Denmark is the second EU member-state to ratify CETA

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1 June 2017 the Danish Parliament ratified the Free Trade Agreement between EU and Canada, the Comprehensive Economic and Trade Agreement (CETA). The agreement is expected to have major implications for Denmark and Danish companies.

Danish efficient and expeditious ratification process

On 30 October 2016, the EU and Canada concluded the CETA negotiations initiated back in 2009. After years of intensive negotiations, the approval and ratification process was then commenced. As a mixed agreement CETA has to go through two main stages of democratic oversight before it comes fully into force. At the first stage, the European Parliament must give its consent for the CETA to apply provisionally. The second stage involves parliaments in EU member states. Only once they approve the agreement CETA comes fully into force. The Danish government has prioritized a fast an expeditious approach to the Danish ratification of CETA and presented the legislative proposal in the Danish Parliament 28 February 2017. Following a public debate in the Parliament on 3 May 2017, the Parliament approved the ratification on 1 June 2017. Denmark thereby becomes the second EU member state to ratify the CETA just after Latvia.

Implications for Denmark and Danish companies

The CETA is expected to have significant implications for Denmark and Danish companies. It is intended to boost growth and new business opportunities, including for Danish Small and medium-sized enterprises. In fact, the agreement is expected to result in an increase in Danish exports to Canada worth 2.2 billion Danish kroner (DKK) annually. CETA will remove 98 percent of tariffs and thus improve Danish companies’ ability to compete on the Canadian market, an element, which particularly serves the Danish textile industry well. Moreover, the agreement also means that Danish companies will be able to bid on public works. The CETA lay down a whole panoply of rights providing investors with a stable and predictable legal framework. Danish companies and investment funds will thereby enjoy better conditions in terms of investment in Canada. As an innovative feature, the CETA establishes an investment court system, which is to handle investor-state disputes. In Europe, Danish companies will, however, be challenged with an increased competition from Canadian companies, which likewise potentially may initiate claims against the Danish state.

In the attempt to reach a more balanced approach to investors’ rights and obligations, elements of corporate social responsibility are integrated in the free trade agreement. In addition, CETA provides a certain scope of maneuver for states to adopt regulatory measures. Economic development can thus not be detrimental to raising social, environmental or labor standards. CETA thereby seeks to enhance sustainable trade and investments.