Changes from report parliamentary committee draft to plenary report

MOTION FOR A EUROPEAN PARLIAMENT RESOLUTION

▸4 unchanged paragraphs

on the implementation of the EU-Canada Comprehensive Economic and Trade Agreement (CETA)

(2023/2001(INI))

The European Parliament,

– having regard to the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part,

Added– having regard to the Joint Interpretative Instrument on the Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union and its Member States,

Added– having regard to the Strategic Partnership on Critical Raw Materials between Canada, of the one part, and the European Union and its Member States, of the other part, which was agreed and launched at the EU-Canada Summit of 14-15 June 2021,

Added– having regard to Decision No X/2023 of the CETA Joint Committee on the interpretation of certain terms in Article 8.10, Annex 8-A and Article 8.39,

– having regard to its position of 15 February 2017 on the draft Council Decision on the conclusion of the Comprehensive Economic and Trade Agreement (CETA) between Canada, of the one part, and the European Union and its Member States, of the other part,

Added– having regard to the Opinion 2/15 of the Court of Justice of the European Union of 16 May 2017 pursuant to Article 218(11) TFEU on the Free Trade Agreement between the European Union and the Republic of Singapore,

Added– having regard to the Joint Declarations of the EU and the Canada Domestic Advisory Groups (DAGs),

– having regard to the Commission report of 11 October 2022 entitled ‘Implementation and Enforcement of EU Trade Agreements’ (COM(2022)0730),

Added– having regard to the Commission communication of 22 June 2022 entitled ‘The power of trade partnerships: together for green and just economic growth’ (COM(2022)0409),

– having regard to the report of the CETA Joint Committee of 31 March 2023 following its third meeting,

Added– having regard to its resolution of 23 June 2022 on the future of EU international investment policy,

Added– having regard to the CETA Joint Committee recommendations of 26 September 2018 on trade, climate action and the Paris Agreement, on Trade and Gender and on Small and Medium-sized Enterprises (SMEs),

Added– having regard to the Commission communication of 5 March 2020 entitled ‘A Union of Equality: Gender Equality Strategy 2020-2025’ (COM(2020)0152),

– having regard to the reports of the different specialised committees, the Civil Society Forum and the Regulatory Cooperation Forum,

Added– having regard to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), published on 20 March 2023,

Added– having regard to the successive audits carried out in 2014, 2019 and 2022 by the Commission’s Directorate-General for Health and Food Safety on the traceability and quality of the control systems in place governing the production of beef and pork intended for export to the European Union,

– having regard to Rule 54 of its Rules of Procedure, as well as Article 1(1)(e) of, and Annex 3 to, the decision of the Conference of Presidents of 12 December 2002 on the procedure for granting authorisation to draw up own-initiative reports,

– having regard to the opinion of the Committee on Agriculture and Rural Development,

Changed– having regard to the report of the Committee on International Trade (A90000/2023),(A9-0400/2023),

Change 1

ChangedA. whereas CETA was among the first trade agreementagreements the EU completed with another major established OECD economy;economy after South Korea: whereas it was also the most ambitious and comprehensive agreement either the EU or Canada had concluded at the time, including unprecedented access to public procurement at sub-federal as well as federal level;

B. whereas CETA has been provisionally applied since 21 September 2017, i.e. for more than six years;

C. whereas important provisions, in particular relating to investment protection, have still not been applied, as not all Member States have ratified the agreement;

Change 2

AddedD. whereas Canada and the EU are finalising a draft Decision of the CETA Joint Committee on the interpretation of certain terms in Article 8.10, Annex 8-A and Article 8.39 specifying the remit of the right to regulate in the context of the investment protection chapter and on the facilitation of the access by SMEs to the investment court system under CETA;

E. whereas the EU was Canada’s third largest trading partner after the United States and China, accounting for 8.2 % of its trade in goods with the world in 2022; whereas Canada ranked 14th among the EU’s international trading partners for the same year, accounting for almost 1.4 % of the EU’s total external trade in goods;

Change 3

RemovedE. whereas the implementation of the EU’s trade agreements is a key priority for Parliament, the Council and the Commission in order to monitor, assess and calibrate the EU’s common commercial policy (CCP); whereas reporting on the implementation of the agreement with Canada is a timely and useful contribution to the reflection on the functioning of EU trade agreements;

AddedF. whereas Russia’s war of aggression against Ukraine has demonstrated the need to diversify trade agreements and reduce dependence on imports and exports from a limited number of trade partners, as well as the importance of concluding trade agreements with like-minded partners;

AddedG. whereas the effective implementation and the monitoring of the EU’s trade agreements is a key priority for Parliament, the Council and the Commission in order to monitor, assess and calibrate the EU’s common commercial policy (CCP); whereas reporting on the implementation of the agreement with Canada is a timely and useful contribution to the reflection on the functioning of EU trade agreements;

H. whereas the institutional framework under CETA is now fully in place, with 19 specialised committees, a regulatory cooperation forum and a civil society forum, and their agendas and reports are publicly available;

Change 4

RemovedG. whereas there is now sufficient experience, data and statistical information to assess the implementation of CETA;

