Opinion: In French elections, Canada’s trade with the EU is also on the line

Achim Hurrelmann is professor of political science and co-director of the Centre for European Studies at Carleton University.

In an increasingly hostile international trading environment, Canada and the European Union like to praise each other as reliable defenders of a rules-based trading system. But their own bilateral trade deal – the Comprehensive Economic and Trade Agreement – faces an uncertain future after the French legislative elections, which will be held on June 30 and July 7.

The parties leading in opinion polls, the far-right National Rally and the left-wing coalition New Popular Front, both oppose CETA and demand that the National Assembly reject its ratification. This would put CETA in jeopardy. It would spell another crisis for Canadian trade policy-makers, already struggling with the fallout of U.S.-China trade wars, the upcoming review of the Canada-United States-Mexico Agreement and the possible return of Donald Trump to the U.S. presidency.

CETA has governed Canada-EU economic relations since September, 2017. It has helped increase bilateral trade with Canada’s second-largest trading partner by more than 60 per cent. But CETA is applied only on a provisional basis while it awaits full ratification on the EU side. And because it includes a few provisions – mainly in the area of investment – that exceed the EU’s trade powers, this requires separate votes in the parliaments of all member states. Ten of 27 EU states, including France, have yet to ratify CETA.

While public debates about CETA have died down in Canada, the lengthy ratification process has kept them alive in Europe. In France, the National Assembly voted in favour of CETA in 2019, but the Senate rejected it earlier this year. A new vote in the Assembly is now needed.

Critics have focused on agricultural trade, especially beef imports – which are miniscule. This shows that opposition to CETA is not primarily economically motivated. CETA has become a proxy for globalization and neoliberalism, its rejection a convenient way to publicly embrace French sovereignty and identity.

What happens if CETA opponents win the election, as current polls predict? This would depend, most importantly, on the strategy of the new government. A parliamentary decision against CETA would upset other EU states, as well as business interests.

Faced with these kinds of pressures, Italy’s Prime Minister Giorgia Meloni, who used to be a vocal CETA critic, has refrained from scheduling a ratification vote in her country. France’s far right, which is trying to give itself a more moderate image, could follow Ms. Meloni’s playbook, even though this would not sit well with its own supporters.

If a negative ratification vote does occur, proponents of CETA could resort to legal manoeuvres to keep the agreement in place regardless. For instance, French President Emmanuel Macron could refrain from notifying the EU Council that ratification has failed. This strategy was chosen by the President of Cyprus when its parliament rejected CETA in 2020.

Legal loopholes also exist at the EU level. According to the EU Council decision authorizing CETA, provisional application “must be and will be terminated” if a member state reports failed ratification. However, the document adds that the “necessary steps will be taken in accordance with EU procedures.”

EU lawyers read this as saying that the end of CETA would not be automatic. It would require EU legislation – which could be deliberately stalled, or could invent creative ways to extend CETA’s application.

Such legal tricks are of questionable legitimacy. If used, they may be struck down by courts. A more transparent response would see Canada and the EU work together to revise CETA, by removing provisions that trigger the need for member-state ratification, as well as potentially making other changes. A CETA 2.0 would again need to be passed by the EU Council, the European Parliament and the House of Commons, but ratification by EU member states would no longer be required.

Policy-makers resist reopening trade agreements at a time when the political climate has shifted toward protectionism. But hiding away from public debate does not help the cause of international trade. My research on CETA ratification shows that in EU states where governments made an active case for ratification, sometimes by incorporating critical perspectives, they were able to build pro-CETA coalitions. Proponents of trade openness must be willing to defend its benefits.

For Canada, CETA’s ratification troubles underscore that achievements of past trade agreements cannot be taken for granted. To navigate trade policy over the coming decade, Canadian policy-makers will need to define – and proactively communicate – strategic priorities that can guide negotiations with multiple partners, including ones previously seen as unproblematic.