Saving EU trade policy

These are tough times for the European Union’s trade policy. Public sentiment has never been more hostile to the idea of free trade than it is now. An area previously of interest only to specialists of technical issues like tariff schedules, quotas, customs rates and trade balances is now the subject of impassioned street protest and furious rhetoric over the perceived risks of such deals for consumer rights and more. Free trade is now so contentious that nervous ministers are ready to block even the most modest of EU agreements.

This past year has already seen many setbacks for trade.

In April, Dutch voters rejected the EU’s trade pact with Ukraine in a referendum that reflected a surging mood against the establishment. The British referendum on EU membership in June was a vote to leave arguably the most successful customs union ever. The Transatlantic Trade and Investment Partnership (TTIP), vaunted for creating the world’s largest free-trade zone, is now in almost suspended animation. And that’s not to mention the current World Trade Organization talks, the so-called Doha Round launched in 2001, which have been effectively stalled for a decade.

So when EU trade ministers met in Bratislava on September 23, they had a daunting challenge as they attempted to breathe new life into their policies and ongoing negotiations.

The signs were ominous, even in the days before the meeting. Germany’s vice-chancellor and SPD leader Sigmar Gabriel said the TTIP negotiations had failed, while Austria and France proposed ending the current TTIP round, and starting fresh talks under a new name. On top of that, there were new concerns about an equivalent trade deal with Canada, the Comprehensive Economic and Trade Agreement (CETA), which was agreed two years ago, but still has to be ratified by up to 38 national and federal parliaments. Nearly 10,000 protestors marched in Brussels on the eve of the Bratislava meeting, demanding the EU completely halt its trans-Atlantic talks with the United States and Canada.

But the mood in Bratislava was upbeat.

EU Trade Commissioner Malmstrom said there was “unanimous agreement” about moving forward with CETA. Germany, once again, was the key: the Bundestag endorsed CETA the day before the ministers met, after Sigmar Gabriel threw his weight behind it, in contrast to his earlier dismissal of TTIP. Gabriel’s intervention was gratefully received by EU officials, who were concerned that he would be swayed by the hundreds of thousands of Germans who had taken part in protests against TTIP the weekend before.

The ministers now hope to formally adopt the CETA at a special trade council in Brussels on October 18, and have it signed by all member states at the EU-Canada summit at the end of the month.

As for TTIP, the ministers agreed to press on, despite the obvious obstacles. While they agreed that there is almost no chance of a deal before US President Barack Obama leaves office, leaving TTIP’s fate in the hands of the next administration, they still felt it was better not to prematurely pull the plug. With trade playing an important role in the current US election campaign, negative signals from Europe could play into the hands of protectionists on the other side of the Atlantic.

As a bonus, the ministers in Bratislava agreed to overhaul their trade defences against China, which is the most frequent target of anti-dumping duties on its exports of steel and other goods. The move will allow the EU to recognize China as a market economy and lower the risk of a trade war between the two.

The Bratislava meeting showed that EU trade policy was still viable, at least for the moment. But the longer term challenge for the EU will be to engage with its own citizens about the benefits of free and fair trade. Economic growth in the EU is still sluggish, and trade deals could offer a much-welcomed boost.

Activists say these deals are threats to democracy: TTIP is portrayed by its critics as a diabolical plot to scrap rules protecting consumers, social rights, health, the environment and data protection. The protests tie in broader anti-globalization sentiment across the West, and the surge in anti-establishment votes, like the UK’s referendum to leave the EU. Just as the Brexit vote showed that governments need to make a better case for the EU, they also have to make a better case for trade.

Words Dennis Abbott, David Harley & Leo Cendrowicz (Burson-Marsteller Brussels)

Photos CC/Flickr Mehr-demokratie

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