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German court rejects challenge to CETA trade deal

Germany's Constitutional Court has given the go-ahead for the German government to approve a proposed trade deal between the EU and Canada, the Comprehensive Economic and Trade Agreement (CETA).14 Oct 2016

The Court heard injunction applications from groups who wanted to stop the agreement during an oral hearing on 12 October, but announced on 13 October (link in German) that it had rejected the requests.

The government should sign the agreement, but only on the condition that Germany can leave CETA again if forced to do so by a later German court judgment, the Court said.

The complainants had challenged "the approval by or the abstention of the German representative in the Council of the European Union with regard to the European Commission’s proposed decisions. They challenge, among other things, a violation of the principle of democracy - that is part of the constitutional identity - through an encroachment upon the member states’ competences, through the investment protection approach set out in the CETA draft, as well as through the intended committee system", the court said.

Three German pressure groups, Campact, foodwatch and More Democracy, handed the court 125,000 signatures supporting their position, Reuters reported.

The European Commission formally proposed the signature and conclusion of the free trade deal in July and hopes to see the agreement signed at an EU-Canada summit planned for October.

The Commission proposed CETA as a 'mixed agreement' which needs the ratification of individual EU countries.

Other countries, including France, are slightly more disposed towards the deal, said Paris-based Peter Rosher, arbitration expert with Pinsent Masons, the law firm behind Out-Law.com.

"It is of particular interest to the French, for example, as it represents a great opportunity to open up trade between France and Canada," he said.

"CETA also already recognises 42 designations of origin for French agricultural products. Having said that, protests against CETA are due to take place this Saturday in France," Rosher said.

"The future of CETA remains uncertain and it is unclear what the position of the French 'Conseil Constitutionnel' would be if faced with the same challenge that was brought before the German constitutional court," he said.

A bespoke trade deal along the lines of CETA has been proposed as a potential model for a future trade relationship between the UK and the EU after Brexit.

The idea is interesting, said Rosher, "but the general socio-political background of Brexit needs to be borne in mind with regard to any eventual trade agreement between the UK and the EU."

"It is clear that the member states are not going to want the UK to get any preferential treatment in their negotiations with the European Union, to avoid a domino effect of other member states cherry picking the advantages and disadvantages of their memberships in the Union," he said.

"Essentially, the two situations are not comparable; it is therefore difficult to see how CETA can serve as a template for the Brexit negotiations," Rosher said.