CETA Breakdown

Watching Free Trade Die

  • Why it matters

    Why it matters

    Even some critics of free trade consider the proposed Comprehensive Economic and Trade Agreement deal between the E.U. and Canada to be the most progressive and best that the European Union has ever negotiated.

  • Facts

    Facts

    • E.U.-Canada relations are in a rocky state after the Canadian trade minister walked out of talks with the Wallonian government on Friday after failing to reach an agreement over the CETA treaty.
    • All 28 E.U. governments support CETA but Belgium cannot give assent without backing from five sub-federal administrations. French-speaking Wallonia has steadfastly opposed it.
    • On Tuesday, Wallonia’s premier said the Belgian region was not opposed to an E.U.-Canada free trade deal in itself but that an arbitration scheme needed to be dropped and public services protected.
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    Audio

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Thousands of people have protested against TTIP and CETA in Germany. Photo: DPA

There once was a dream. A dream of Europe, a continent with a multitude of states joining together to be able to compete in an increasingly complex world.

Europe gave itself a common market to be able to keep up economically with the ever-stronger major powers. It opened up its borders for people, goods and capital to create not just more long-term prosperity but also a uniform prosperity for all. Finally, Europe gave itself a single currency to be able to trade more simply within and without the single market and above all to allow reliable trade.

The Continent was meant to be a global model of openness, freedom and rule of law. Its policies were supposed to be guided by the ideas of unity and solidarity, its political discourse by rationality.

You don’t have to be a euroskeptic to realize that this dream is over.

Free trade is the strongest anti-poverty project in history.

The latest proof is the sad fuss over the free trade agreement with Canada – undoubtedly the worst disaster in the history of the European Union’s foreign policy. The proposed free-trade deal is called the Comprehensive Economic and Trade Agreement (CETA).

The world is looking on in amazement as Europe lets an agreement that was seven years in the making be threatened by Belgium’s internal power games.

The Continent is in tatters. That is abundantly clear in the destabilizing uncertainty of its protagonists right now in the de-facto E.U. capital of Brussels. Martin Schulz, the mediating president of the European Parliament, praises on the one hand the Wallonians’ “democratic steadfastness” and laments, on the other, the European Union’s “lack of community spirit.”

But even critics of free trade consider this agreement to be the most progressive and best that the European Union has ever negotiated because, among other things, it takes into account the criticism of the justifiably controversial arbitration courts, a type of parallel justice to protect investors. Nevertheless, it is facing its end.

And that is more than a disgrace. For at stake is more than the question of who will still take the European Union seriously as a negotiating partner, it is above all an issue of its attitude about the openness of its national economies.

One thing seems clear. The more ambitious trade agreement between the United States and Europe (TTIP) will no longer be realized. And the British, as well, who are expected to have to forge new trade agreements after leaving the European Union, most likely now have a good guess of what they are in for – not only with the negotiations with Europe but also with the increasingly free-trade resistant United States.

No one disputes the fact that bilateral trade agreements are always only the second-best option because they hold the risk of excluding a third party. In fact, a fresh global round of negotiations with the World Trade Organization as a basis would be better. But such a thing, given burgeoning worldwide protectionism, seems further away than ever.

There is a lot at stake – not just for Europe. For trade is and remains a good business for the national economies as a whole. And what’s more, free trade is the strongest anti-poverty project in history.

The protest is aimed at what globalization is supposedly causing here and is completely blind to what it is accomplishing elsewhere. Almost 700 million people in China alone have found their way out of extreme poverty since the 1980s. That is far more people than in Europe. In other emerging countries with less spectacular growth rates, as well, the level of poverty has fallen with astounding speed.

Free trade is ultimately also a matter of international justice  – something that people like to forget in the West. Free trade promotes the “Wealth of Nations,” but not that of all citizens. Above all the lower classes in the industrialized countries suffer under the increasing competition, while the poorest of the poor in emerging economies profit. So there is a connection between the increasing inequality within rich states and the decline in global inequality.

Ensuring that the profits of trade are justly distributed within the countries is the responsibility of the national governments. The new skepticism is supported by the feeling that only big corporations profit and that small companies as well as the little people are left behind. This skepticism is fed by the arrogance of some government officials in Brussels and Berlin, who believe such far-reaching trade agreements can be negotiated, and possibly even signed, behind closed doors.

But CETA isn’t quite dead yet. Maybe the Europeans will come to their senses and find a compromise. The ability to compromise has been, after all, their strength.

Perhaps the outcome of this compromise could even be a better CETA, and it could act as a model for future agreements.

That isn’t likely, but mustn’t be ruled out. Then, at any rate, we will be allowed to dream again.

 

The author can be reached at: muenchrath@handelsblatt.com

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