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SuperCanadaandCETAcompared:askeletonUK/EUTradeAgreementPROPOSEDBYDAVIDCAMPBELLBANNERMANMEP

This note is designed for illustration and debate only and does not constitute legal advice orguidance.

ThenotesetsoutthebasicprovisionsthatcouldbeexpectedtobecontainedinacomprehensiveUK/EU Trade Agreement. It uses the Comprehensive Economic and Trade Agreement of 2016(“CETA”) between Canada and the EU as a template, to illustrate that, whilst the successfulnegotiation of a ‘SuperCanada’ UK/EU Agreementwill be an undoubtedly complicated process, asuccessfuloutcomeisnotonlypossiblebutmuchthesameconclusionshavealreadybeenreached.

The note sets out each Chapter in CETA and discusses how the equivalent provision in a‘SuperCanada’UK/EUAgreementwhichwouldbewider,deeperandbetterthanCETA,especiallyinmarketaccessforservices.

To illustrate the difference in content and scope, where the equivalent Chapter heading in theUK/EU column is highlighted in red, it indicates a topic where considerable difference can beanticipated.ItisassumedthroughoutthattheUKdoesnotobtain“accesstotheSingleMarket”bythe simple expedient of remaining within the EU Customs Union. Going down the CETA-styleAgreement route leaves open the possibility, howevermarginal, of less than total access, though100%accessbothwaysistheobjective,withouttariffsorquotasasnow.

In the sectionon Financial Services, page8, reference ismade to the report for the InternationalRegulatory Study Group (“IRSG”) by Hogan Lovells, A New Basis for Access to EU/UK FinancialServices Post-Brexit (https://www.irsg.co.uk/resources-and-commentary/a-new-basis-for-access-to-eu-uk-financial-services-post-brexit/)

Theissueof“regulatorydivergence”,anditsimplicationsforanyUK/EUdeal,hasattractedagreatdealofattention. SomecommentatorsassumethattheUKwillonlybeabletotradewiththeEUafter Brexit if it continues to adopt EU law. That is not true, as the CETA agreement itselfdemonstrates. Brexit will commence with the UK and the EU enjoying identical regulatoryframeworks.Allanyagreementrequiresisamechanismfortheeachsidetoassessanychangestothe rulesof theother to satisfy themselves that there remains sufficient regulatory compatibility,and a forum for the discussion of any proposed changes so that each side may makerepresentations.ThereisnoneedforeithertheUK,ortheEU,toforfeititslegislativesovereignty–although in key business sectors it would be helpful if the two sides committed to keep theirregulationsalignedandcompatible.

The IRSG report points out that the trend in international regulation is towards this “outcomes-based”assessmentphilosophy,andawayfromalegalisticinsistenceonword-identicalequivalencebetween regimes. Their recommendations principally concern financial services, but are equallyapplicable toany sector. TheSuperCanadaproposal envisages the creationof specialist technicalcommitteestooverseeeachbusinesssectorasappropriatetostudythepracticalsubstanceofanychanges to assess that the two regulatory regimes remain compatible.

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CETAPROVISION SUPERCANADAPROVISION

Preamble

Preamble

An introductory section which sets out theobjectivesandaspirationsof theparties,andthe basis on which each side enters theAgreement.

Essentially the same sentiments could berepeated: commitments to internationalsecurity and human rights, trade andeconomic development whilst respectingeach side’s right to protect its culturalidentity.

Thereshouldprobablybeanadditionalclausewhich references themutual commitmentoftheparties toupholdpeacebetween Irelandand Northern Ireland and to avoid any hardborder.Thisisunlikelytobecontroversial.

1.GeneralDefinitionsandInitialProvisions 1.GeneralDefinitionsandInitialProvisions

This Chapter contains the institutional andadministrative framework by which CETA isinterpreted,managedandimplemented.

Theseprovisionsarelargelyofa“boiler-plate”standard wording and could be repeatedverbatim,e.g.theUK/EUareunlikelytoneedabespokedefinitionof“customsduty”.

2.NationalTreatmentandMarketAccessforGoods

2.NationalTreatmentandMarketAccessforGoods

ThisChapterprovidescomprehensivemarketaccess for goods from both sides byessentiallytreatingimportedproductsnolessfavorably than similar goods produceddomestically (“National Treatment”) oncetheyhaveenteredthedomesticmarket.

CETA does NOT provide for immediate freetradebetweenthepartiesforallgoods.Thatapplies only to Category A commodities. Asmall number of commodities (Category E)are excluded altogether, and for agriculturalproducts there is conceded an increasedtariff-free quota rather than tariff abolition.In other cases the commitment is toprogressively reduce tariffs over 3 years(CategoryB), 5 years (CategoryC) or 7 years(CategoryD).

Thereforetherearealsoprovisionsgoverningthe suspension or termination of anyconcededpreference incasesofdefault,andancillary provisions relating to treatment ofnon-partyexports.

A Committee on Trade in Goods and a

Given the context of Brexit, there is anarguable case for sayingaUK/EUAgreementwould be simpler than CETA: continue withthe total abolition of tariffs and quotas asapplies at present, without the CategoryA/B/C/D/Edistinctions.

However that would represent a majornegotiating concession by both sides – andmay not be possible in agricultural products,where domestic political pressure in the EU-27means that a quota systemcouldwell beintroduced. Forestry products are probablygoingtobealessmaterialissue.

A best-guess prediction is that non-agricultural products would be grantedimmediatetariff-freeentryunderCategoryA,and then there would be a series of quotasand/orreducedtariffsfortherest.

A UK/EU Agreement will also require aProtocol governing Rules of Origin, and theestablishment of Committees for Goods andAgriculture.TheCETAwordingcouldbemore

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CETAPROVISION SUPERCANADAPROVISIONCommittee on Agriculture are established tooverseeimplementationandactasforumsfordiscussion.

Protocol I (Rules of Origin and OriginProcedures) adjudicates the extent to whichany product (given the nature of globalisedsupply chains) can be said to originate fromeitherparty.

Two Annexes (2-A and 2-B) set out the line-by-lineagreementsandimportmechanics.

orlesscopiedover.

A UK/EU Agreement would also include itsown equivalents of Annexes 2-A and 2-B,because every trade treaty includes them.They follow a standard-form structure basedon the WTO Harmonised System forclassifyingcommodities(HS).

However, access to fisheries between theUK/EUwill be amore significant negotiatingpointthanwithCETA.Thepracticalapproachis to relegate this to be a bespoke Protocol1A,whichcouldbeannexedtothissectionoftheoverallAgreement.

Electricity is a good for these purposes (it istreated as if an extractedmineral fuel). TheEU does not levy a tariff on importedelectricity,andthat isunlikelytochange,butthere are outstanding issues with electricitygeneration,andtheotherindustrialprocessescaught by the current EU Emissions TradingScheme,whichareconsidered inChapter24,Trade&Environment(below,page21).

