Critics of law maintained dispute settlement clauses would give too much power to multinationals at cost of independence of EU member states.
BRUSSELS—A key adviser to the European Union’s highest court said Tuesday that a controversial element on dispute settlement in the free trade agreement with Canada complies with EU law.
Advocate General Yves Bot said in a legal opinion that the 2016 agreement does not impede the autonomy of EU law or question the exclusive right to interpret EU law. Critics of the law had maintained that the dispute settlement clauses would give too much power to multinationals at the cost of the independence of member states and force through trade practices against the will of nations.
The Court said in a statement, however, that Bot “considers that the safeguards surrounding the establishment of the dispute settlement mechanism are sufficient.”
The request for a court ruling was brought by Belgium, where the small region of Wallonia, population 3.6 million, long threatened to hold up the overall trade agreement between over 500 million Europeans and 35 million Canadians. The EU needed unanimity among its 28 nations.
As Wallonia grudgingly backed the deal, it did so on the condition that the European Court of Justice would check the legality of dispute settlement between multinationals and governments. The full court will rule on the case later this year and often follows the advice of its advocate general.
“The agreement does not adversely affect the autonomy of EU law and does not affect the principle that the Court of Justice has exclusive jurisdiction over the definitive interpretation of EU law,” the statement on the advice said.
The Canadian-EU trade deal, called CETA, provisionally entered into force last year and most of the agreement now applies. The deal eliminates almost all customs duties and increases quotas for certain key products in each other’s market.
The EU said it will save its companies some 600 million euros (US$700 million) a year in duties.
Implementing the full deal is also important for the EU as it tries to strike trade deals with other global partners and amid broader tensions in trade, particularly with the U.S.