Lawyer Paolo Quattrocchi,
Director of the Centro Studi Italia-Canada and ADVANT Nctm partner
Italy and Europe have profound historical ties with Canada that trace back to the colonial period. Originally established as a French colony in the early 17th century, the geographical area now encompassing modern-day Canada was later ceded to the British Empire by the French following the conclusion of the Seven Years' War in 1763. During the 19th and early 20th centuries, Canada witnessed successive waves of European immigration. The Canadian government actively promoted immigration through various initiatives, such as the Dominion Lands Act of 1872 and the Canadian Pacific Railway's recruitment campaigns. This period saw significant immigration from Central and Eastern Europe, including Ukraine, Poland, Italy, and the Baltic states. Moreover, in the same period, there was a huge immigration from China, and, later on, after World War II, Canada gradually saw a more diverse influx of immigrants from Asia, including countries such as India, the Philippines, Korea, and Pakistan.
In the transition from being a British colony to achieving the status of an independent nation (albeit tied to the United Kingdom through the Commonwealth), Canada and European countries have always shared essential values of freedom and democracy.
Regarding its relationship with Italy, Canada boasts a sizable and influential Italian community, comprising over 1,500,000 compatriots. The trend of Italian immigration to Canada has experienced notable transformations, commencing with a considerable surge at the onset of the twentieth century, subsequently declining amidst the years marked by the fascist regime, and experiencing a noteworthy upturn in the aftermath of the Second World War. Over the past 25 years, Italian immigration to Canada has witnessed the inclusion of scientists, scholars, professionals, entrepreneurs, and technicians affiliated with investing companies. These various professional qualifications, coupled with the achievements of numerous Italians who navigated truly arduous and challenging times, have collectively contributed to fostering a positive reputation for our country.
The economic, social, and cultural ties between Italy and Canada contribute significantly to their political relations, which are reflected in numerous joint initiatives, agreements, and collaborations, including:
- Participation in the G7/G20;
- Collaborative engagement in multiple international military missions abroad, including substantial contributions to missions in Afghanistan, Iraq, Ukraine (among others);
- Even before the EU-Canada Strategic Partnership Agreement (SPA) and the EU-Canada Comprehensive Economic and Trade Agreement (CETA), Canada and Italy were legally bound by a significant strategic agreement (Agreement on Mutual Recognition Between Canada and the European Community – 1976) as well as equally crucial economic and commercial agreements;
- Italy represents Canada's interests in Iran since 2012;
- Italy holds observer status in the Arctic Council since 2013, a position that received substantial support from Canada;
- Besides being a member of the European Space Agency, Canada signed a memorandum of understanding with Italy regarding cooperation in the exploration and use of space for peaceful purposes in 2021;
- Canada and the EU have a strategic partnership on raw materials (Canada’s critical mineral and battery value chains);
- In alignment with CETA, Italy and Canada finalized an Agreement on Youth Mobility and Business Immigration in 2022;
- In addition to various other connections, including close collaborations in scientific research sectors, there are numerous relationships between Italian and Canadian universities across various fields.
The aforementioned agreements, understandings, and collaborations, some of which arose in direct response to and after the implementation of CETA, have led to the emergence of new objectives pursued by the EU and Canada. These objectives have arisen following the recent EU-Canada Summit held in St. John's. They reaffirmed the fundamental principles governing cooperation between Canada and the European Union and identified new areas of collaboration, including the establishment of a Green Alliance and the initiation of a digital partnership. Additionally, they aimed to finalize negotiations for Canada's involvement in the Horizon Europe programs.
THE STRATEGIC PARTNERSHIP AGREEMENT
In 2016, the European Union (EU) and Canada entered into two pivotal agreements: the Strategic Partnership Agreement (SPA), aimed at strategic matters, and the Comprehensive Economic and Trade Agreement (CETA), focused on economic and commercial aspects. Consequently, the CETA constitutes the economic segment of a broader and strategically vital agreement, specifically the Strategic Partnership Agreement. The SPA (tracing back to the 1976 agreement) aims to bolster and broaden bilateral cooperation encompassing a wide spectrum of sectors involving the EU, Italy, and Canada. These areas include international peace and security, counterterrorism, cybersecurity, crisis management, maritime security, labour protection, scientific research, environmental preservation, energy, sustainable development, human rights, and Arctic governance, among others. Hence, the SPA and CETA agreements stand as the most effective instruments for cultivating a stronger bond between two political entities that share fundamental principles integral to their respective societies.