Chapter 2 of the UK/EU Agreement mayrequire considerable negotiating time andeffort and the detailwould be different (butperhapsnotallthatmuch:thesameproductswill be contested between the parties).Fisheriesaside,thefinaltextwillneverthelessfollowmoreorlessthesamestructure.

3.TradeRemedies 3.TradeRemedies

ThisChapterregulatestheparties’recoursetoanti-dumping duties, countervailing dutiesandsafeguardmeasuresinvolatilemarkets.

This area is already highly circumscribed bythe WTO framework. A UK/EU Agreementcouldcopyovertheidenticalwording.

4.TechnicalBarrierstoTrade(TBT) 4.TechnicalBarrierstoTrade(TBT)

This Chapter prevents the parties frustratingthe value of concessions made by ensuringthat the same technical standards apply todomesticgoodsandimports.

In essence, this section merely repeats theWTOAgreement on TBTs, but doing so doesstreamline the process by makingcommitments enforceable bilaterally andstrengtheningtransparentdisclosure.

The Protocol II (Mutual Acceptance of the

This area is already highly circumscribed (atleastintheory)bytheWTOframeworkandbyinternationalstandard-settingbodies.Subjecttoone issue,aUK/EUAgreementcouldcopyovertheidenticalwording.TheAnnexoncarregistrations might require some revision toreflect current EUpractice, and the fact thattheUKalreadyfollowsit.

At present there are supposedly no TBTsbetween the UK/EU because both are

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CETAPROVISION SUPERCANADAPROVISIONResults of Conformity Assessment) andProtocol III (Good Manufacturing PracticesforPharmaceuticalProducts)aredesignedtoeliminate duplicative certificationrequirements.

There is a specific Annex 4-A to covercooperation in the field of motor vehicleregistration.

The Committee on Trade in Goods overseesthisarea.

governed by the same Single Market. Theissue that arises is whether post-Brexit howmuchscopethereisfordivergence.

If “access to the Single Market” means “UKdomestic application of EU law”, presumablyasaquidproquofornotimposingaCategoryA/B/C/D/E framework on goods (see above,Chapter 2, page 2), then no TBTs will everarise – but that would represent a majorconcession by the UK and is notrecommendedhere.

Arguably, the interests of the UK are betterserved by copying the CETA provisions andpushing for stronger mutual recognitionpractices,i.e.NOTgoingbeyondCETA.

Since the ‘acquis communautaire’ andregulatory framework will be imported intoUK domestic law under the Withdrawal Bill,theUKandEUshouldagreethatassessmentto determine regulatory equivalence is notnecessary. Both Parties should insteadconsent to an ‘assessment of compatibiity’approach in their versionofProtocol II – seethe relevant comments under FinancialServices(below,page8).

5.SanitaryandPhytosanitary(SPS)Measures

5.SanitaryandPhytosanitary(SPS)Measures

This Chapter regulates the parties’ rights toprotectagainstriskstofoodsafety,animalorplant life or health, so as not to createunnecessary and unjustifiable traderestrictions.

In essence, this section merely repeats theWTO Agreement on SPS, and a pre-existingCanada/EU agreement on veterinarystandards, but doing so does streamline theprocess by making them enforceablebilaterally and strengthening transparentdisclosure. There is a specific annexgoverning the recognition of regulatoryequivalencebetweentheparties.

A specific Committee on SPS Measuresoverseesthisarea.

TenAnnexes(5-Ato5-J)setoutmechanismsandprocedures.

As with TBTs, this area is already highlycircumscribed(atleastintheory)bytheWTOframework and by international standard-setting bodies, and the UK starts from aposition of being 100% compliant with EUrules.

A UK/EU Agreement could copy the basicCETA provisions, but re-draft these to assessfuture regulatory divergence, rather thanregulatory equivalence. See the relevantcomments under Financial Services (below,page8).

The detailed content of the ten Annexeswoulddoubtlessdiffer,buttheCETAstructurecoversthecorrecttopicsanditwouldnotbetoodifficulttoupdate/adjustthem.

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6.CustomsandTradeFacilitation

6.CustomsandTradeFacilitation

This Chapter seeks to minimise theadministrative burden of importing throughthe use of technology and greatertransparency, and common procedures andapproaches.

These provisions complement thecommitmentswhichbothCanadaandtheEUhavealreadymadethroughtheirmembershipof the WTO and the World CustomsOrganisation(WCO).

Thesemeasurescanbecopiedoverdirectly–assuming that the parties do not agree toevenmorerelaxedprovisions.

Special arrangements for the Irish borderissue would be incorporated as either anAnnex,ormorelikelyaProtocol.

7.Subsidies

7.Subsidies

This Chapter mainly repeats and reinforcestheexistingWTOAgreementonSubsidiesandCountervailingMeasures.

Itstrengthensandimprovestheprovisionsforconsultation and disclosure between theparties.

These provisions can be copied over into aUK/EUAgreement.

8.Investment

8.Investment

This Chapter governs investments bybusinesses of one party in businesses in theother party. It prohibits the parties fromimposing market access limitations oninvestment (number of firms; value ofservices; number of transactions; capitalemployed; staff headcount; corporatestructure).

Thepartiesarealsoprohibitedfromimposing“performance requirements”, i.e. tradedistorting conditions as to minimum exportlevels of goods/services; degree of localcontent of goods/services; local purchasingpreferences;localsalesrestrictions;orsimilarconditions as a requirement of eligibility foranygrantorsubsidy.

SubsidiaryinvestmentsaretoreceiveNationalTreatment and Most Favoured Nationtreatment. Investments are to be treatedfairly and equitably. Compensation is to bepaid for losses caused by armed conflict ornatural disaster etc. Expropriationmay onlybeforapublicpurpose,underdueprocessof

Following the recent European Court ofJustice (ECJ) decision on the EU-SingaporeTrade deal, any Free Trade Agreementnegotiated by the EU containing Investmentand Investorprotectionprovisions isamixedagreement,meaningitmustberatifiedbyallMember StateParliaments including regionalparliaments such as Wallonia, which at firstvetoedCETA.

It is now likely that investment will not beincorporated into future EU trade deals, inorder to allow the EU’s institutions of theCommission,CouncilandParliamenttoagreesuchtradedealsatEUlevelwithouttheneedforMemberStateratification.This is likelytohappen for the EU-New Zealand trade deal.Insteadseparateinvestmentagreementsmaybeused.Suchafasttimetablewouldironicallybenefit a Brexit deal even if the implicationson sovereignty for otherMember States is agenuineissue.

There isalsothe issueof ‘ForwardMFNs’ forInvestment and Services, which requires any

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CETAPROVISION SUPERCANADAPROVISIONlaw, non-discriminatory and receive fullcompensation.

The parties are prohibited from placingrestrictions on the ability tomake capital orincome transfers in or out of the territory,unless for a non-discriminatory reason e.g.bankruptcyproceedings.

A Tribunal and an Appellate Tribunal areestablished to hear complaints by investors,together with a procedure which reflectsexistinginternationallaw.