AddedI. whereas Canada was the first country with which the EU established a Strategic Partnership on Critical Raw Materials, which has been subsequently complemented by a Green Alliance Initiative, an EU-Canada Digital Partnership and an Ocean Partnership;

AddedJ. whereas Canada is an active participant in the WTO Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade and the WTO Trade and Environment Committee, but is not a member of the Fossil Fuel Subsidy Reform (FFSR) initiative;

AddedK. whereas there is now sufficient experience, data and statistical information to assess the provisional implementation of CETA;

AddedL. whereas Canada is a world leader in the co-construction of public policy for the social and solidarity economy, and whereas the social and solidarity economy represents almost 10 % of Gross Domestic Product (GDP) in certain provinces, such as Quebec, accounting for approximately 210 000 jobs;

Main conclusions and recommendations

Change 5

Changed1. Highlights that CETA relies on a fairrules- and predictable rules-basedvalues-based relationship which promotes a more secure and stable economic environment between the trading partners, which is particularly important in the context of heightened geopolitical uncertainties, built on the principles of sustainable development and respect for human rights and labour and environmental standards; considers that such predictability fosterscan foster economic growth, the exchange of goods, the provision of services, participation in public procurement, the attractiveness of investment, quality employment, the creation of more and better-paid jobs, and improved working conditions and living standards; notes, however, that CETA needs to further strengthen sustainable development, respect for human and labour rights and to protect the climate;

Change 6

Changed2. Notes with satisfaction that trade in goods between the EU and Canada increased by 5366 % between 20172016 and 2022, while EU-Canada trade in services increased by 46 %, outperforming other extra-EU trade; welcomesnotes the fact that EU goods exports to Canada increased by 47 % during the first five years of provisional application, where the biggest gains were registered in the cases of manufactured products, chemical products as well as food and animal products; notes that most of the concerns expressed before the provisional application of the agreement regarding the influx of Canadian agricultural products into the EU market, have not materialised; observes that Canadian exports to the EU saw an increase of 46.4 %, where the biggest gains were registered in ores, precious stones and metals, and mineral fuels and oils;

Change 7

Added3. Underlines the considerable growth in bilateral trade in food and agricultural products between the EU and Canada, with EU agri-food exports to Canada increasing by 62 % and EU imports of such products from Canada by 52 % since the start of the provisional application of CETA; notes that this has significantly benefited producers and exporters on both sides and has also contributed to job creation; welcomes the substantial increase in the number of the Union’s micro, small and medium-sized enterprises exporting to Canada, as well as in the value of their exported products, noting that the agreement thus significantly serves their interests;

Added4. Stresses that, in the implementation of CETA, as with all other EU trade agreements, due account must be taken of respect for sustainable agricultural production, reciprocity and maintaining high standards, in particular sanitary, phytosanitary and veterinary standards, as well as of adequate controls and monitoring mutual compliance with those standards;

5. Welcomes the fact that trade flows between the parties have generally proven to be resilient throughout the pandemic, as well as the difficult situation created by Russia’s war of aggression in Ukraine, thereby resisting pressure on supply chains and contributing to strengthened food security; takes the view that CETA should serve as a tool to facilitate cooperation and joint action in the reconstruction of Ukraine once the war is over;

6. Underlines that EU exports are key to employment; welcomes the fact that CETA has contributed to creating new job opportunities, as the number of jobs supported by EU exports to Canada rose from 624 000 in 2017 to more than 700 000 in 2021;

Change 8

Changed5.7. Stresses the importance of labour mobility facilitation granted under CETACETA, as it helps ensure an adequate skills transfer between the EU and Canada and avoid shortages of qualified labour; welcomeswelcomes, in this regardregard, the successful conclusion in 2022 of the first Mutual Recognition Agreement under CETA for architects’ qualifications; takes the view that the EU Blue Card could further facilitate exchanges between two developedcompetitive economies with a highly educated population; underlines that exchange programmes between EU and Canadian academic institutions can further contribute to the necessary labour mobility in the long run;

Change 9

Changed6.8. Notes that the two most important product categories that the EU and Canada export to each other are machinery,machinery and transport equipment, accounting for around 4034 % of both exports and imports, and chemical, pharmaceutical and plastic products, making up around 20 % of total exports and imports; notes, however, that the mining and extraction sectorsector, in particular fertilisers, nickel, uranium and sand oils is highly significant when it comes to imports from Canada, compared to other trading partners, accounting for nearly 20 % of the EU’s total imports from Canada; underlineshighlights that access to critical raw materials from a reliable trading partnerpartners, including Canada, is a key element of the EU’s Critical Raw Materials Strategy and vital to delivering a sustainable green transition;

Change 10

Removed7. Welcomes the fact that European and Canadian firms are making increasing and continuous use of preferences granted by CETA, with preference utilisation rates of EU imports from Canada standing at 65 % in 2021 compared to 52 % in 2018; notes that the utilisation rate is still lower, though increasing for EU exports, reaching 58 % in 2021 compared to 40 % in 2018; notes with interest that smaller companies are using the preferences to a larger extent than large companies and that utilisation rates are significantly higher for agri-food industries compared to manufacturing industries; stresses that the low utilisation rates in key sectors for several EU members indicate foregone cost savings and diminished welfare gains from the agreement; encourages both partners to continue to promote actions to raise awareness of CETA among stakeholders in both regions;

