TTIP, CETA… What the EU will/should do on free trade?

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Question:

1. What do you expect out of the debate at the upcoming EU summit that will assess the state of play of on-going free trade agreement negotiations with key partners. So what the MMs should assess, how do you see the state of play regarding CETA and TTIP, how (un)realistic do you find that we will have both treaties?

2. In general, we can probably talk about kind of backlash against free trade. Do you think the EU, MMs should somehow address it?

Answers:

Gabriel Siles-Brügge, Associate Professor, University of Warwick

1. The recent vote in the Walloon parliament, which rejected CETA, has clearly overshadowed the meeting of Trade Ministers in Luxembourg – which decided to postpone its decision on the agreement until next week. As it stands, the Belgian representative will be unable to sign the agreement before the planned summit on 27 October. In theory, approval of the agreement only requires a qualified majority in the Council, but because the agreement is considered mixed (covering both EU-level and Member State competences) all Member States also have to accede to it (and all their relevant national parliaments, including some regional parliaments such as Belgium’s, will eventually need to ratify it).

There will therefore be much pressure brought to bear on Belgium and the Walloon region over the next week. The President of the Walloon Region – Paul Magnette – has insisted that this isn’t a definitive no to CETA, but that he wants to see further negotiation. He’s spoken specifically of wanting to see the interpretive declaration accompanying CETA given equal weighting to the agreement – which to my mind means there may be some room for accommodation. Re-opening the agreement itself would be a wholly more complicated endeavour, and is something most other parties (including Canada and the Commission) reject.

2. I’m not sure that in the case of CETA and TTIP there has been a backlash against free trade as such, but rather more against the wider effects of trade agreements, which now go beyond just eliminating tariffs to constrict the policy space of governments to pursue policies in the general interest. Indeed, much of the opposition to TTIP and CETA has focused on the issue of ISDS – the granting of special rights to investors, which are upheld in independent tribunals – which is not so much about liberalising investment flows (there is little evidence such provisions boost investment between developed countries).

As for the prospects of CETA and TTIP, I think the former, as an agreement that has already been negotiated, is more likely to be concluded – but still faces an uphill battle (and may end up just being ‘provisionally applied’). As for TTIP, this isn’t quite dead – but entering a predictable (if somewhat accelerated) hiatus with the US election and administration turnover – and French and German elections next year. That said, most Member States (and naturally the Commission) remain committed to the goals of the negotiation (while I suspect that if Hillary Clinton gets elected, she will also moderate her anti-trade agreement tone), so there may well be a renewed push from the second half of next year onwards.

Dennis Novy, Associate Professor, Department of Economics, University of Warwick

The trade deal with the US, TTIP, is almost dead now – it is certainly on the backburner. There has been too much political backlash from the grassroots, and appetite in the US is waning. Instead, the EU strategy seems to rescue the Canadian deal, CETA. Given that over 30 national and regional parliaments in the EU can veto CETA, it will be an uphill battle to get CETA ratified. But the key issue is: If the EU cannot agree a deal with a friendly partner such as Canada, who could they ever agree a deal with? The long-run ramifications of failing to rescue CETA are therefore potentially very damaging.

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