A Committee on Services and Investment isestablishedasaforumforconsultationandtooverseethecodeofconductoftheTribunals.Mediation is encouraged and the parties areto exhaust the CETA process before seekinganyotherinternationalredress.

The Chapter does not apply to most airlineservices, which are already covered by abespoke international agreement, or culturalindustriesorfinancialservices.

Parties are entitled to deny the benefits ofthisChaptertoabusinesswhichisultimatelycontrolled by a third country person andinternationalsanctionsareinoperation.

There are six Annexes (8-A to 8-F) coveringthe definition of “expropriation”;restructuring of public debt; the exclusionofcertain Canadian regulatory acts from thedispute settlement process; and declarationson how the parties will implement theircommitments.

liberalisation in these areas in a newagreementsuchaEU-UKdealtobeofferedtoholders of othermodern tradedeals such asSouth Korea and Canada. This obligationwouldagainbenotmandatoryifcontainedinaseparateinvestmenttreaty.

But if investment is contained in a UK/EUAgreement, then CETA contains all theprovisionswhichyouwouldexpecttofindinatrade treaty and has sensible measures forhandlingthem.

These provisions could be carried overmoreor less unchanged into a UK/EU Agreement.Thereisanimportantdistinctionbetweentheability to invest in an overseas subsidiary(which iswhatChapter8effectivelygoverns)andthemore important issueoftheconductof investment business (which falls withinChapter13,Financialservices,below,page8).

Possibly, the parties might wish to extendprotection to key domestic industries oractivities. As with CETA, that is bestaddressed through Chapter 28, Exceptions(below,page22).

9.Cross-BorderTradeinServices

9.Cross-BorderTradeinServices

This Chapter obliges the parties to extendNational Treatment and Most FavouredNation treatment to the service suppliers ofthe other party. They are prohibited fromimposing limitations on market access(number of suppliers; quotas; value oftransactions or assets; economic needs testsetc.).

The Chapter does not apply to most airlineservices, which are already covered by abespoke international agreement, or cultural

It is a matter of dispute whether there isactually a “single market in services” withinthe EU at present, as this is oneof the leastcomplete or developed parts of the SingleMarket.

TheCETAprovisionscouldbestrengthenedbya specific commitment that no business willreceive treatment post-Brexit that is lessfavourable than the treatment itwouldhavereceivedpre-Brexit.

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CETAPROVISION SUPERCANADAPROVISIONindustriesorfinancialservices.

Parties are entitled to deny the benefits ofthisChaptertoabusinesswhichisultimatelycontrolled by a third country person andinternationalsanctionsareinoperation.

TherearethreeAnnexes(9-Ato9-C)coveringtheinterpretationof“NationalTreatment”forservices; the handling of “new services”inventedafterCETAcomesintoforce;andthetreatmentofcourierservices.

NB: General Annexes I and II contain furtherreservations,exceptionsandclarifications. Inparticular, they list specific services (byreference to the UN Central ProductClassification1991)excludedfromChapter9.

On that basis, itwould be unnecessary for aUK/EU Agreement to include equivalents ofAnnexes 9-A and 9-C. Annex 9-B merelystatesthatwhereanewservice isdevelopedwhich is not included in the UN CentralProduct Classification 1991, then the partieswill consult onhow it is to be treatedunderCETA–whichishardlyagreathelp.

There is a strong case for considering an‘MFN-Forward’ provision, i.e. any futureconcessiongrantedbyeithertheUKortheEUin abilateral agreementwith a third countrywillalsobeextendedtotheotherpartytotheSuperCanadadeal.

10. Temporary Entry and Stay of NaturalPersonsforBusinessPurposes

10.MovementofNaturalPersons

This Chapter obliges the parties to admitindividuals not otherwise ineligible underimmigration law for the purposes of keypersonnel, contractual service suppliers,independent professionals and short-termvisitors. That is part of the WTO’s GeneralAgreement on Services (GATS) and its 4modes, including Mode 4 which coverstemporary entry for natural persons forbusinesspurposes.

SixAnnexes(10-Ato10-F)setoutthecriteriafor qualification, and for the spouses ofeligible persons, and the procedures to befollowed.

This is an area in which CETA is whollyinadequatetotheBrexitscenario.

A SuperCanada Agreement wouldundoubtedly include provisions to relax theadmissionofshort-termbusinessvisitors,butbe subject toBritain’s new style immigrationpolicyandcontrolof itsborders. Itwillhaveto gobeyondCETA to cover the issueof thefreemovementoflabour(assumingthisisnotcarvedoutintoawhollystandaloneTreatyinitsownright):(a)forexistingexpatriateswhohave migrated pre-Brexit; and (b) for post-Brexitmigration.

Whatever the resolution reached, theSuperCanada UK/EU Agreement will mostlikely require a series of agreed principles inthe main text, of which short-term visitorswould be only one of many topics, and abespoke Protocol containing the full detail,with sub-sections covering the subjectof theCETA Annexes for different categories ofindividuals.

11. Mutual Recognition of ProfessionalQualifications

11. Mutual Recognition of ProfessionalQualifications

This Chapter commits the parties toencourage their respective nationalauthorities and professional bodies to enter

A UK/EU Agreement could supplement theCETA provisions with an additional Annexwhich specifies – and perhaps provides a

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CETAPROVISION SUPERCANADAPROVISIONintoMutual Recognition Agreements (MRAs)inregardtoeachother’squalifications.

An MRA Committee is establish to monitorprogress and make appropriaterecommendationstoprofessionalbodies.

Annex 11-A contains non-binding guidelinesfor judging professional equivalence andreachingMRAs.

minimum “grandfathering period” – thoseprofessional qualifications which are alreadyrecognisedacrosstheEU-28,orperhapsonacountry-by-countrybasis,priortoBrexit.Thisagain would be made subject to the UKGovernment’s new post Brexit Immigrationpolicy.

12.DomesticRegulation

12.DomesticRegulation

This Chapter governs the licensingrequirements for businesses granted marketaccessunderChapter9,Cross-BorderServices(above,page6).

The parties are obliged to operate licensingsystems which are clear and transparent,objective and public, and not applied in anarbitrary manner. There should bereasonable time limits in which to make anapplication. Refusal should be accompaniedwithwrittenjustificationandnotprecludere-applicationbythesamebusiness.

NB: General Annexes I and II contain furtherreservations,exceptionsandclarifications. Inparticular, they list specific services (byreference to the UN Central ProductClassification1991)excludedfromChapter12.

The CETA provisions are uncontroversial andcould be incorporated into a UK/EUAgreement, but in the Brexit context theywouldbeimprovedbytheadditionof:

• Acommitmenttograndfatherallpre-Brexit licenses and approvals, exceptin cases where conduct would havecaused a license etc. to be forfeitedunder the pre-Brexit rules (perhapsforatleastafixedtransitionalperiod);

• A commitment to ensure that nobusiness would receive lessfavourabletreatmentpost-Brexitthantheywouldhavedonesobeforehand,i.e. to continue pre-Brexit licensingcriteria (perhaps for at least a fixedtransitionalperiod);

• A commitment to not discriminateagainstapplicantsfromeitherparty.

