Europe’s free-trade deals are stuck in the mud. How to unstick the process is not much clearer.
As the EU’s free-trade agreement with Canada stalled this month, POLITICO polled 52 influential policymakers, senior politicians and ambassadors for their views on the state of trade with the Continent.
POLITICO’s first trade caucus saw half of the respondents say the EU should retain total competence over trade talks, meaning national and regional parliaments wouldn’t be able to throw a spanner in the works as the Walloons have done with the Comprehensive Economic and Trade Agreement. Two-thirds felt the solution was simply to reduce the scale of deals the EU attempted to negotiate, and focus efforts on specific products and services rather than try to standardize regulation among countries.
Half of the participants backed the idea that individual EU countries should be able to give their consent for trade deals, as happened with CETA, where the veto of one of Belgium’s regional parliaments could potentially kill the entire agreement.
Member countries must control those issues whenever they involve areas of national competence, according to one participant.
To make trade deals “truly democratic,” national parliaments “must have a say throughout the negotiations,” another respondent said, adding “they should be able to approve or reject both the interception mandate and the final proposal.”
Another participant added that while the power should be with the member countries, it should not go as far as regions being able to block deals.
Those backing the idea the EU as a whole should negotiate trade deals with other countries supported their stance by saying the EU “as a customs union, has been given the right to conclude international trade agreements on behalf of its members.” Another noted this has been a core competence since the beginning of the European Economic Community.
Scaling back
Amid the CETA talks being stalled and the delays in finalizing the Transatlantic Trade and Investment Partnership — the mammoth trade deal between the EU and the U.S. — respondents were asked if Europe should reduce the scale of its trade deals.
Two-thirds of those surveyed said no, while the rest said streamlining current regulation would make the politics of today’s trade deals unwieldy.
“Giving in to protectionism is not the solution; reforming and adapting our economies, open market and trade is,” one respondent said. Another added that “deep discussion on how to process now is needed.”
Another said “in light of the trouble with TTIP and CETA, the EU should try to go for a larger number of limited scope agreements, which will be more easy to agree and raise fewer fears.”
Fight against Chinese dumping
The EU this month pushed for tougher trade defenses against China following the country’s move to style itself as a “market economy” in the World Trade Organization, which will make it more difficult for the EU to impose its current duty levels on any goods it argues are priced beneath the cost of production.
Participants are divided on whether the EU can stand up to China, with a third being confident the EU would succeed if it followed the U.S. approach on this. Fifteen percent of people thought it would be too difficult. Half of the respondents preferred other options.
Some said the circumstances are different when trading with China than with countries such as the U.S. or Canada. “The EU has to come forward with very clear regulation to combat dumping compatible with WTO rules.”
Others said standards of labor, safety, environment and health care will need to be harmonized, saying they were “a prerequisite in trade deals.” Not all the respondents thought that would be easy. “China will not give in to pressure. It is better to engage and keep an open dialogue without giving in.”
‘UK trade deal possible’
Influencers were generally positive about Britain’s chances of securing a trade deal post-Brexit. Just under 60 percent believed some kind of deal would be agreed, with 27 percent saying Britain will get “something close to single market access.”
“Preference would be a single market, but with the U.K.’s negative stance on free movement of labor (or people) it is quite improbable,” one of the respondents said.
Another said single market access “seems the most realistic option” given the information available at this stage.
Some 23 percent of the respondents believed a deal wouldn’t be completed on time after Britain leaves the EU. The EU is therefore likely to trade with the U.K. under WTO rules in the near term.
According to one respondent: “The more-than-difficult Brexit negotiations prove that there will not be a free-trade agreement with Britain in the short term.”
The CETA saga also informed many participants’ opinion. “The experience with Canada shows the difficulty to decide on a trade deal with the EU.”
“Article 50 divorce agreement has to be negotiated by spring 2019, and considering CETA and other deals, there isn’t much hope for a U.K./EU free-trade agreement to be in place before 2025,” another added.
But some also believed there was still hope: one person said “Brexit will never happen” and another said “When things have calmed down, the EU and U.K. will be able to conclude a free-trade agreement which would go beyond CETA.”
Click here to see a list of all participants.
Lawrence Wakefield and Arnau Busquets Guàrdia contributed to this report.
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