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The EU is a Goat Circus if it can’t negotiate CETA

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As a Canadian abroad in Europe, watching the EU’s inability to ratify CETA makes me think the EU these days is a goat circus. Even those with strong objections to CETA, like me, should not be celebrating.

The EU negotiated the trade deal––the Comprehensive Economic and Trade Agreement, which would eliminate most tariffs between Canada and the EU––for seven years, only to have it, at the 11th hour, blocked by a Belgian province. If a decision made by other 27 EU member states can be squashed at the local level, a couple days before the planned signing of an international agreement, it makes you ask: what CAN the EU agree on?

Why is the EU’s functionality as a decision-making entity so important? Because you should care about its ability to agree on other matters of importance: a united compassionate solution to Syria, a united European refugee policy, a united foreign policy to deal with an aggressive Russian led by Vladimir Putin, a united position on climate emissions.

Trade was the one thing the Europeans prided themselves on. “We might be a military dwarf, but we are an economic giant!” was the slogan. Now they don’t seem to be able to do that. As Donald Tusk has put it, “CETA might be Europe’s last free trade agreement”. If people thought the Euro-crisis, the refugee crisis, and Brexit showed the fragility of the EU, they should take a good hard look at the consequences of the CETA debacle.

Speaking of the Brexit… If CETA took seven years to negotiate without (yet) a conclusion, then how will Brexit-Britain negotiate a new trade deal within the two-year deadline triggered by Article 50? It looks like Britain should prepare for the return of the WTO regime.

Let me, at this juncture, go point by point, explaining some problems with CETA, and addressing what has been really getting my goat in the press:

 

  1. The rich getting richer: the biggest criticism of the deal is just how little the trade deal will benefit ordinary people. A Tufts University study has concluded that the 12 billion dollar boost to the Canadian economy will mostly go into the hands of capital rather than workers––and will be worse in this respect for Canada than the EU economies. With this will be a projected loss to Canadian employment, wage compression, net losses to government revenue and to GDP (and my Canadian friends who were celebrating the idea of cheaper French wine and cheese should think beyond their fridges). You can read more here about one of the study’s authors, Servaas Storm, a Dutch economist, who is an expert with the Institute for New Economic Thinking, dedicated to ‘economics serving humanity’. CETA, meanwhile, is a tiny deal complared to the American version, TTIP––where the inequalities would be even greater. Importantly, CETA is seen as the Trojan Horse for TTIP. Should a deal with a social-democracy like Canada be conflated with a deal with neoliberal America? Keep in mind: if CETA fails, then TTIP has fewer chances of being ratified.
  2. Environmental and social concerns? I am surprised though, when talking to some of my environmentally-minded friends, that they are not aware that Canada acceded to EU environmental safety demands: no food, for example, will enter the EU from Canada that does not meet EU standards. In addition, I am surprised when people use rhetoric targeted at trade deals between the industralising world and Europe (note that the Vietnam-EU trade is much less controversial than CETA)-–pointing to social questions such as threatened working conditions and benefits––when Canada is far superior in those respects to many EU member states. In fact, a Politico poll recently asked whether Europeans would prefer to live in Wallonia or Canada, and they voted two to one for the latter. Canadians have felt the blow of European ignorance regarding the character of their state.
  3. Courts for investors? A criticism I had with CETA was with the Investor-State Dispute Settlement Court, which was, frankly, a terrible idea. There were improvements made to it, however, this past spring. There is still an independent court where investors can lodge complaints, but this court is no longer stacked with judges who are appointed by the investor and the defending government, and a third member by agreement. Now, there’s a roster of fifteen judges, created by the EU and Canada, from which three judges––one from each of the EU, Canada, and a third country––are appointed. The investor, as a result, is given less power.
  4. People say that the ratification of CETA has been anti-democratic, when in fact the European Council demanded national ratification of the deal. One might indeed argue that the quorum established for CETA ratification has gone well beyond what is democratic, with the requirement of the unanimity of the EU28. This is because CETA was considered a ‘mixed agreement’ requiring unanimity––showing up a fundamental flaw in the EU’s Lisbon Treaty.
  5. Taking Europe hostage? Wallonia never once opposed the deal in the preceding years. We are dealing instead with Belgian internal politics, in which the francophone Socialist Paul Magnette has found his cause-célèbre in opposing the trade deal, in a region which will be hardly affected by it. I am annoyed by people who say that Magnette is standing up for the working man against evil free-trade profiteers, when in fact the reality looks more like an act of political opportunism. Wallonia’s Parti Socialiste (PS) are sticking it to his province’s liberals, and the nationalists in Flanders, and punishing them for leaving them out of the Belgian coalition government. Meanwhile, the Walloon government has no moral high-ground when it comes to international trade: it owns 100% of FN Herstal, one of the world’s leading arms manufacturers, which traded with Gaddafi. In 2014, the Walloon government even approved a massive arms deal with Canada worth 3.2 billion euros.

The major reason to oppose CETA has to do with inequality, and its status as the foundation stone for TTIP. I think a lot of the other reasons are garbage. And these problems need to be weighed against the ills that accompany protectionism: populism, closing borders, hand-in-hand with rabid nationalism. There is a lot I hate about CETA, but the problems with the trade deal––to my mind––are all relatively minor compared to the delegitimization of Europe’s standing as an international negotiator this week. This was not the way to squash the deal.

But this imperfect deal, CETA, might not be dead quite yet. As Wolfgang Münchau so poetically put it in the FT, “trade agreements are like B-movie monsters. You see the stake in their heart. But you just cannot be sure that they are dead”. We might be stuck with it after all. And be stuck too with the lasting impression that the EU is a disorganised morass of petty national interests.

Lose-lose, in my opinion.

 


Joseph Pearson 25.10.2016

photo: crossing to Vancouver Island, Canada.