Theextent towhich the rulesandconditionsforeligibilitymightalterafterBrexit,andthatis best handled as part of Chapter 21,RegulatoryCooperation(below,page20).

13.FinancialServices

13.FinancialServices

ThisChapter commits theparties to concedeNational Treatment and Most FavouredNation treatment for the other party’sfinancial institutions and investments. Theyare prohibited from imposing market accesslimitations (number of firms; value ofservices; number of transactions; capitalemployed; staff headcount; corporatestructure).Theyareobligedtoprovideaccessto payment and clearing systems. Theycannot impose nationality requirements for

CETA contains extensive provisions forfinancial services and is quite good as mosttrade treaties go. However, given thestrategic importanceofthissectortotheUK,and the pre-Brexit situation of significantoverlap in regulation of the entire financialservices field, although the CETA provisionsare a useful starting point, they are notadequate. For example, whilst the headlinemarket access rights under CETA are fairlygenerous, they are in places heavily

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CETAPROVISION SUPERCANADAPROVISIONseniorstaff.

Chapter 13 overrides the provisions ofChapter 8, Investment, (above, page 5) andChapter 9, Cross-Border Services, (above,page6).

Thereisa3yearwindowinwhichthepartieswill further negotiate on “performancerequirements”, i.e. conditions as to localpurchases or exports etc., and in default theprovisions of Chapter 9 (Cross-BorderServices)willapply,i.e.completeprohibition.

Specific exclusions apply to governmentaction in pursuit of monetary or exchangeratepolicy,orfortheprudentialregulationoffinancialserviceproviders.

AFinancialServicesCommitteewillsupervisetheimplementationofthisChapterandactasaforumforconsultationandnegotiation.

There is a special financial procedure fordispute settlement between the parties andfor investor/state disputes over investmentsin financial services. But the ECJ Singaporedecisionmayleadtotheremovalofanyformof Investor State Dispute Procedure (ISDP)from this agreement to allow its fasterprogress, with investment and its protectiongoing to a new specific investmentagreement. It should be noted that majordisputes over ISDS and its public perceptioncaused theEU-USTTIP free tradeagreementtofail.

Annex 13-A specifies the financial serviceswhich each party recognises for the purposeof cross-border service provision. In somecases this isdependentuponreaching futureagreementonregulatoryequivalence.

Annex 13-B sets out principles by which theFinancial Services Committee will adjudicatethat the prudential regulation carve-out isbeing legitimately applied by one of theparties.

Annex 13-C is a statement of principle as tohowthepartiesintendtoconductdialogueonfinancialservicesregulation.

NB: General Annexes I, II and III containfurther reservations, exceptions and

circumscribedbyreservationsandexceptionsintheAnnexes.

TheEUmaytrytoarguethatthereisalreadya single coherent EU-wide financial servicesmarket and therefore the UK should cederegulatorypowertotheEUorestablishajointregulator which amounts to much the samething. The UKwill rightly seek to resist this(althoughsomebusinesselementsmayclaimtofindeitheroptionattractive).

This section of SuperCanada draws heavilyfromtheexcellentreportbytheInternationalRegulatory Strategy Group (IRSG) chaired byformer Minister Mark Hogan and producedwith the support of the City of LondonCorporation,CityUKandHoganLovells.

Exactly how far the SuperCanada UK/EUAgreement will extend is a matter ofchallengingnegotiation,butbyadoptingCETAasatemplatemuchtimeissavedtodevotetosuch negotiations. It is possible though todrawupa“wishlist”:

1. The definition of “financial services”should be taken from existing EU law.Trade treaties usually follow a WTOdefinitionwhich is somewhatwider in itsscope, but they then tend to qualify andconfine its application throughreservations and exceptions. It makesmore sense to start from an agreed EU-wide definition. (IRSG flag this as a keyissue to consider but do not advance aspecificrecommendation.)

2. The UK/EU already share the samefinancial services regime. There is astrong case for ‘grandfathering’ – i.e.rights to exempt, so that any firm orproductwhichwasrecognisedorlicensedpre-Brexit to remain recognised orlicensed afterwards, unless an operatordoessomethingwhichwouldhavecausedrecognition or approval to be forfeited –at least for a substantial transitionalperiod. This would be confined to theposition as at Brexit. Firms couldvoluntarily waive grandfather status, e.g.iftheywishedtointroduceanewproductor service and they qualified under the

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CETAPROVISION SUPERCANADAPROVISIONclarifications. In particular, there is a keydistinction between financial servicesoperated at the time that CETA comes intoforce and any new products or servicesdevelopedafterwards.

local post-Brexit rules. (IRSG alsorecommendaformofgrandfathering,butnotasexplicitly.)

3. AtpresenttheEUoperatesapassportingsystem:anyfirmlicensedinonememberstate can (a) establish a branch in anyothermemberstate;and (b) sell servicesinto another member state withouthavingtoestablishabranchthere.Tradetreaties follow a different format, basedonthestructureof theWTOGATStreatywhere countriesmake commitments andreservationsagainstmarketaccessunderfourheadings:

• Mode 1: cross-border trade – supplyfromcountryXintocountryY

• Mode 2: consumption abroad –supply in country X to a customerfromcountryY

• Mode 3: commercial presence – afirm from country X permitted toestablishabranchincountryY

• Mode4: presenceof natural persons–a frim fromcountryXpermitted tosendstaffintocountryY

4. Mode 1 and Mode 2 access (selling andbuyingacrossborders)shouldbehandledby mutual recognition of authorisationsbybothsides. Starting fromthepremisethat UK/EU regimes already haveregulatoryalignment, then for so longasthe two regimes do not substantiallydiverge, a financial service providerauthorisedfromonesidemaysellservicesinto the other, and customers can buyservicesfromprovidersintheother.(Thisis how IRSG would achievegrandfathering.)

5. The EU currently has a system forrecognising authorisations by thirdcountries demonstrating regulatoryequivalence between their authorisationand EU law. IRSG reject this as toolegalistic and burdensome. Instead theyadvocate followingtherecommendationsof the International Organisation ofSecurities Commissions (IOSCO) to focuson regulatory alignment using five

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CETAPROVISION SUPERCANADAPROVISION“outcometests”:

• Domesticinvestorprotection;• Maintenanceofmarketintegrity;• Reduction of scope for regulatory

arbitrage(i.e.jurisdictionshopping);• Reductionofsystemicrisk,crimeand

misconduct;• Protection against money laundering

andfinancialcrime.

Comparing the outcomes in practicerather than the precise legal process forauthorisation will provide greaterflexibility and certainty. IOSCO alreadyprovides a template for how this wouldwork.

6. In some situations regulatory divergenceisquiteacceptable,e.g. iftheUKandtheEUdecide to implement the sameglobalstandard in different ways; if the EUfurtherdevelopsitsBankingUnion.Thereare some areas where the EU does notpresently regulate, and in others EUregulation sets only minimum standardswhichmember statesmay exceed. IRSGrecommend that the UK/EU Agreementshould explicitly state the areas whereregulatoryalignmentisnotrequired.

