EU-Canada Trade Pact Provisionally Cleared by German Court

  • German top court imposes three caveats for CETA approval
  • Federal Constitutional Court in Karlsruhe gives interim ruling

Germany’s top court provisionally cleared a controversial trade agreement the European Union is scheduled to complete with Canada later this month even as a legal attempt to block it continues

The government can agree to the deal at an EU ministerial meeting next week as long as it guarantees that any implementation of the pact can be revoked in case of an adverse final ruling. The order, issued by the Federal Constitutional Court in Karlsruhe on Thursday, also requires that the pact’s planned provisional implementation is limited to areas where the EU has sole jurisdiction and that a treaty committee is subject to some democratic control.

"This is a great step towards attaching rules to globalization," German Economy Minister Sigmar Gabriel said in Berlin after the ruling. "We will, of course, fulfill the three caveats. We’re convinced that they’re already fulfilled in part. I think that the requirements can be met without major problems."

TTIP Talks

The EU and Canada have been negotiating the Comprehensive Economic and Trade Agreement, or CETA, since 2009. Like its counterpart TTIP, the Transatlantic Trade and Investment Partnership, being thrashed out between the U.S. and the EU, CETA has come under public criticism on both sides of the Atlantic. Opponents argue the accords will cost thousands of jobs, promote industrial agriculture and lower standards.

Activist groups, national opposition lawmakers and a member of the European parliament have sued over the pact and asked the judges to make the German government veto the plan.

They say CETA undermines democracy because the EU transgressed its powers by negotiating it and they argue CETA bypasses parliaments by entrusting some rulemaking to a special committee. They also oppose the provisional implementation of the rules planned after signature and before national parliaments have ratified them.

The court made it clear that today’s ruling isn’t its last word on CETA. It will continue to test the accord under the constitution before making a final judgment. Some CETA rules could turn out to violate the constitution if implemented provisionally as originally planned, court president Andreas Vosskuhle said when delivering the ruling.

‘Some Exceptions’

"But the government has explained that it can see to it that there will be some exceptions from the provisional implementation," said Vosskuhle. The government also said "that it will only agree to those parts of CETA for which the EU has undoubtedly jurisdiction."

The areas that can’t be preliminarily implemented cover investment protections including an arbitration system that allows foreign companies to sue against government regulation outside regular courts. Rules on financial services, labor, recognition of professional qualifications and maritime transport must also be exempted from the provisional implementation. The special committee can’t make decisions without the backing of EU ministers, the judges ruled.

Lasting Damage

The judges said Thursday’s interim ruling balanced the interest at stake while the case is ongoing. While the plaintiffs still have a chance of toppling CETA in the final ruling, the damage to Germany and the EU would be irrevocable had the judges put the accord on hold now, Vosskuhle said.

"The loss of credibility for Germany -- as the cause of that development -- as well as the EU could have had a permanently negative impact on the capabilities of all European actors in global trade relations," said Vosskuhle.

The judges issued the order less than 24 hours after hearing the suits on Wednesday. Until late at night, lights were on in the deliberation room of the eight judges.

It’s unclear when a final ruling will come. The court usually takes at least a year to make such a decision. It may also schedule more hearings.

‘Partial Victory’

Thilo Bode, managing director for Foodwatch, one of the groups supporting the case, said it’s a big win that the court will continue to scrutinize the accord. The caveats are strict and show that the government overlooked dramatic problems of the deal, he said.

"We didn’t win everything but a lot," said Bode. "Our struggle against this failed agreement will continue."

Klaus Ernst, lawmaker for the Left Party that also sued, said the ruling is "a partial victory for us and a shame for the government."

EU ministers are scheduled to clear CETA in a vote on Oct. 18 and the pact is due to be signed at a EU-Canada summit on Oct. 27. The pact would cut trade barriers between the EU’s market of more than 500 million people and Canada, the world’s 10th-biggest economy last year.

The European Commission takes note of the ruling of the German court, trade spokesman Daniel Rosario told reporters in Brussels.

“It is for the German authorities to draw the necessary conclusions of the ruling once all the relevant proceedings are concluded,” he said. The commission considers that CETA “is consistent with European Union law.”

The commission is monitoring all of the debates and discussions under way in a number of member states, particularly Belgium, he added.

The cases are: BVerfG, 2 BvR 1368/16, 2 BvR 1444/16, 2 BvR 1482/16, 2 BvR 1823/16 and 2 BvE 3/16.

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