Added9. Stresses that cooperation on access to critical raw materials is essential in the current geopolitical landscape, as well as for the green and just transitions, and welcomes the signing in July 2021 of the EU-Canada Strategic Partnership on Critical Raw Materials within the framework of CETA, which should help to integrate EU-Canada raw material value chains and foster collaboration in science, technology and innovation; notes that this constitutes an important component of the European economic security strategy; is convinced that raw materials extraction needs to occur with respect for environmental standards and labour and human rights, including the rights of indigenous peoples;

Removed8. Notes that the utilisation rate of the tariff rate quota (TRQ) for beef and veal imports to the EU was only 3 % in 2021, and that EU exporters have expanded their market share in Canada, such that the EU exports more frozen beef to Canada than it imports from it;

Added10. Welcomes the fact that European and Canadian firms are making increasing and continuous use of preferences granted by CETA, with preference utilisation rates for both the EU and Canada standing at 60 % in 2022 compared to 40 % and 52 % respectively in 2018; notes with interest that smaller companies are using the preferences to a larger extent than large companies and that utilisation rates are significantly higher for agri-food industries compared to manufacturing industries; stresses that the low utilisation rates in key sectors for several EU members indicate foregone cost savings and diminished welfare gains from the agreement; encourages both partners to continue to promote actions to raise awareness of CETA among stakeholders in both regions, including through the EU’s ‘Access2Markets’ platform; underlines the importance of facilitating new opportunities for businesses and consumers through digital trade in line with EU standards;

Added11. Notes that the utilisation rate of the tariff rate quota (TRQ) for beef and veal imports to the EU was only 3 % in 2021, and that EU exporters have expanded their market share in Canada, such that the EU exports more frozen beef to Canada than it imports from it; notes, however, that the utilisation rate of this TRQ may change over time as a result of variations in Canada’s other export markets, in particular the US and China;

Added12. Highlights that according to the audit report of the Commission’s Directorate-General for Health and Food Safety, Canada has yet to satisfactorily implement the recommendations made in the Directorate-General’s audit on the traceability and quality of the control systems in place governing the production of beef and pork intended for export to the European Union;

Added13. Welcomes the introduction of a harmonised EU export certificate for the export of fresh poultry from authorised Member States, which became operational in 2021; calls on the Commission to pursue further progress on similar certificates for processed meat and sheep or goat meat, while increasing efforts to ensure stronger traceability systems for meat products; calls on the Commission, in the framework of the Management Committee and in cooperation with the Canadian authorities and Member States, to make progress on the recognition of the remaining meat inspection systems in order to allow the remaining Member States to export meat to Canada;

Added14. Notes, with regret, that CETA does not apply the principle of regionalisation in general, solely considering the EU as a single area with regard to livestock production, but not with regard to the fruit and vegetables sector, which means that each Member State has to individually negotiate and agree on export requirements for each product; calls for this flaw to be remedied as soon as possible within the framework of the EU-Canada Joint Management Committee;

Added15. Calls on the Commission to facilitate ongoing cooperation with the Canadian authorities aimed at increasing attention to safeguards for animal welfare standards in CETA and evaluating the feasibility of establishing, in the future, mirror clauses in this area to guarantee the equivalence of animal welfare standards and thus a level playing field between EU and imported animal products;

Added16. Points out that EU trade policy, and CETA in particular, has a significant economic impact on the outermost regions (ORs), and therefore stresses the need to protect the interests of those regions in future negotiations or a possible review of the agreement;

Added17. Maintains that part of the tariffs and TRQs assigned to EU products should be allocated to operators registered in the ORs, taking account of their economic situation; stresses that differential treatment for operators in the ORs is key to ensuring the competitiveness of businesses and the fair distribution of tariffs and TRQs among commercial agents by avoiding the restriction of benefits to a small number of operators;

18. Takes note of the fact that the TRQ utilisation rate stands at 98 % for EU cheese exports on average; calls, nevertheless, for a more transparent and flexible Canadian TRQ management system for dairy products, in particular the cheese quota, and urges the Canadian authorities to move forward with a potential review of the system as soon as possible;

Change 11

Changed10.19. Highlights the importance of recognising the system of geographical indications (GIs) as a key component of the agreement; underlines the need for further effective enforcement of GIs protection for EU rights holders in Canada, in order to ensure the trust in the correct functioning of the agreement;

Change 12

Changed11.20. Takes note of the fact that during the first six years of provisional application of CETA, the EU’s exports to and imports from Canada in services have grown by 1954 % and 1574 %, respectively, with the highest gains in transport services, business services and information, computer and telecommunications services, in particular benefiting smaller EU Member States where services features significantly in the economic structure of the country; regrets however that unlike trade in goods, services trade in 2022 had not yet recovered to its pre-pandemic level;