7. IRSG recommend that market access forcertain financial services should beenabled to continue without anyrequirementforregulatoryalignment:

• Mode1/Mode2provisionofbanking,investment serviceswithin theMiFIDdirective , fund and assetmanagement, insurance andreinsurance;

• By a firm regulated in country X, i.e.one already supervised by its homeauthority;

• To a qualifying counterparty incountryY:afirmregulatedincountryY, or a large corporation (to bedefined), or a government/publicbody, i.e. a sophisticate customerwho can be assumed to be able tolookaftertheirowninterests.

Firms eligible for such market accesswouldbeexemptfromcountryYruleson

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CETAPROVISION SUPERCANADAPROVISIONlicensing, capital/prudential conduct andinternal management, but not from thelocalrulesonmarketintegrityandmarketstructure.Noexistingtradetreatyallowssuchmarketaccess(althoughCETAcomesclose) but that reflects the uniquecircumstancesofBrexit.

8. IRSG do not appear to specificallymention the point, but – in contrast toCETA – the UK/EU Agreement shouldcontain no “performance requirements”attachedtomarketaccessatall.

9. Mode 3 access (freedom ofestablishment) could create a problem –IRSG flag that regulatorsmaybewaryofgranting market access to third countryfirms authorised by the other partywithout undergoing a prior licensingapplication. IRSG recommend a mixtureofsolutions,tobewrittenintotheUK/EUAgreement on a case by case basis, andwhichcouldbeused tohandle situationswherethereisnoregulatoryalignment:

• “consent to jurisdiction”: a firm isgrantedmarket access by voluntarilyaccepting host country regulation(whichishowmanynon-USfirmsgainaccesstosomeUSfinancialmarkets);

• “standstill arrangements”: both UKand EU agree to continue theirexisting exemptions/approvals andnot alter their regulatory frameworkin ways which reduce third countryaccess (i.e. continue the status quoante, which currently is accepted byallsides);

• Specific rights of access for dealingwith qualifying UK or EU centralcounterparties without the need forlicensingordemonstrating regulatoryalignment.

10. Investment exchanges and marketinfrastructure operators have a slightlydifferent passporting system across theEU. IRSG recommend that the UK/EUAgreement immediately grants freshlicensestoanyauthorisedbusiness(i.e.ineffectgrandfathering).Howevertheyflagup that the EU is currently considering a

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CETAPROVISION SUPERCANADAPROVISIONproposal that any third country centralcounterparty which is “systemicallysignificant” be required to establish alicensedbranch in amember state. Thiswill clearly affect UK entities post-Brexitand it appears to be aimed at eurodealings. IRSG suggest that this issuecould be handled through the range ofmeasuresmentionedinpoint9(voluntaryconsent/grandfathering/case-by-case)buttheUKmayhavetoconcedeothematter.

11. TheUK/EUAgreement shouldgobeyondtheIRSGrecommendations.Thereshouldbe a prohibition on either partyattempting extra-territorial regulation oftransactions denominated in itscurrency/currencies, e.g. the EU shouldnot be able to try to confine all eurodealingswithintheEurozone.

12. The conduct of business is slightlycomplicated by the fact that at presentthere isnouniformEU-wideapproachasto whether firms are obliged to followtheir home country rules or thoseof thehost country where the service isprovided. IRSG make the sensiblerecommendation that the UK/EUAgreement simply provide that in eacharea of business the current positionunderEUlawwillapplypost-Brexit.

13. Mode4access(freedomofmovement)isalreadycoveredbyEUlawandlikelytobea contentious negotiating point (seecommentsonChapter10above,page6).One party’s immigration law couldeffectively impose a requirement to hirelocal staff if foreign staff are not eligiblefor entry, so there would have to befurther consideration of how the twoareas dovetail. The strategic significanceof financial services and their globalisednaturemeansthattheUK/EUAgreementwillhavetorefertoimmigrationrightsforpersonnelsomewhere.

14. All trade treaties covering financialservicescontaina“prudentialcarveout”,i.e.areservationtooverrideaccessunderthe treaty for prudential reasons. Thiscreates scope for discriminatory

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CETAPROVISION SUPERCANADAPROVISIONrestrictions on access. CETA hasprovisions governing this, but they arequite basic. IRSG recommend that theprovisions be tightly circumscribed, andthat different prudential carve outsshould apply to different financialservices.

15. IRSG recommend that whether possible,adherence to relevant codes issued byinternational standard-setting bodies forfinancial services should be written intotheUK/EUAgreement.

16. There should be an explicit commitmentto use reasonable efforts to alignregulatory treatment, perhaps in theframework of global regulation. IRSGrecommend that the UK/EU Agreementshould pro-actively encourage regulatoryalignmenttocontinuepost-Brexitby:

• Clear and comprehensivearrangementsforsharinginformationand for co-operation betweenregulators

• Eachsideformallyinvolvingtheotherin the development of new laws andregulations,withaduty tonotify theotherpartyofproposedchangesanda right for them to makerepresentations (i.e. like the EEAstructure,butmorerobust)

• Memorandum of Understandingbetween the parties as to theirmutually agreed approaches towardsregulatoryenforcement.

17. IRSG recommend that the UK/EUAgreement should regulate how theparties are entitled to respond to anyregulatorydivergenceonceitoccurs.TheEU/Turkey Customs Union agreementprovidesatemplateforthis:

• “protective measures”: protectcountryXfromtheeffectsofcountryY’sdivergence

• “safeguard measures”: to counteractany serious economic or marketdisturbance caused in country X bycountryY’sdivergence

• “rebalancingmeasures”:responsesby

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CETAPROVISION SUPERCANADAPROVISIONcountry Y to any protective orsafeguarding measures taken bycountryX

Theprocessesandconstraintsoneachofthese shouldbe setout in advance,withrightsofconsultationbetweenthepartiesat every stage. This should be linked tothedisputeresolutionterms.

18. Supervision creates a practical problem,because although there is an EU-widefinancial services law, it is largely left toeachmember state to supervise its ownfirms. There is no EU-wide practice andhence it is difficult to assess whetherthere is de facto post-Brexit divergence.IRSG consider that simply carrying overpre-BrexitEUlaw(point12above)shouldresolvemost of these issues by ensuringthe status quo ante. However IRSGrecommend that the principles currentlyfollowedbytheUKPrudentialRegulationAuthority for risk-based recognition ofthird country firms offers a usefultemplatetobefollowed:

• Does the home country supervisorfollow sufficiently equivalentconditionsforgrantingauthorisation?

• Does the home country supervisoroverseetheUKbranch?

• Does the home country haveadequate insolvency resolutionprocesses?

• Are the UK branch’s activitieseconomicallysignificant?

