investment Court System

The EU and Canada welcomed the adoption of the four decisions implementing the Investment Court System, honouring the commitment taken at the time of CETA’s signature in the Joint Interpretative Instrument and highlighting the ground-breaking approach to investment dispute settlement jointly started in CETA. They noted that the four decisions would only enter into force when CETA is ratified by all EU Member States and reaffirmed their commitment to continuing cooperation at the multilateral level regarding the creation of a Multilateral Investment Court and Appellate Court for investment disputes.

Conclusion

Canada announced it would be pleased to host the next meeting of the CETA Joint Committee in Ottawa in September 2022, marking the 5th anniversary of the Agreement.

The Co-chairs agreed on the publication of the agreed Joint Statement on the respective EU and Canada’s websites and reiterated their commitment to work together in implementing CETA and in upholding the rules-based international trade system.