by Barry Finnegan, Attac Ireland

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This June the 28 EU foreign ministers will have a vote on whether or not to give the European Commission ‘provisional application’ power to sign an EU-Canada free investment and trade deal (called CETA) so that it would become law even if the European Parliament votes against it.  Barry Finnegan, researcher with ATTAC Ireland, and senior lecturer at the media faculty Griffith College, has been following the evolution of EU trade policy for 19 years and here explains what the ‘provisional application’ clause is all about.

This is a big deal: If the EU Council votes to give the Commission ‘provisional application’ powers, then CETA will become law even if the EU Parliament votes against it.

What’s making this a VERY big deal is: CETA has a section in it where they plan to set up a private ‘court’, an arbitration mechanism (called ICS or ISDS depending who you talk to) that would allow companies with a base of operations in Canada to bypass the Irish and European courts and to sue any of our EU governments for compensation when they feel our laws interfere with company profits.

Sounds crazy? Why would they not just sue in the Irish High Court? Surely all this is illegal under EU law? Wouldn’t a private arbitration mechanism like that be able to overrule the European Court of Justice?

Yes indeed! And it’s not just you that thinks this is odd: 3,400,000 EU citizens have signed a petition against it, 250,000 have marched through Berlin to oppose it, 3,000 German and Austrian companies have signed up to ‘SME’s Against TTIP’ [TTIP is a similar deal to CETA but between the EU and the USA], the Irish, European and Canadian congresses of trade unions are against it as are hundreds of civil society organisations in Europe and Canada as well thousands of politicians, academics, practitioners and professors of law. The German Association of Judges has even said it “sees neither a legal basis nor a need for such a court.”

According to the EU Trade Commissioner, it “will ultimately be a decision for the Council, whether the agreement will be provisionally applied and what will be the scope of provisional application.” So all eyes on the Council for now. Does anyone know the Irish government’s position? Has anyone seen anything about this in the media? Sadly, for most journalists who do not wish to ‘lose their objectivity’, the first rule of CETA is you do not talk about CETA!

Commission to bypass democracy

Article 218 of EU law, or as they say in Brussels, Article 218 of the TFEU (Treaties on the Functioning of the European Union) states: “agreements between the Union and third countries or international organisations shall be negotiated and concluded in accordance with the following procedure”.

Ok. Then Article 218(5) tells us: “The Council, on a proposal by the negotiator, shall adopt a decision authorising the signing of the agreement and, if necessary, its provisional application before entry into force.” What does all that mean?:

‘The Council’: That’s the Council of Ministers; in this case made up of the 28 foreign affairs ministers of the 28 EU Member States.

‘The negotiator’: That’ll be the European Commission; the unelected body which drafts EU law and negotiates all trade deals on our behalf and is ‘appointed’ by EU governments for a term of five years.

‘The agreement’: In this case the CETA; no it doesn’t stand for the ‘Canada-Europe Trade Agreement’! It’s the ‘Comprehensive Economic Trade Agreement’, a free investment and trade deal between the EU and Canada with a private ‘court’ for foreign corporations which citizens and domestic businesses are not allowed use.

‘its provisional application before entry into force’: or in layman’s language: ‘its becoming the law before it’s approval by parliament, and,  its becoming the law even if it’s rejected by parliament’!

From the perspective of Articles 207 and 218 of the TFEU, for CETA to get ‘entry into force’ and become binding international law, it would have to be approved firstly by a vote at the Council of Ministers, and then secondly by a vote in the European Parliament. But those parliamentarians might not understand how important this trade deal is for big business and might be more concerned with the views of their voters and so vote NO! Therefore ‘provisional application’ is a way to bypass the ‘inefficiency’ of parliament, as follows:

The EU Council of Ministers, according to Article 218(5) of the TFEU, has two jobs to do here:

1. First they have to vote to decide whether or not to authorise the Commission to formally sign-off on the final text of CETA as agreed by the Canadian government and the EU Commission; and
2. second, they have to vote to decide whether to give the Commission ‘provisional application’ power.

Nobody quite knows exactly what kind of “proposal” for “provisional application” the Commission has in mind to offer the Council to vote on, but it’s going to be one of these three:

• From the first day of the month after the Commission formally signs CETA at a ceremony in October 2016, the CETA would apply in law in a provisional manner until such time as the Council of Minsters votes to remove it from provisional application, after which time CETA would remain as binding international law for three years (as per Article 30.8.4 of CETA).
• Or, that CETA would apply in law in a provisional manner only after the Council of Minsters votes to approve it, and before the Parliament votes. Which means even if the European Parliament votes against it, CETA is in law anyway, again, until such time as the Council of Minsters votes to remove it from provisional application, after which time CETA would remain as binding international law for three years (as per Article 30.8.4 of CETA). In this scenario,
• Or, that CETA would apply in law in a provisional manner only after the Council of Ministers and the Parliament, both vote to approve it, and so the Council and Commission could ignore the votes of Members State national parliaments.