The present historical moment affirms the wisdom inherent in the collaborative initiative previously embraced by both Canada and the EU. Following the conflict in Ukraine and increased tensions in the Middle East, the necessity for stable and enduring relationships with nations that share longstanding values and objectives becomes an absolute imperative. Notably, during the recent summit held in St. John's, and in particular, within the framework of the EU-Canada Green Alliance, the SPA and CETA were explicitly recognized as key foundational instruments crucial for strengthening and advancing the relationships between the EU and Canada.
The origins of the CETA agreement can be attributed to a Canadian initiative, specifically emerging from an idea proposed by the former Premier of Quebec, Mr. Charet. Initially met with a lukewarm reception in Canada, the proposal gained support from other provinces. Subsequently, negotiations were initiated and concluded following an intensive period of approximately seven years. A multitude of stakeholders, each representing varied interests, participated in negotiations utilizing different methodologies and timelines, all possessing a vested interest in the subject matters governed by the treaty.
The final version of the CETA agreement, endorsed by Canada and ratified by multiple European countries, represents a comprehensive accord that transcends a simple trade deal centered on customs duties. Besides achieving its primary goal (considering that the average tariffs between Italy and Canada were not notably high), it regulates all sectors involved in economic and commercial activities. In addition to abolishing tariffs, it covers a wide array of sectors such as pharmaceuticals, automotive, intellectual property, investment, procurement, certification alignment, recognition of professional qualifications, and others. Collectively, these aspects position the CETA as an innovative “next-generation” agreement, laying the groundwork for subsequent bilateral agreements concluded by the EU, including those with Japan, New Zealand, and others.
Six years following its implementation, the outcomes derived from CETA indicate positive results for both Canada and the EU, with considerable benefits for Italy. This fact is unquestionable. It's noteworthy that the period following its provisional enactment was clouded, among other issues, by the negative impacts of the pandemic, affecting international trade across all levels for approximately two years. However, despite these challenges, CETA's outcomes demonstrate broad and conspicuous positivity.
Another crucial factor to note is the initial skepticism, if not outright hostility, directed toward the agreement, resulting in a lack of efforts to promote or encourage its adoption by operators. However, despite this absence of promotion, it notably yielded positive and uncontested effects.
An in-depth examination of sector-specific data from the first six years of CETA goes beyond the scope of this article. However, it is important to highlight that all sectors have recorded growth, with diverse figures, some reaching double digits. The overall growth surpasses 60% in six years. Additionally, even those who were staunchly against CETA before and after its enactment have had to acknowledge the favorable results attained.
The discussions surrounding CETA, despite its positive outcomes, continue unabated. Conversations persist around the same matters that had previously sparked significant concerns.
Some preliminary observations are necessary in this context. CETA was provisionally enforced because it was categorized as a mixed agreement, and as such, requiring ratification by the Member States. Why was it categorized as mixed? This classification arose because the agreement included (and continues to do so) provisions related to areas outside the direct jurisdiction of the EU, falling within the scope of individual Member States. These provisions involve regulations on Indirect Investments, the novel mechanism for resolving disputes between states and investors, and the provision allowing companies to participate in reciprocal public procurement bids. Thus, the ongoing discussions surrounding topics – like geographical indications and the dairy sector – involve matters that, without the aforementioned provisions, would have been firmly enforced. Any modifications to these issues could only be made through the intricate treaty revision system.
