It’s the End of Trade Policy As We Know It

By John Clancy, Senior Advisor and former EU Trade spokesperson (2010-2014)

EU Canada summit

There were sighs of relief among EU officials Sunday as the EU-Canada trade deal known as CETA was finally signed by visiting Canadian premier Justin Trudeau and his EU counterparts. Enormous credit should go to the EU’s chief negotiator Mauro Petriccione who has tirelessly fought to keep the deal alive and get it across the finish line despite a mine field of obstacles put in his way. After dozens of negotiation rounds between Ottawa and Brussels, no one had predicted that its very existence would go down to the wire in the Wallonian capital of Namur.

If many EU trade officials would rather forget about the turmoil of the past few weeks, the truth is that this is just the beginning of a period of introspection for EU trade policy. The damage has been done and the full ratification process including before the European Parliament, all national parliaments and where required (such as Belgium) regional parliaments has still to take place. The EU’s trade policy is far from out of this crisis.

First, the EU has lost its credibility in the eyes of its international trade partners as a trusted negotiating partner. The EU cannot guarantee that a similar fate will not befall future trade deals.

Second, left limping on the battlefield from self-inflicted wounds, the EU will likely have to drop its plans for ambitious trade deals such as CETA in the future and revert to more basic arrangements with carve-outs of key policy areas just to ensure survival.

As ECIPE trade expert Hosuk Lee-Makiyama stated to the Financial Times, he would expect the investment and service sectors to be gradually removed from future trade agreements. A major re-think of EU trade policy is needed and a major re-think of just how to manage future trading arrangements in a modern context.  There are now dozens and dozens of legislative hurdles to overcome in the deal process with anyone of those being a prime opportunity for trade opponents and civil society to shoot down an agreement.

Many commentators including former trade Commissioners have pointed the finger firmly at the decision of President Juncker, under pressure from Germany (but also France), to pronounce CETA a “mixed” agreement, meaning any final deal must be ratified by all EU national and regional parliaments (where required) in  addition to the the EU institutions because of shared competencies on the policy areas covered by the pact.

It was the death blow to EU trade policy when the Commission President should have defended such a core EU competency. Efforts by Jean-Claude Juncker to deflect blame just make his Commission appear ever more politically weak and distant from reality.

Power over EU trade policy has shifted to the EU’s member states (and its regions) and it will be hard for the European Commission to claw it back. In the last few years, the member states – especially Germany and France – have treated EU trade policy as a political football. From one day to the next they have been supportive of trade policy and then its biggest critics – if that would help win domestic political favour. Too often presidents and prime ministers have publicly attacked TTIP, for example, despite supporting the original mandate given to the Commission. Such hypocritical behaviour is damaging to Europe.  Trade policy has been kicked around so much it should come as no surprise that it is now so deflated.

Just how bad is it? I can only imagine some EU trade officials may be dreaming of a paradise drenched in sunshine and sandy beaches. If only they could put bilateral deals back in the filing cupboard and revive Doha.

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