September 9, 2016 / 12:06 PM / a year ago

EU risks trade impotency as critics target Canada deal

Canada's Prime Minister Justin Trudeau arrives at a news conference in Ottawa, Ontario, Canada, June 22, 2016.Chris Wattie/File Photo

BRUSSELS (Reuters) - A deal that would allow Canada to sell maple syrup duty free in the EU and Europeans to ship more cheese to Canadian shops has become the focus of a battle with anti-globalisation groups that is key to the future of Europe's free trade agreements.

Supporters of the huge deal say it would increase trade between the EU and Canada on a range of products, from cars to investment and farm products, by nearly a quarter, boosting the EU economy by 12 billion euros.

But anti-globalisation and other groups emboldened by France's call to suspend EU trade talks with the United States, have turned their attention to the deal already reached with Canada which has not yet been approved.

There is a growing public backlash in the West against free trade and globalisation, which critics blame for factory closures, depressed wages and a widening gap between rich and poor. Britain's decision to leave the European Union was partly seen as a protest by some voters against globalisation.

"CETA (EU-Canada Comprehensive Economic and Trade Agreement) is the little brother of TTIP (EU-U.S. Transatlantic Trade and Investment Partnership) and needs to be buried alongside it," said Fabio De Masi, a German member of the European Parliament (MEP) for the leftist Die Linke party.

Canada is not impressed.

"If the EU cannot do a deal with Canada, I think it is legitimate to say who the heck can it do a deal with," Canadian Trade Minister Chrystia Freeland said in June.

Other supporters say CETA is the most modern trade deal ever made and that the new Canadian government bent over backwards to accept EU demands for a new way of settling investor claims.

"There are no deals that are comparable in their quality with CETA," said Artis Pabriks, a member of the European Parliament. "I would say it is a gold standard."

The deal would eliminate tariffs on almost 99 percent of goods. The beneficiaries would include, for example, carmakers or the EU textile sector, for which Canadian duties can be up to 18 percent.

Service companies could also benefit and EU companies would be able to tender for public contracts at Canadian provincial and municipal level, the first time Canada has offered this.

        

VOTERS IN MIND

The deal, agreed by negotiators two years ago after five years of talks, should get the green light from EU member states next month before it is signed during Canadian Prime Minister Justin Trudeau's visit to Brussels on Oct. 27.

However, there are risks it will not. Austrian Chancellor Christian Kern said last week he would start a "conflict" over CETA, while toning down his opposition a day later.

Leaders, including Britain's Prime Minister Theresa May (2nd row, 2nd L), pose for pictures during the G20 Summit in Hangzhou, Zhejiang province, China September 4, 2016.Damir Sagolj/File Photo

Observers say Kern and others are responding to public mistrust of the planned TTIP in particular what critics call a "race to the bottom" in environmental and food standards. CETA, say opponents, is just a mini-TTIP and indeed more advanced, given TTIP is simply under negotiation and not yet a deal.

France and Germany hold elections next year and politicians are curbing their enthusiasm for trade deals. Germany's Social Democrats will vote on CETA at a party meeting on Sept 19, a year before Germans chose a chancellor.

"I am confident that the closer to election days we come, more politicians will think twice whether to pass these agreements or not," said De Masi.

Trade is unusual in the EU because it is one of the few policy areas where the European Commission negotiates on behalf of national governments, rather than each country doing it individually.

The deal will still need backing from the European Parliament, with a vote possible in December, as well as ratification from up to 30 national and regional parliaments, which could take up to five years or more.

The Belgian regional parliament of Wallonia has already voted to reject CETA.

"There is the sense that globalisation is the thing that's at fault," said Jeffrey Bergstrand, finance professor at Notre Dame University in Indiana. "There is clearly this momentum towards a protectionist attitude, back to what we had in the Great Depression."

UNRELIABLE PARTNER

Even if CETA is not blocked it could face a crippling delay.

Luisa Santos, international relations director at business federation BusinessEurope, says waiting for final ratification could mean CETA taking almost 15 years from start to finish.

"You are jeopardising the positive effects that might come from a free trade agreement," she said.

Hosuk Lee-Makiyama says the drawn-out TTIP and CETA experiences demonstrate to would-be trade partners that the EU is a less reliable counterpart in negotiations, less able to agree a deal and less likely to implement a deal when agreed.

"If you are Australia, New Zealand or Japan why make concessions when you're not really sure what you'll get in return?" he said.

The EU will also be smaller when Britain leaves, taking with it strong ties to the United States and Commonwealth countries.

"Imagine if the United States said, for instance, 'Well maybe TTIP will not apply to California'," the U.S. chief TTIP negotiator said, adding a "certain reflection" was now required.

Editing by Anna Willard

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