Trying to censor aspects of the Treaty that are indisputable and have not influenced the so-called mixed nature of the Agreement appears to be a rather covert operation. With that said, the main unresolved issues where a full consensus has not been reached are:
- Geographical Indication
- Dairy Sector
- Canadian wheat imports
- Dispute resolution system
An additional preliminary consideration is essential: a bilateral agreement – particularly one as comprehensive as CETA – stems from intricate negotiations and embodies the accomplishment of a compromise where reciprocal concessions are inherently necessary to pursue broader goals. This principle applies to both the EU and Canada (representing the first bilateral treaty of its new-generation category).
Within the framework of the CETA, forty-one Italian GIs, constituting more than 90% of the value of Italian GI exports to Canada, gained recognition. Canada's acknowledgment and subsequent protection of European GIs mark a notable achievement within the CETA. Moreover, the insights derived from the CETA's implementation have reverberated positively across subsequent EU bilateral agreements structured along the CETA model, exemplified by the agreement with New Zealand, which similarly outlines the recognition of a limited set of European GIs.
Canada employs a system centered on trademark-based protection for indicators of food product recognition, diverging from reliance on GIs. Consequently, before the CETA's enactment, the presence of trademarks already registered on food products in Canada that conflicted with European GIs precluded the importation and sale of the latter under their original GI denomination. Instead, the European GI-labeled product could only potentially enter the market under generic names, resulting in an inaccurate portrayal of the product and its quality. This situation led to substantial adverse effects on its pricing and consequently hindered its profitable distribution.
In the negotiations leading up to the signing of CETA, a remarkable result was accomplished when Canada agreed to adopt the European Geographical Indications (GIs) system. Consequently, Canada acknowledged forty-one Italian GIs, which, as previously mentioned, represent over 90% of the value of Italian GI exports to Canada. This allowed products that had never been exported to Canada before to be marketed, exported, and safeguarded under their authentic names. Notably, the CETA's list of recognized Canadian GIs within the EU doesn't specify any names, underscoring Canada's detachment from the GI system, particularly around the time when the agreement was being concluded.
Nevertheless, despite this unquestionable achievement, a setback surfaced due to the constrained count of GIs featured in CETA in contrast to the multitude of GIs present in Italy and the EU. Beyond the neglected aspect concerning the potential updating of the CETA list to incorporate new GIs – a process inherently characterized by intricate timelines and procedural complexities – the resolution was achieved through the enactment of the new Canadian Intellectual Property law. This legislation has established a framework for recognizing GIs not covered by the CETA, employing an administrative procedure accessible online and incurring minimal costs. This mechanism allows European GIs recognized in their originating countries but excluded from the CETA list to attain recognition and protection in Canada equivalent to those outlined in the CETA. Presently, eleven Italian GIs, absent from the CETA agreement, have utilized this provision (more than any other European country). Thus, the recognition of European Geographical Indications (GIs) within the CETA marks a significant success for EU negotiators, amplified by the opportunities afforded to European GIs by the newly introduced Canadian legislation.
THE DAIRY SECTOR
This sector is notably intricate. Canada, specifically Quebec, boasts a considerable dairy production that exceeds national demand. Before the implementation of CETA, the importation of dairy products faced significant hurdles, characterized by relatively restricted import quotas, taking into account the 1 to 10 population ratio between Canada and Europe. Negotiations surrounding the dairy sector resulted in a complex compromise. On one hand, this agreement notably increased import quotas, while concurrently establishing a sophisticated import structure in Canada on the other. Notably, both sides faced challenges: the heightened dairy import quotas posed difficulties for the Canadian government, prompting interventions to bolster local production by providing indirect support to sector operators.
After the implementation of CETA, the quantity of dairy products allowed for import into Canada tripled, and Italy notably capitalized on this surge. The combined effect of recognizing Geographical Indications and the increased import quotas led to a remarkable surge in Italian cheese exports to Canada. It's crucial to acknowledge that these products, due to their exceptional quality and consequently higher costs, might be sensitive to economic trends. However, after the first six years, the value of Italian dairy exports to Canada has significantly increased. Additionally, having a bilateral agreement doesn't automatically lead to increased sales, and this pertains to all types of products, not just food-related ones. There is a need for proactive measures, such as training and preparing operators, to fully leverage the benefits offered by trade agreements. Following this premise, despite facing resistance and lacking comprehensive training efforts, CETA has produced remarkable and unexpected results.
