Future of EU Trade Policy - The case of CETA
by David Fernandez (November 17, 2016)
Changing the level and influence of the same-old economic direction is decided without actually tackling the reasons behind the economic anxiety of European electorates. CETA’s arduous approval process and its ramifications is a clear example.
On October 29, Belgium signed the CETA agreement after the regional and the federal parliament approved it. Needless to say, this was a much more complicated journey than first expected given the considerable opposition of Wallonia to the agreement. Whether this was caused by internal Belgian quarrels or the opposition of a declining post-industrial region to free trade, it would not be the only problem the treaty has encountered – or might encounter – in its ratification. Currently, signatures are being collected in the Netherlands to hold a referendum on its ratification by the Dutch Parliament, much like with the Ukraine-European Union Association Agreement, and if the 300,000 threshold is reached, the referendum will have to be called.
Generally, trade policy is one of the areas where the European institutions have an exclusive competence to pass on their own. However, CETA is a ‘mixed agreement’ which contains elements of both exclusive EU competences as well as national or shared competences. As a result, during the summer, the Commission and the heads of state clashed over the procedure to ratify the agreement. Jean-Claude Juncker and Cecilia Malmström sought the sole ratification by the European Parliament and the Council, Angela Merkel and François Hollande among others however prevailed and the agreement was sent to the national capitals for its final approval. This has proven to be a headache, several fronts have undermined the image of cohesion that the Union seems to be trying to project after Brexit, while undermining the external image of the EU as a united body with regards to trade.
CETA arouses less passions than the TTIP agreement with the United States, which has attracted opposition from right and left alike. It promises to be a steeper battle, especially if the procedure used with CETA serves as a precedent. More importantly, this procedure for ratifying trade agreements can serve as a different kind of precedent. If, given their increasing complexity, trade agreements are classified as ‘mixed’ ones and, as a result their ratification returns to the Member States, this means that they gain more leverage on the process, eroding the independence of the EU to negotiate and compromising the previously successful trade policy model of the Union.
That the trade policy is seemingly slipping away from its previously supranational dimension and returning to the national arena is the result of the new populist-nationalist and protectionist Zeitgeist questioning the integration and globalisation processes that have been underway since the 1990s. National heads of state may believe that by bringing ratification of trade agreement closer to home, where it is supposedly easier to scrutinize them, they can deflect criticism about the European Union’s democratic deficit and lack of accountability. However, trade agreements are written in highly technical jargon and are as a result largely obscure. What matters more about them is the narrative of its content, not the actual fine letter.
However, Europeans are not revolting against whether or not free trade agreements should be approved at one level or another. Instead, they are either against free trade in general or seemingly against the current kind of free trade agreements, notoriously their infamous dispute settlement systems. Rather, it would appear that what Europeans seek are new economic policies at the European and national level to leave behind the austerity that has been characterizing both the economic crisis and the current period of weak recovery. Some of the alternatives, like the Juncker's stimulus plan, albeit ambitious, are still not enough to address the concerns of many Europeans over the course of European Union-wide economic policy-making. Therefore, by simply transferring the locus of approval of the same policies, national leaders do not alleviate economic anxiety and probably undermine the cohesion of the EU’s economic position by opening up to potential blackmailing by the Member States over parts of trade deals, or by making it easier for third parties to influence the approval at the national level.
In sum, the change of direction of the trade policy, not towards agreements perceived as ‘fairer’ but simply keeping up with the current trade policy and shifting political approval from the European institutions to the national ones menaces to weaken the EU’s commercial bargaining position vis-à-vis third parties. Substantive policy remains untouched without addressing the economic concerns of the Europeans citizens.
David Fernandez is Junior Policy Analyst at Bridging Europe
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