What are the Commission going to propose? When will the Council vote take place? What is the position of each EU government on specifically what type of provisional application do they support and reject? And what exactly is in in Article 218 of the TFEU that would bar the Council from applying provisional application in the instance that the Parliament rejects CETA? Who could find out referenced, evidence-based answers to these questions?

As shocking as all this is to people in the global movement for democracy, this “provisional application” business is not some kind of aberration of international law. For example, a report by the United Nations in 2015 into the ‘Provisional Application of Treaties’, states: “the rights and obligations of the State which had consented to provisionally apply a treaty were the same as the rights and obligations that stemmed from the treaty itself as if it were in force”.

So if the Council votes to give the Commission ‘provisional application’ approval for the CETA, what does the CETA have to say about that?

The full 1,598 pages of CETA are now available on the Commission’s website, and so we know that five articles and annexes in CETA refer to the “provisional application” of the agreement: Article 8.44 (pages 72 and 73), Article 30.7 (pages 227 and 228), Article 30.8 (pages 228 and 229) , Article 30.09 (page 229) , and ANNEX 19-1: Notes to Canada’s Annex 19-1 (page 392).

Article 30.7.3 states: “The Parties may provisionally apply this Agreement from the first day of the month following the date on which the Parties have notified each other that their respective internal requirements and procedures necessary for the provisional application of this Agreement have been completed or on such other date as the Parties may agree.”

A worst case scenario here then is that the Commission reckons that ‘provisional application’ applies the minute they sign CETA, while a best case scenario here is that the Commission waits until after the European Parliament has voted against the agreement, and only then will it tell the Canadians that the CETA is in “provisional application”. In terms of their marketing and perception management strategy for CETA, it’s most likely the Commission will go for that line.

CETA is emphatic: Article 30.7.4(d) states: “If this Agreement, or certain provisions of this Agreement, is provisionally applied, the Parties shall understand the term ‘entry into force of this Agreement’ as meaning the date of provisional application”.

The Commission’s View:

In an ‘Answer given by Ms Malmström [the EU Trade Commissioner] on behalf of the Commission’ to a European parliamentary question of 27 April 2015, it was said: “The Council will take a decision on the signature of CETA on the basis of a proposal from the Commission and, if warranted, will also decide on its provisional application. It is important to note in this context that Commissioner Malmström has declared in writing to the INTA [the EU parliament international trade] Committee that, ‘(e)ven if the power to decide on provisional application lies with the Council, (…) I am ready, when proposing decisions to sign politically important trade agreements which fall under my responsibility, to ask the Council to delay provisional application until the European Parliament has given its consent’”.

What this means is, (a) if the Parliament rejects CETA the Commission can go ahead and provisionally apply it anyway as a result of the power given them by a vote of the Council of Ministers, and (b) if the Parliament accepts CETA and in the unlikely scenario that Member State parliaments are allowed vote on CETA and they reject it, that the Commission will provisionally apply it anyway.  Malmström elaborated further as to when the “provisional application” period of international trade deals would end when answering a parliamentary question on the TTIP (the EU-US free investment deal) she said: “In general terms the provisional application will terminate in one of the following circumstances: (a) when the Union and, in case of a ‘mixed agreement’, the Member States conclude the agreement in accordance with Article 218(6) TFEU such that it enters into force or (b) when the Union takes a decision not to conclude the agreement and notifies this decision to the other Party. Overall it cannot be said at this moment in time, and will ultimately be a decision for the Council, whether the agreement will be provisionally applied and what will be the scope of provisional application.”

A final EU formal rejection of CETA would then allow Article 30.8.4 to kick in. It says that if the CETA is provisionally applied, and then has that provisional application withdrawn, companies still have three years in which to take ICS/ISDS cases. To quote it:

            “ [ … ] if the provisional application of this Agreement is terminated and this Agreement does not enter into force, a claim may be submitted under Section F of Chapter Eight (Investment) within a period no longer than three years following the date of termination of the provisional application, regarding any matter arising during the provisional application of this Agreement, in accordance with the rules and procedures established in this Agreement.”