19. As with CETA there should be acommittee to oversee the operation ofthe UK/EU Agreement. IRSG call this aForum and suggest it should have theexplicitroleofencouragingcontinuingco-operationandactingasafirstportofcallfor assessing divergence, resolvingdisputes aboutmutual compatibility, andruling on the validity of counter-measures. The processes should be setout in greater detail than in CETA andthereshouldbespecialistsub-committeesfor each area of financial services.Industryshouldberepresented.

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CETAPROVISION SUPERCANADAPROVISION20. Should investorprotectionbe included in

theBrexitdeal,whichmayseemunlikely,the IRSG are recommending that thedispute settlementprocedures shouldbestrongerthaninCETA.IRSGrecommend:

• Disputes should be adjudicated by aformal standing judicial court, not adiplomatic political body (and notone-offarbitratorsasperCETA)

• Recoursetothecourtshouldbealastresort after prior rights ofconsultationhavebeenextinguished

• The court should be empowered tomake findings or assessments onalleged breaches of the UK/EUAgreement, continued regulatorycompatibility and the validity of anyuseoftheprudentialcarveout

• The court should be able to makebinding determinations on theparties, but without infringing UKsovereign rights or ousting theauthorityoftheECJoverEUlaw

• The consequences of an adversefindingshouldbestrictlysetout(andwithmoredetailthaninCETA)

• The consequences of one partyrefusing to accept the rulings of thecourtshouldbesetout

• The dispute settlement provisionsshould also regulate the right of thepartiestowithdrawmarketaccess.

IRSG believe that their recommendedapproach towards regulatory divergence isapplicable to other areas of the UK/EUAgreement.

14. International Maritime TransportServices

14.InternationalTransportServices

ThisChapter confirms that the commitmentsinChapter8,Investment,(above,page5)andChapter 9, Cross-Border Services, (above,page 6) apply to maritime services,particularlytheobligationstoensureNationalTreatment and Most Favoured Nationtreatmentinregardtoaccessanduseofportfacilities. Partiesareprohibited fromplacingobstacles to the competitive access of

Air services are excluded from CETA andcovered by their own agreement. SinceCanada and the EU are separated by wideoceans, shipping is the only transportconnectionlefttobeconsidered,anditisonlydealtwithfortheavoidanceofdoubt.

In contrast, the UK and the EU share a landborder(Ireland),araillinkundertheChannelandtheclosenessofthecontinentmeansthat

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CETAPROVISION SUPERCANADAPROVISIONmaritimetransportsuppliers.

NB: General Annexes I and II contain furtherreservations,exceptionsandclarifications. Inparticular, they list specific governmentmeasuresexcludedfromChapter14.

there isaconsiderablevolumeofroadtrafficcarried by ferry and Shuttle. A UK/EUAgreement would therefore most likelycontain farmoreprovisions thanCETAtosetouttheprinciplesonwhichtheselinkswouldbe maintained (and not just be confined tothe narrower question of access to portfacilities).

It is unclear whether a UK/EU Agreementwouldalsoembraceairservices,asthesemaywell be handled through other internationalmechanisms based on pre-existing non-EUagreements.

15.Telecommunications

15.Telecommunications

This Chapter commits the parties to provideeach other’s firms with non-discriminatoryaccess to public telecommunicationsnetworks and services in their territory andacrossinternationalborders.Itreservestheirright to take action to protect security andconfidentiality of telecommunicationsservices and the privacy oftelecommunicationsusers.

The UK/EU already share a common regimefor telecommunications access. Those rulescould simply be recited in the UK/EUAgreement, supplemented by generalprinciples for the future of the nature as inCETA (perhaps strengthened, e.g. acommitment to maintain harmonised andliberalisedarrangements?).

Thiswouldbeameansof,e.g.grandfatheringthe abolition of roaming charges for mobilephones – a benefit attributed to the EU butoriginating in the internationalmobilephoneorganisation the UN’s ITU and itsTelecommunication Standardisation Sector(ITU-T).

There would have to be a provision for thenotification and consultation of newregulatory changes which diverged from thepre-Brexitarrangements. TheUKmightevenwish to concede a prohibition on reversingthe pre-Brexit access rights for the EU, inreturn for a quid pro quo concession by theotherside.

16.ElectronicCommerce

16. Electronic Communications and DataProtection

ThisChaptercommitsthepartiestopromotee-commerce by not levying a customs duty,feeor chargeonanydelivery transmittedbyelectronic means, and to maintain an on-going dialogue on issues such as fraud,verificationetc.

This is an area in which CETA is whollyinadequate to the Brexit scenario. Indeed aseparate Data agreement may be mostpreferable.

The CETA provisions are very worthy but donot greatly amount to much in comparison.

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CETAPROVISION SUPERCANADAPROVISIONThe UK starts Brexit already operating thesame data protection and e-commercearrangementsastheEU.

The UK/EU Agreement would therefore beable to include far more detailed andconstructive provisions than CETA governingmutual acceptance of data protection,marketing etc. As with Chapter 4, TBTs,(above,page3)andotherareas thesewouldbe framed on the presumption that eachparty’sstandardswerecompatiblewiththoseof the other, and the Agreement wouldinstead assess the extent of unacceptabledivergence.

17.CompetitionPolicy

17.CompetitionPolicy

ThisChapter reserves the rightofeachpartyto enforce its domestic competitionlegislation in the ways it sees fit, whilstcommitting them to operate transparent,non-discriminatory and fair enforcementregimestocounteranti-competitivepractices.

TheChapterreaffirmsaprior1999Agreementbetween the parties and expressly excludescompetitionmattersfromthegeneraldisputeresolutionprocedureunderCETA.

The UK and EU already start with the samecompetition policy regime, and there is agreater cross-border integration of businessgroups than is thecasebetweenCanadaandtheEU.

Thisisanareainwhichpost-Brexitdivergencecould rapidly emerge, especially if there is achangeofUKgoverningparty.Thereisalsoadistinct threat of post-Brexit retaliation,withcompetition policy being used as amechanismfor“punishing”theotherpartybylevying fines upon its businesses. Forexample, could either side argue that thereexist single markets embracing 28 nationalterritories which continue notwithstandingBrexit?

An ideal UK/EU Agreement would thereforeincludefarmoredetailedandfarmorerobustprovisions than CETA, in particular (a) abinding dispute resolution procedure; (b)safeguardsagainstpost-Brexitretaliation;and(c) strictdefinitionsof the“market” inwhichanti-competitive practices are assessed. Inthecaseof(b)and(c)thesemightonlyapplyfor a transitional post-Brexit adjustmentperiod.

Whetherornotitisactuallypossibletoagreesuch provisions may well depend on theextent of progress reached in regard tospecific business sectors elsewhere in theUK/EUAgreement.

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CETAPROVISION SUPERCANADAPROVISION

18. State Enterprises, Monopolies andEnterprises Granted Special Rights orPrivileges

18. State Enterprises, Monopolies andEnterprises Granted Special Rights orPrivileges

This Chapter reaffirms the obligations of thepartiesundertheWTOregime.Theycommitthemselves to ensure that nationalisedentities will operate according to strictcommercial considerations where not beingused to procure goods and services forgovernmentpurposes.

