By: Victoria Garcia

During the G20 Summit in China this September, the President of the European Commission called Canada and the European Union’s Comprehensive Economic and Trade Agreement (CETA) the “best and most progressive” trade agreement the EU has ever negotiated.[1] CETA is set to cut trade barriers between Canada’s tenth largest economy and the EU’s 500 million person market.[2] While the EU and Canadian Prime Minister Justin Trudeau have expended political capital to successfully conclude CETA, three German activist groups have brought a case to the German Federal Constitutional Court (“FCC”), claiming that CETA violates the German Constitution.[3]

CETA is one of many EU trade agreements.[4] Both CETA and the proposed United States-EU deal, the Transatlantic Trade and Investment Partnership (TTIP), have sparked controversy.[5] In September, more than 160,000 German citizens protested CETA and the TTIP.[6] The European Commission strongly supports CETA, and is due to vote on a temporary implementation on October 18, 2016,[7] hoping to sign CETA by the end of October.[8]

Three German activist groups, Campact, Foodwatch, and More Democracy, brought the case to the FCC and acquired 125,000 signatures opposing CETA.[9] The German activist groups brought suit, claiming that CETA undermines the democratic principles because (i) the agreement entrusts some rulemaking to a committee created by the treaty that is not subject to citizen accountability; (ii) a treaty-created arbitration court would resolve investor disputes, rather than national courts, as mandated by the German Constitution; and (iii) CETA allows products in the market until proven unsafe, rather than allowing products into the market only when they are proved to be safe.[10] The Plaintiffs asked the Court to find that the treaty’s provisions violate the German Constitution, and provide an injunction prohibiting the German Government from supporting the agreement during the European Council’s deliberations on October 18.[11]

On October 13, 2016, the FCC rejected the Plaintiff’s temporary injunction request and allowed the German Government to support CETA in the EU; however, the FCC set three conditions for signing CETA’s temporary application, but is still set to later decide a broader constitutional challenge to CETA.[12] The FCC ruled that the German Government may vote for a temporary implementation based on three conditions: (i) if it ensures that a temporary CETA implementation will apply to aspects only controlled by the EU; (ii) CETA’s committees must have strong “democratic backing” to make decisions; and (iii) if Germany can unilaterally withdraw from CETA.[13] The FCC’s conditions placed on the Government and CETA, in combination with the later constitutional challenge, create a threatening context for CETA.[14] Even though the FCC gave the Government permission to vote on a temporary CETA implementation, CETA’s fate is still undetermined.[15]

The FCC’s findings are crucial for the international business community because Germany is at the center of EU business, trade, and finance. CETA incorporates two large world economies and has the potential to affect much larger economies. The German Economy Minister Sigmar Gabriel even noted that CETA’s successful or lacking trajectory will influence the provisions negotiated in the US-EU TTIP, which will be one of the most significant trade deals in history, affecting millions of people and the world’s two largest economies.[16]

 

[1] Canada-EU Trade Deal Called ‘Best and Most Progressive’ at G20, The Global News (Sept. 4, 2016), https://globalnews.ca/news/2920289/canada-eu-trade-deal-called-best-and-most-progressive-at-g20/.

[2] Karin Matussek, EU-Canada Trade Pact Faces Constitution Test at German Court, Bloomberg (Oct. 12, 2016), https://www.bloomberg.com/news/articles/2016-10-12/eu-canada-trade-pact-faces-constitution-test-at-top-german-court.

[3] German Activist Take EU-Canada Trade Deal to Constitutional Court, Reuters (Aug. 31, 2016), https://www.reuters.com/article/us-eu-canada-trade-germany-idUSKCN1161P4.

[4] Germany’s Top Court to Rule on Canada Free Trade Deal, The Local de (Oct. 12, 2016), https://www.thelocal.de/20161012/canadian-free-trade-deal-could-be-stopped-by-german-court-ceta.

[5] Id.

[6] Id.

[7] Germany’s Top Court to Rule on Canada Free Trade Deal, supra note 4.

[8] Matussek, supra note 2.

[9] German Activist Take EU-Canada Trade Deal to Constitutional Court, supra note 3; see also Germany’s Top Court to Rule on Canada Free Trade Deal, supra note 4 (the largest group of plaintiffs to bring a suit before the German Constitutional Court).

[10] Matussek, supra note 2.

[11] Germany’s Top Court to Rule on Canada Free Trade Deal, supra note 4.

[12] Guy Chazan, German Court Gives Green Light For EU-Canada Trade Deal, Financial Times (Oct. 13, 2016), https://www.ft.com/content/9d91ee52-9116-11e6-a72e-b428cb934b78

[13] Monika Ermert, German High Court Paves Way For Government to Sign CETA, Hands Down Conditions, Intellectual Property Watch (Oct. 13, 2016), https://www.ip-watch.org/2016/10/13/german-high-court-paves-way-for-government-to-sign-ceta-hands-down-conditions/; Jelena Baumler, Jelena Baumler on the German Federal Constitutional Court’s Judgment on CETA, International Economic Law and Policy Blog (Oct. 14, 2016), https://worldtradelaw.typepad.com/ielpblog/2016/10/jelena-bäumler-on-the-german-federal-constitutional-courts-judgment-on-ceta-.html

[14] Ermert, supra note 13.

[15] Jelena Baumler, Jelena Baumler on the German Federal Constitutional Court’s Judgment on CETA, International Economic Law and Policy Blog (Oct. 14, 2016), https://worldtradelaw.typepad.com/ielpblog/2016/10/jelena-bäumler-on-the-german-federal-constitutional-courts-judgment-on-ceta-.html

[16] Matussek, supra note 2.