Member States Excluded

It’s difficult to work out exactly what role is intended for member state national parliaments in the acceptance or rejection of international trade deals. As one legal opinion has recently put it: “The decision to provide in the CETA for its provisional application was driven by concerns that ratification on the EU side could be a drawn-out process. [ … ] the respective roles of the Commission and Member States in the post-Lisbon Treaty era remains the subject of some debate.” After the ‘Brexit’ vote and while the Euro 2016 is on, the European Court of Justice is expected to make a ruling, which was sought by the Commission, as to whether the EU-Singapore Free Trade Agreement (EUSFTA) with its ISDS (the private corporate ‘court’) is an ‘exclusive competence’ or a ‘mixed competence’ trade agreement. In the highly unlikely scenario that they rule it’s a ‘mixed competence’ trade deal, then any one of 28 national EU member state parliaments might be able to block a few small aspects of the trade deal, but not the whole thing and not the ICS/ISDS mechanism.

Legal opinion among anti-CETA NGOs and the small group of globally-active law firms specialising in facilitating ISDS cases is that whichever ‘competence’ the ECJ applies to the EUSFTA, will also apply to the CETA and all other similar EU free trade deals with ISDS/ICS.

Meanwhile in March 2016,  the Director General of the European Commission’s trade department, Jean-Luc Demarty, told the Parliament’s international trade committee, “the final CETA Agreement will be sent for the approval of the European Parliament by the end of 2016, once the EU’s Member States have signed it”. Given that Commission’s view on the ratification of CETA is that, “the agreement will need to be approved by the Council and the European Parliament”, and has no mention of any Member State parliament having a say on it, what Demarty actually means, is that, once EU Member States’ representatives at the Council of Ministers have signed it … it will be sent to the Parliament for approval.

According to an article in Le Monde newspaper: “If EU ministers agreed at the signing of the CETA on its provisional application, it could come into effect the following month. Such a decision would have serious implications.” The original version of that article claimed that CETA could be provisionally applied before MEPs vote on it, but an updated version of the article says that, “provisional application … can be implemented only after the vote by MEPs, and before the national parliaments”. However, no one can provide any legal text proving this, and the TFEU is certainly open to interpretation.

Finally, for anyone who didn’t read their 2008 Lisbon Treaty thoroughly enough, an article in Canadian newspaper The Star, in fairly explicit terms, points out that Member State parliaments will no role in CETA ratification, stating: “An unhappy European country with an axe to grind will not be able to torpedo the [CETA] deal in the final stages, according to Marie-Anne Coninsx, the EU ambassador to Canada”.

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More technical stuff about ‘provisional application’ in the text of CETA:

CETA is quite explicit in its expectation that some or all of CETA will apply either before Parliament votes on it, or, after they reject it: Article 30.7.3(b) states: “If a Party intends not to provisionally apply a provision of this Agreement, it shall first notify the other Party of the provisions that it will not provisionally apply and shall offer to enter into consultations promptly.”

Article 8.44 of CETA tells us that the Commission and the Canadian government will set up a ‘Committee on Services and Investment’ which will be able to change the rules of the private corporate arbitration mechanism (ISDS), or ‘Tribunal’ as it’s called in CETA, and that they will come up with a “code of conduct for the Members of the Tribunal” which will be “adopted no later than the first day of the provisional application” of CETA.

A minor issue of good news is that if the Parliament votes for democracy and rejects the CETA and its ICS/ISDS and the Commission and Council then provisionally applies it; when the people of Europe subsequently take to the streets to complain about getting sued for having decent working conditions, environmental protection, fracking bans, not privatising water, etc, and the Commission and Council is under serious political pressure, they can legally pull out of provisionally applying CETA under Article 30.7.3(c) which states:  “A Party may terminate the provisional application of this Agreement by written notice to the other Party. Such termination shall take effect on the first day of the second month following that notification.”

But don’t forget, Article 30.8.4 says it applies for three years after we leave provisional application:

“ [ … ] if the provisional application of this Agreement is terminated and this Agreement does not enter into force, a claim may be submitted under Section F of Chapter Eight (Investment) within a period no longer than three years following the date of termination of the provisional application, regarding any matter arising during the provisional application of this Agreement, in accordance with the rules and procedures established in this Agreement.”

Articles 30.8.1 and 30.8.2 refer to Annex 30-A which is a list of agreements which are suspended after CETA is provisionally applied and are replaced by CETA.

If the Council and the Parliament both vote to accept the CETA and allow it ‘entry into force’, and if after a few years the EU then decides to scrap, or “denounce” it, according to article 30.9.2, “in the event that this Agreement is terminated, the provisions of Chapter Eight (Investment) shall continue to be effective for a period of 20 years after the date of termination of this Agreement in respect of investments made before that date”. Which means another 20 years of getting sued in ICS/ISDS even after we have left the CETA! But at least, “This paragraph shall not apply in the case of provisional application of this Agreement”.