Theseprovisionscouldbemoreorlesscopiedover. The WTO regime (The GeneralAgreementof Tariffs andTrade,GATT, 1994;andGATS)alreadyoverridesthisarea.

19.GovernmentProcurement

19.GovernmentProcurement

This Chapter reaffirms the obligations of thepartiesasWTOmemberstoprovideaccesstoeach other’s government procurementactivitiesonanon-discriminatory,transparentandimpartialbasis.

A centralised process for tendering isestablishedandthresholdsagreedforoutsideaccess to specific activities for specific publicbodies. There are exclusions for defence;nationalsecurity;protectionofpublicmorals,orderor safety;protectionofhuman,animalor plant life or health; protection ofintellectualproperty;andgoodsorservicesofpersons with disabilities, of philanthropicinstitutionsorofprisonlabour.

Thereare twosubstantialAnnexes (19-Aand19-B) applying to Canada and the EUrespectively, each containing 8 sub-annexesspecifyingthepublicentities,procuredgoodsand services and publication media coveredbytheprovisions.

The UK/EU already share a common regimeforgovernmentprocurementbasedagainonaWTOAgreement:thisbeingtheAgreementon Government Procurement (GPA). Thoserules could simply be recited in theSuperCanadaAgreement.

To the extent that theUKwanted to amendor revise those rules, it would presumablyhavetoconcedeequalandoppositetermsfortheEU.

Itemsofparticularpoliticalsensitivity–which,in the case of the UK, will almost certainlyinclude the NHS and resistance to privateoperation by EU companies – could bespecified here, but it is likely to be moreconvenienttohandlethemaspartofChapter28,Exceptions(below,page22).

20.IntellectualProperty

20.IntellectualProperty

This Chapter aims to achieve regulatoryconsistency for IP between Canada and theEU.

Thepartiesagreetousereasonableeffortstocomply with their existing internationalobligations in regard to copyright,trademarks, designs, patents and plantvarieties and establish mechanisms for theirregistration, enforcement and fee collection.There are also safeguards for the protectionof confidential information submitted to the

At the very least these provisions can becopiedover,althoughitshouldnotbedifficulttoextendthemifrequiredtoreflectthepre-Brexit relationship between the UK and theEU.

The two Annexes could be compiled verysimply by carrying over anything alreadyrecognised by the EU as a ‘GeographicalIndication’(GIs).TheUK/EUAgreementcouldinclude a presumption that any newrecognitions by either party would be

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CETAPROVISION SUPERCANADAPROVISIONauthorities as part of the approval for e.g.pharmaceuticals.

Three Annexes (20-A to 20-C) list the“geographical indications” (e.g. Parma ham)to be protected, and a process for revisingthis list. (At present there are no protectedCanadianproducts.)

accepted by the other, unless specificallychallenged.

GIs are a particular concern for EUMemberStates inanyBrexitdeal,and it isnoted thatthe Canadians initially resisted GIs but cameround to accepting the concept. This maybewhere theUKcangenerategoodwill throughaccepting as well as securing continuedprotection for UK sectors protected such asStiltoncheese.

The European Patent Organisation is not anEU agency. It is governed by a separateconvention to which some (but not all) EUmembers are signatories, as well as somenon-memberstates.

21.RegulatoryCooperation

21.RegulatoryCooperation

This Chapter provides some principles andobjectives for regulatory cooperationbetweentheparties.

TheexistingRegulatoryCooperationCouncilisreconstituted as a Regulatory CooperationForum for discussion and consultation ofregulatoryinitiativesbyeitherparty.

Thereisanobviousneedforaforumthroughwhich the UK and EU can discuss regulatoryissues,andtheCETAprinciples/objectivesareunobjectionable. However, what form thatforumshould take, and thepowers it shouldpossess, will depend on what is meant by“accesstotheSingleMarket”.

If it is a condition of access that the UK isbound by all future domestic regulation ofsingle market competences, then the CETAframework is clearly inadequate because theUK will require much stronger rights ofengagementandprotectionagainstunilateralchangesbytheEU(andarguablyviceversa).

In a UK/EU Agreement, therefore, thisChaptermayhave tobecompletely replacedandrenegotiated.

InCETAthematterofregulatorycooperationisasubsidiaryissue,andsotheprovisionsareplacedtowardstheendofthedocument.Ifina UK/EU Agreement it is expanded toembrace the wider issue of regulatorycoordination, then it arguably deserves amoreprominentposition inthefinal text. Inparticular the Agreement should be explicitthat the assessment of continued regulatorycompatibility (see the comments above,pages 8-15) would involve specialist sub-committees drawn from businesses in each

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CETAPROVISION SUPERCANADAPROVISIONsector, and have a facility to add new sub-committeesfromtimetotimeasappropriate.

22.TradeandSustainableDevelopment

22.TradeandSustainableDevelopment

ThisChaptercontainsmutualcommitmentstoensuretradeandinvestmentarenotpursuedat the expense of sustainable developmentandsocialobjectives.

The Parties reaffirm their existinginternational commitments and commit tocooperate on promoting sustainabledevelopment. A Committee for Trade &Sustainable Development is established forconsultation, co-operation and disputeresolution, with obligations to publicise thefindings. ACivil SocietyForum isestablishedtoassistitsoperation.

Theseprovisionsareseentobereasonableinprinciple but the provision of ‘sanctions’ toenforcetheprovisionontheenvironmentandsustainable development are controversialand a potential attack on UK sovereigntywhere tariffs could be reapplied or otherpunishments leviedshouldtheEUdecidetheUK contravenes its responsibilities – in theopinionof theEU.Thiswouldrequirecarefuland robust negotiation to find an acceptabletext.

23.TradeandLabour

23.TradeandLabour

ThisChaptercontainsmutualcommitmentstoensuretradeandinvestmentarenotpursuedattheexpenseofemploymentrights.

Each party reserves the right to pursue itsown employment practices, but commit tohigh standards, reaffirm existing ILOstandards.

The Parties commit to cooperate onemployment-related issues and shareinformation. A mechanism is set out forconsultation, co-operation and disputeresolution, with obligations to publicise thefindings.

The Committee on Trade & SustainableDevelopmentoverseesthisarea.

These provisions can bemore or less copiedover. The UK/EU are already bound by thesame international agreements in Trade andLabour – such as from the InternationalLabour Organisation (ILO) - as Canada, andbetweenthemselvessharehighlysimilarpre-Brexitemploymentlegislation.

Thewiderquestionof the freemovementofpeople between UK/EU would have beenaddressed elsewhere – see comments underChapter10(above,page6).

24.TradeandEnvironment

24.TradeandEnvironment

ThisChaptercontainsmutualcommitmentstoensure trade and environmental protectionaremutually reinforcing, and that one is notpursuedattheexpenseoftheother.

Each party reserves the right to pursue itsown environmental protection practice, butcommits to high standards, reaffirm existinginternational treaties and the ability to usedomestic law to enforce environmental

As they stand, and subject to one caveat,these provisions can bemore or less copiedover. The UK/EU are already bound by thesame international agreements in Trade andEnvironmentasCanada.

