H+K’s Public Affairs Chairman, Thomas Tindemans, gives his in-depth account of the CETA Treaty and its implications for the EU’s future trade agreements.
- A new standard for trade agreements
The European Parliament today ratified the comprehensive economic and trade agreement between the EU and Canada, known as CETA, with a solid majority of 408 against 254. Amidst protests from the anti-trade left- and rightwing factions, a solid majority endorsed this new generation trade agreement that will now in major parts enter into force provisionally. This represents a crucial step in the cumbersome ratification process involving no less than 38 elected assemblies in the 28 EU Member States – yes, that includes the UK for as long as it is a full EU member.
The CETA negotiations were launched in May 2009 and concluded in September 2014. The EU and Canada signed the agreement on 30 October 2016. Trade between the EU and Canada is expected to grow by up to 20% with the agreement in place. Although the process is convoluted and time consuming, the CETA Treaty is well on its way to set the standard for a whole range of EU trade agreements that are in the pipeline, at least 20 of them. Negotiations have started or are imminent with Japan, Indonesia, Mexico, the Philippines, Australia, New Zealand and Chile. The customs union with Turkey is up for modernization. The Mercosur agreement is revisited. An investment treaty with China is in the making. And partnership talks with Tunisia and other African countries are ongoing. The EU is accelerating the pace at a time when the Trump administration is pulling out of TTP, has put TTIP on ice and is reconsidering NAFTA.
- EU standards and norms go global
Although none of the envisaged trade agreements will be exactly the same, the CETA model introduces a whole new approach with a much broader scope than was hitherto the case. Apart from bringing down tariffs and non-tariff barriers to the free flow of goods and more and more services, the innovative and most controversial part is the regulatory convergence commitment. By requiring alignment of regulatory provisions, the EU now shares with its trading partners the EU standards and norms in fields such as environment protection, consumer protection, food safety, industrial norms, as well as intellectual property protection and data privacy rules. Thus, these new generation trade deals result in an unprecedented export of EU regulation to the rest of the world.
With the US administration setting a more protectionist agenda and reducing market access, the US regulatory model could well seem less attractive to many countries seeking new export markets. The EU’s 450 million consumers in the internal market become ever more attractive for third countries, who then adopt an EU inspired regulatory regime to facilitate trade. In the global competition between regulatory models, the EU is fully seizing the opportunity to advance its views and rules and values. This means that EU restrictions in traditionally controversial sectors, such as agriculture, now have a better chance to become de facto global rules. Think of GMOs, antibiotic growth promotors, indications of origin and the likes.
- Ironies arise in the debate
The CETA debate and the enhanced pursuit of more trade agreements by the EU reveal fascinating paradoxes. While opponents to free trade agreements within the EU claim that these arrangements risk watering down democratically adopted consumer and social protection measures in place in Europe, the irony is that more and more countries wishing to access the EU market feel compelled to implement precisely these safeguard measures. They realize increasingly that the 450 million EU consumers with a high purchasing power demand healthy food, environmentally responsible products and socially acceptable production methods and they adjust accordingly.
A second paradox will come later, when Brexit actually happens. The UK has announced that it will seek to conclude free trade agreements with non-EU countries around the globe, not least with its Commonwealth friends. By that time, the EU agreements with Australia and New Zealand may be close to conclusion, including the EU regulatory policy demands. Getting rid of intrusive EU regulations on products and services is the expressed purpose of the UK leaving the EU. But through its trade negotiations, the UK may well encounter the same EU regulation compliance demands from these third countries who value the access to the EU market so highly that they adopted the EU rules to enter.
These new generation trade agreements do not enjoy unmitigated support from all groups in society. If one thing became clear, it is the tremendous need to inform the public and its elected representatives much earlier and much more clearly about the precise content and consequences of these deals. Highlighting the benefits of free trade arrangements should not be left to governments and Commission negotiators. They are easily accused of pushing through shady horse trades. The companies, sectors and groups that stand to benefit from bringing down barriers and from regulatory alignment should explain things early and convincingly. Just asking people and parliaments to agree with what “is good for you” doesn’t work anymore. People want to understand, want to see concerns addressed and want to be involved in the process. From a communications and public affairs perspective, it is the responsibility of those enjoying the advantages of free trade to ensure that they are worth the trust they seek from the people. Only sustained, honest and frank communication with the public can achieve that.