CANADIAN WHEAT IMPORTS
The import of Canadian wheat raises concerns over Canada's purported utilization of substances banned by the EU in agriculture, specifically highlighting the use of glyphosate, an herbicide, throughout the wheat production process. The use of glyphosate at various stages of wheat cultivation remains a contentious issue that the EU closely monitors. In July 2023, the European Food Safety Authority issued a somewhat positive yet conditional opinion regarding the renewal of authorization for glyphosate's agricultural use for an additional 10 years. However, the requisite approval from the designated committee – the Standing Committee on Plants, Animals, Food, and Feed – is still pending. Notably, at the time of drafting this document, the committee has yet to decide on the renewal – or otherwise – of glyphosate use. This decision is crucial as the authorization is due to expire on December 15, requiring resolution by December 14. This scrutiny underscores the EU's meticulous monitoring of the matter, which is distinct and only tangentially linked to CETA. Although Canadian wheat is subject to glyphosate treatment within the limits and authorization set by the EU, it's crucial to emphasize that CETA does not mandate European countries to purchase Canadian wheat or any other food or non-food products originating from Canada.
As evidence to validate the details provided, it remains factual that between 2017 and 2019, after the enactment of CETA, there was a notable reduction in Italy's importation of Canadian wheat. Italy historically held the status of being the largest buyer of Canadian wheat. This drop in imports could be partially linked to the widespread negative publicity concerning Canadian wheat during that period. In essence, CETA does not wield influence over the procurement of Canadian (or European) products, as these transactions remain subject to market laws. Notably, prevailing European legislation on labeling (EU Regulation 1169/2011 and Regulation 775/2018) mandates the disclosure of product ingredient origins. This legislative aspect, combined with the negative publicity surrounding Canadian wheat, might have contributed to the aforementioned reduction in Canadian wheat imports. Consequently, the apprehensions widely voiced at the time of CETA's implementation, and which persist today, suggesting that CETA would permit the introduction of food products into the EU that do not meet the quality standards set by the EU, appear unfounded.
Throughout the six-year duration of the Agreement, no product failing to adhere to EU regulations has entered simply due to the prohibition outlined by European standards. While this response might seem simplistic for a deliberately intricate matter, I recommend consulting the Joint Interpretative Instrument, a component of the ratification law. Articles 1(d) and (e) within this instrument offer explicit evidence supporting the aforementioned information.
INVESTOR STATE DISPUTE SETTLEMENT
It is pertinent to emphasize that the classification of CETA as a mixed agreement, necessitating ratification by the Member States, was exclusively attributed to the incorporation of provisions related to indirect investments and regulations governing public procurement, accompanied by the introduction of a pioneering Investor-State Dispute Settlement (ISDS) mechanism. This ISDS is structured upon a Court of Arbitration, encompassing its unique composition and procedural protocols.
Regarding indirect investments and participation in public tenders, no criticisms were raised (CETA's procurement discipline is essentially identical to EU procurement regulations). The interpretation of the Joint Interpretative Instrument serves to dispel any doubts about the legitimacy of what is stipulated in CETA. Specifically, reference is made to the provisions in the Preamble (Article 1), mutual legislative rights (Article 2), public services discipline (Article 4), among other aspects including social security and insurance (Article 5), investment protection (Article 6), trade and sustainable development (Article 7), labour protection (Article 8), and environmental protection (Article 9).
If the dispute resolution system (along with the other two subjects) had not been included in CETA, the agreement would have been fully operational by 2017, and none of the aforementioned matters would have been open to debate. That said, this topic should still be considered outdated. In 2019, prompted by the Walloon parliament, the European Court of Justice issued a binding Opinion (1/17) in a plenary session. In this opinion, after an extensive rationale, the Court clearly and definitively defined the jurisdictional limits of the Court of Arbitration. It concluded that the dispute resolution system outlined in Chapter VIII of CETA is compatible with the Union's primary law, clarifying that the said system cannot modify the judicial power of individual States or of the Union itself.