Inpractice,ensuringsustainablefisheries(andaccess to them) is likely to be a moresignificant issue,andsustainableforestry lessso, for a UK/EU Agreement than with CETA.However, the contentious issues would be

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CETAPROVISION SUPERCANADAPROVISIONprotection.

The Parties commit to cooperate on trade-related environmental issues, such asfacilitating and promoting trade andinvestment in environmental goods andservices, climate change, and biodiversity.They agree to encourage trade in productsfrom sustainably managed forests and topromote the sustainable and responsiblemanagementoffisheriesandaquaculture.

Amechanism is set out for consultation, co-operation and dispute resolution, withobligationstopublicisethefindings.

The Committee on Trade & SustainableDevelopmentoverseesthisarea.

addressed through a specific FisheriesProtocol(seeabove,commentsonChapter2,page2)sothebasiccommitmentsofprinciplewouldbeunaffected.

ThemajorstickingpointislikelytobetheEUEmissionsTradingScheme(ETS).

Canada has only recently launched its owndomestic ETS (although something has beenrunning inQuebecforsomeyears)andthereis no reason why CETA would include anymention of it. The UK is in a completelydifferent situation, as an existingmember oftheEUETS. Furthermore,whilstglobally thecross-border trade in electricity iscomparatively minor, one region where it ismoredevelopedisbetweentheEU-28.

TheEUcouldwellseektodemandthattheUKcontinue itsparticipationorat thevery leastimpose an equivalent domestic scheme, toavoid a perceived competitive advantage forUK exporters. That has significantimplications for theultimate control of post-Brexit UK energy policy and on sovereigntyandisunlikelytobeacceptable.

Whatevertheresolutionarrivedat,theUK/EUAgreementwillmost likelyrequireabespokeProtocol to cover the topic, and which goesbeyondthescopeofthecontentsofCETA.

25.BilateralCooperationandDialogues

25.BilateralCooperationandDialogues

This Chapter extends and codify existingcontacts between Canada and the EU inregardtotheareasof:

• Biotechnology• Science, Technology, Research and

Innovation• Forestry• RawMaterials

The CETA provisions are specific to theCanada/EU relationship and existingpartnerships.

There will be an equivalent section in theUK/EU Agreement, depending on whichcurrent EU programmes or EU agencies theUKwishes to continue its participation, suchas, for example, the Horizon 2020 ResearchProgramme and the Erasmus studentProgramme,whichwewould seek to remainin, andagencies suchas theEuropeanSpaceAgency.

In practice the UK/EU Agreement is likely tobemuchmore extensive than CETA andwillprobablycoverthisinfarmoredetail,suchasthevexedissueoffinancing

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CETAPROVISION SUPERCANADAPROVISION

26. Administrative and InstitutionalProvisions

26. Administrative and InstitutionalProvisions

ThisChaptersetsouttheworkingproceduresforthevariousCommittees.

These provisions can be copied over, withappropriateadjustmentsandamendments.

27.Transparency

27.Transparency

This Chapter sets out the requirements fornotification and disclosure between theparties.

Theseprovisionscanbecopiedover.

28.Exceptions

28.Exceptions

CETA does not override the ability of thepartiestolegislateorpursuepolicies:

• Covered by General and SecurityExceptions in the WTO agreements(to protect public morals; protecthuman, animal or plant life/health;law enforcement; conserve naturalresources;nationalsecurityetc.);

• Pursue existing or future tax policies(although investors may challengenewtaxesascontrarytoCETA);

• Promote national culture throughsubsidies and restrictions on cross-borderservices;investmentinculturalindustries; government procurementof cultural products; and licensingrequirementsinculturalindustries.

The UK/EU Agreement will have to includenear-identical provisions, certainly in regardto theWTOGeneral and Security Exceptionsandtaxation.

In practice the EUwill almost certainly insiston near-identical exceptions for thepromotionofcultural industries,especially inthe audio-visual field (i.e. French languagefilms).

UK domestic political pressure may force anextensiontoCETAsothattheNHSiscoveredbysimilarexceptionsasEUculturalindustries,particularly as the rest of the EU does nothave equivalent healthcare systems to theNHSbutusesfarmoreprivateprovision.

Carbontaxesorequivalentmeasurescouldbea potential issue, but it is likely thesewouldbe settled under Chapter 24, Trade &Environment(above,page21).

29.DisputeSettlement

29.DisputeSettlement

This Chapter sets out a mechanism forresolving disputes under CETA, as analternative to taking thematter through theWTO. The same dispute cannot be settledthroughbothmechanismsatthesametime.

Three Annexes (29-A to 29-C) set out theprinciples andprocedures for arbitrators andmediators.

These provisions together with the Annexesaresubjectagain towhether investmentanddisputesettlementarecontainedatallinthisAgreement, but if so this is a good basisthoughtheexactmodelofsettlementcannotbe the ECJ and may not use the CanadianInternationalCourtSettlementmodel.

30.FinalProvisions

30.FinalProvisions

This Chapter governs the mechanisms forbringingCETAintoforce,foramendingitand

The main provisions can be copied over –although some might argue for a longer

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CETAPROVISION SUPERCANADAPROVISIONfor terminating it (sixmonths’writtennoticeby either side). There are also information-sharingprovisions.

It also provides that CETA applies to anysubsequent newmember of the EU from itsdate of accession, and entitles Canada torequestinformationorpresentconcernswithregard to the accession as it relates to anymattercoveredunderCETA.

Four Annexes (30-A to 30-D) containmiscellaneous material in regard to otherCanada/EU agreements; alcoholic beverages;and non-EU participants in the EU CustomsArea.

notice period. There is a strong case for amuch longer notice period for financialservices,andperhapsaprovisionfordifferentparts of the UK/EU Agreement to fall awayafter different transition period, such as ayearminimum.

TheAnnexeswouldberevisedorreplacedasapplicable.

GeneralAnnexI

GeneralAnnexI

Reservations by both Canada and the EUagainst their commitments to liberalise theirtreatment of existing services andinvestments.

A UK/EU Agreement would include anequivalentprovision.

GeneralAnnexII

GeneralAnnexII

Reservations by both Canada and the EUagainsttheircommitmentsinregardtofuturemeasures governing services andinvestments.

A UK/EU Agreement would include anequivalentprovision.

GeneralAnnexIII

GeneralAnnexIII

Explanatory notes supplementing Canada’sofferinregardtofinancialservices.

A UK/EU Agreement might well includesomethingof thisnatureonbehalfofoneorotheroftheparties,onthisorothertopics.

AdditionalProtocols

As noted previously, a SuperCanadaagreement would most probably containadditionalprotocolscovering:

• TheUK/IrishBorder• Immigration/Movement of Natural

Persons• Fisheries• EmissionsTradingSchemes

Note:OtherChapters, suchasonE-Commerce,maybeadded toSuperCanadaas required ifnewareasareaddedorredefined.