Europe Assesses “Changed World” In Trade Politics

European Union trade politicians in several meetings this week in Brussels reflected on the future of trade policy, also impacted by the US elections. “It is a changed world, period,” Iuliu Winkler, vice-chair of the parliamentary International Trade (INTA) Committee (European People’s Party) said at the opening of the EU Trade Policy Day, expressing the general sentiment. While many members of INTA committee underlined the need of Europe to press ahead with their trade negotiations internationally, those critical of an aggressive trade agenda were eager to have their arguments not to be mixed with what was criticised as populist fear-mongering against globalisation.

Karl Brauner, deputy-director of the World Trade Organization (WTO) said trade policy today is blamed for all sorts of problems. “We have seen this in the negotiations for the Comprehensive Economic and Trade Agreement and during the US election campaign,” Brauner said. He appealed to EU politicians to continue to explain the pros and cons of bilateral and multilateral trade agreements that he called potential building blocks for the multilateral trade agenda. Only confronting critics “will allow us to prevent unwanted protectionism,” he said.

The consensus over the positive effects of trade that had resulted in the creation of EU’s single market, the negotiations at GATT (WTO predecessor General Agreement on Tariffs and Trade) and the WTO are now “frail”, said Jeffrey Sachs, director at the International Monetary Fund’s offices in Europe. “Opposition to TTIP today is even stronger, in light of the US election results,” he said. Before that the Brexit was seen as a step away from the free exchange of goods.” He confirmed: “Protectionist measures are on the rise.”

“We have a problem with legitimacy,” acknowledged EU Trade Commissioner Cecilia Malmstroem discussing the future trade agenda with INTA. There would also be a discussion on how to tackle the disputes over competency disputes for the trade agenda today at the Council of Trade Ministers meeting.

Moving Ahead without US in Trade?

Brauner warned during the discussion that closing markets is no answer to fears of job loss like for example for “millions of truck drivers in the US once lorries will start to cover long distances autonomously.” Trade policy is neither to be blamed for that, nor could it help, he said. Instead, he pointed to the high-tech race that is unforgiving to those not innovating. Hoping to defend old technology with high tariffs or other protectionist measures is a fallacy, he said.

The value-based trade agenda of the EU, which came at the sacrifice of protracted negotiations, on the other hand will push trade to the next level, he said. “I come not from the Free Trade Organisation, I come from the World Trade Organization,” he said. Trade deals are about a “regulatory framework that offers legal predictability.”

A stronger role of the EU in trade politics was also called for by Dutch Liberal Mareitje Schaake, vice president of the EU-US delegation to the European Parliament. Schaake, who on several occasions clearly expressed her disappointment over the election of Donald Trump, who during the campaign expressed a strong disregard for international agreements. “With the US president-elect who has shown, at least in debates, disregard for international laws, the focus should be more on Europe,” Schaake demanded.

In a press release, she warned the EU has to step up its own game with regard to security: “European leaders need to put their differences aside to make sure the EU member states, together, can play a role of significance on the world stage, when necessary without the US.” With regard to the development of international trade, she added: “The economic consequences of protectionism will only become visible over the long term, but will undoubtedly have a big negative impact on countries that are highly dependent on trade, such as the Netherlands.” Member states of the EU need to unite and continue with their trade negotiations, she argued.

Going ahead with trade policy in the Union was also supported by Joakim Reiter, deputy secretary-general, United Nations Conference on Trade and Development (UNCTAD). But Reiter warned that while talking about broader regulatory issues within the trade deals must not result in the EU becoming a missionary for regulation in developing countries.

TTIP, TISA, NAFTA?

The future of the EU-US Transatlantic Trade and Investment Partnership (TTIP) was questioned by several members of Parliament. But as with a potential effect of a potential US withdrawal from the Trade in Services Agreement, EU officials and trade experts had no answers to the INTA committee members.

The EU Commission originally had announced to spend the days of the outgoing US administration to press on with TTIP negotiation. While the ambitious TTIP timetable was seen by many observers just a bit too ambitions before the election already, TISA is far advanced and had at least a chance to be wrapped up in the coming months. But, for example for the digital and e-commerce chapters, the US so far had been in the driver seat.

Trade Sceptics and Populists

Several members of the conservative European People’s Party (EPP) sharply criticized their colleagues from the Left and Green Party Group for what they said was practically siding with populists, asking for re-nationalising their markets. Those still against CETA (Canada-EU Trade Agreement) would support the protectionist camp. “Do we stand up and combat against that?,” Swedish Conservative Christoph Fjellner ranted, also blaming the CETA nay-sayers for being illiterate to read the answers to their concerns. “It’s all in the text.”

Members from the Green and Left Party Groups on the other hand pointed to specific issues they still have with CETA, for example the so called negative lists, but mainly underlined the need to have a much broader dialogue on old beliefs and a future consensus on trade and trade negotiations. The European Parliament is in the process to make its decision on CETA which will once more elicit controversy and still has to assess the considerable number of 39 attached declarations from Council and individual member states, including one that tries to carve out criminal sanctions against IP-infringers in CETA as non-precedent-setting.

Tiziana Beghin, from the Italian Five Star Movement which in the European Parliament is a member of the EFDD, the group that is home to populists like French Front Nationale leader Marine Le Pen or Brexit driver Nigel Farage, warned her colleagues against complaining about the Wallonian (Belgian state) Parliament for blocking CETA in the last minute.

“This is a call for help from people that are hit by free trade agreements,” she said and asked Trade Commissioner Cecilia Malmstroem in turn if the EU still wants “to follow through with your dogma of free trade despite Trump’s election.”

Separately, Prof. Joost Pauwelyn, co-director of the Graduate Institute of Geneva’s Centre for Trade and Economic Integration, was quoted by the Institute as saying we could expect from Trump’s election “less negotiations and more disputes: a standstill on new trade agreements (no ratification of TPP, TTIP in the freezer, WTO negotiations on hold) and more unilateral measures by the US, especially against China.”