ABSTRACT
The Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union (EU) came into provisional effect on 21 September 2017. However, critical parts of the agreement in the area of foreign direct investment (FDI) and the so-called investor-state dispute mechanism were excluded as they were seen as contractual elements outside the negotiation discretion of the European Commission. As a result, all EU member states need to ratify CETA according to their respective constitutional rulers, and this includes in some cases provincial/regional parliaments in addition to the federal parliament. Whether the whole agreement will pass this test will be only decided years from now. This is not a new situation for the EU. The trade agreement with the Republic of Korea (South Korea), for example, also only provisionally came into effect and ratification happened afterwards. CETA is a different beast, however, as it includes new and potentially ground-breaking mechanisms when it comes to disputes about FDI. This mechanism entered the agreement at a very late stage and only after it turned out that the political resistance to the traditional treatment of FDI issues threatened the overall agreement. CETA still needs to be ratified throughout the EU if it does not want to end up as an incomplete agreement. Even if this worst-case scenario were to become a reality, CETA goes beyond cherry-picking low-hanging fruit as it comprises new elements that so far have not been part of any existing EU trade agreements.
