Latvia becomes 1st EU country to sign on to Canada's trade deal

The journey toward full ratification of Canada's trade deal with the European Union will be long and complicated, but an early step was taken Thursday as Latvia's parliament voted in favour.

"We were visionary when we started a decade ago and now this is the right deal at the right time," said International Trade Minister François-Philippe Champagne during a press conference in the capital city of Riga.

"In an age of rising protectionism and anti-trade rhetoric in the world, it sets a new gold standard for progressive trade that works for everyone," Latvia's public broadcaster quoted Canada's minister as saying, echoing the message Prime Minister Justin Trudeau took to Europe last week after the European Parliament approved the Comprehensive Economic and Trade Agreement.

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Champagne praised Latvia for ratifying quickly. 

Of the 28 member countries currently in the European Union, 27 are required to hold ratification votes in one or more national legislatures.

Latvia is the first, with legislators voting by a margin of 71-5 in favour, with one abstention.

The public broadcaster also reported that Latvian Foreign Minister Edgars Rinkevics said that besides CETA, Canada's decision to send troops to lead a multinational battalion of NATO forces in Latvia proved that Latvia represented a secure environment for businesses to thrive. 

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Prime Minister Maris Kucinskis said CETA brought "only pluses, no minuses."

The Canada-EU Strategic Partnership Agreement, which covers a range of non-trade matters including security, also passed.

European Parliament ratified last week

The goods and services traded between Canada and Latvia in 2015 were worth approximately $83 million, according to data from the Latvian Investment and Development Agency reported by local media.

On Thursday, Global Affairs Canada said on Twitter that bilateral trade in 2016 totalled almost $216 million.

While Latvia is far from Canada's largest European trading partner, one of CETA's objectives is opening up new markets in places Canada has not been a big player.

The European Parliament ratified CETA last Wednesday, with roughly 58 per cent voting in favour.

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Legal and jurisdictional issues may delay, if not threaten, full implementation of the deal.

Over 90 per cent of CETA may be provisionally applied once legal and regulatory changes have been made to bring both partners into compliance.

On Canada's side, this includes the Senate passing an implementation bill, C-30, as well as measures at the provincial level.

Last week the EU suggested this could happen as early as April 1. Both sides must confirm their readiness in an exchange of diplomatic notes before an effective date is set.

Provisional application will bring into effect the parts of the deal most relevant to Canadian businesses and consumers, including: immediate elimination of over 98 per cent of tariffs, access to previously limited markets for both goods and services (including government contracts), easier labour mobility and recognition of professional credentials.

Court decisions ahead

The full agreement will not apply until all member states ratify. Some countries require a vote in more than one legislature, and in at least one country, Belgium, regional governments will vote too.

Up to 14 EU countries may hold referendums on CETA.

While the European Commission was mandated to negotiate CETA on members states' behalf, a few areas — ranging from criminal justice to maritime transport to investment protection — fall under the jurisdiction of individual countries. 

Several countries have brought or may yet bring cases before the European Court of Justice concerning the EU's jurisdiction over aspects of the wide-ranging deal.

Legal wrangling is likely to delay ratification in several places, including France, Belgium and Germany.

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One dispute concerns what happens if one country fails to ratify — would most measures continue to apply provisionally indefinitely, or would one 'no' vote undo the entire thing, including what's already applied?

Opponents say they'll continue to protest and pressure legislators to vote no.

Canada and the EU are still working out difficulties with CETA's contentious investor court system, which allows companies to sue for compensation when government actions harm business interests. Additional changes remain possible. 

The dispute resolution clauses are among those excluded from provisional application.

The broad scope of CETA — the legal text is over 1,600 pages, plus additional declarations negotiated last fall to secure its approval — led the EU into uncharted territory. Jurisdictional arguments could continue for several years.