Additionally, the Joint Interpretative Instrument resolves one of the most delicate issues previously raised. Article 6d clarifies that resorting to the CETA Court of Arbitration requires “CETA requires a real economic link with the economies of Canada or the European Union in order for a firm to benefit from the agreement and prevents ‘shell’ or ‘mailbox’ companies established in Canada or the European Union by investors of other countries from bringing claims against Canada or the European Union and its Member States.”
In summary, following the removal of the significant obstacle regarding the jurisdiction of the Arbitration Court, the CETA has effectively passed all the challenges it faced. Despite the negative publicity and notably limited attention it received—leading to a complete absence of promotional, dissemination, and training initiatives for operators—the CETA has generated commendable outcomes. The continuous monitoring conducted by dedicated bilateral commissions ensures the precise and uninterrupted implementation of the agreement.
Significantly, there exists a distinction between implementing and amending the agreement, the latter being a notably more intricate procedure. Paradoxically, the existing status of the CETA constrains any modifications. The absence of unanimous ratification by all Member States prevents modifications. Considering that some states have ratified the agreement while others have not, the entities involved lack the capability, even if they desire, to make amendments to the CETA. This limitation impedes potential adjustments to address topics not initially included in the Agreement, including those concerning AI and Rare Earth Elements, both holding considerable strategic and economic importance. The topic of economic and trade relations between the EU and Canada will remain unsettled, a common characteristic of all bilateral agreements. This continuous engagement involves each party striving to optimize advantages within the context of natural competition, invariably leading to lingering unresolved issues.
When examining the Canadian perspective, it's crucial to assess the complexities inherent in the intricate system governing dairy imports into Canada, the contentious Canadian labeling regulations (Front Of Pack - FOP), and the broader implications stemming from the new rules of origin outlined in the USMCA.
On the European side, emphasizing the recent implementation of the new European Regulation on labeling and, particularly for Italy, the introduction of the "Made in Italy" regulations concerning agri-food products. These regulations include several provisions aimed at bolstering protection measures, encompassing actions related to labeling (NutrInform Battery), source tracing, and the establishment of an official anti-counterfeiting mark, addressing concerns such as the "Italian Sounding" phenomenon.
The future of the relations between the EU and Canada has just begun. The St. John’s Summit confirmed the excellent ties between the EU and Canada, renewing their mutual commitment to intense and increasingly extensive cooperation. The significance of this collaboration in the present global context becomes apparent when considering Canada's position among the energy powerhouses, holding the world's second-largest oil reserve and substantial deposits of uranium, copper, zinc, lead, natural gas, and critical raw materials. Canada is leading the way in exploring and implementing hydrogen technology and is a frontrunner in issues concerning artificial intelligence across diverse applications. These considerations should prompt judicious and forward-thinking decisions, particularly within the Italian Parliament, which holds responsibility for the ratification process.
 These countries include Austria, Croatia, Czech Republic, Denmark, Estonia, Finland, Germany, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Portugal, Romania, Slovakia, Spain, and Sweden; solely ratified by the National Assembly in France
 These include products like Prosciutto di Carpegna, Salame Piacentino, Coppa Piacentina, Pancetta Piacentina, Piave, Stelvio/Stilfser, Finocchiona, Piadina Romagnola, Piada Romagnola, Salame Felino, Vermouth di Torino.
 Joint Interpretative Instrument on the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States (2017), Official Journal L11, 1 June, p. 4.
 This new labeling system, is causing quite a few controversies within Canada, exacerbating the conflicts between authorities and the dairy industry due to the potential negative repercussions that the new labeling system could generate.
Paolo Quattrocchi has been involved in internationalizing businesses with a specific focus on Canada for 20 years. As the Founder and Director of the Centro Studi Italia-Canada, he has been involved with CETA even before its conclusion and signing. He serves as the Vice President of the Italian Chamber of Commerce in Western Canada and President of Confassociazioni Canada. He is the author of the book "Canada: Stories, Visioni e Sfide di un Laboratorio del Futuro" published by Mimesis in 2022.
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