European Union heads of state will attempt to breathe new life into flagging free-trade deals with Canada and the United States at a two-day summit in Brussels beginning Thursday.
The controversial trade pacts are slated for discussion on Friday amid rising public opposition and demands for concessions from some E.U. member states.
“If Europe wants to remain a champion of free trade in the future, we must address people’s concerns now,” a high-ranking E.U. diplomat told Handelsblatt.
The summit comes after E.U. trade ministers on Tuesday postponed a vote on the E.U.-Canada Comprehensive Economic and Trade Agreement, or CETA. Belgium’s regional parliament of Wallonia rejected the trade pact last week despite approval by the federal government, while Romania and Bulgaria demanded visa-free travel to Canada for its citizens in return for supporting the deal.
“Trade is a powerful engine for jobs, growth and better living standards. Yet the benefits of trade are being questioned.”
The delay was symptomatic of the growing opposition in Europe to both CETA and the E.U.-U.S. Transatlantic Trade and Investment Partnership, or TTIP. Tens of thousands of demonstrators have taken to the streets in Germany to oppose the trade pacts, while protectionist political parties are on the rise in Austria, France and the Netherlands.
Three European politicians, however, hope to take up the mantle from E.U. business and government representatives, who so far have failed to quell soaring mistrust and surging opposition to further globalization.
The troika – German Economics Minister Sigmar Gabriel, E.U. Commission President Jean-Claude Juncker and E.U. Council President Donald Tusk – have been pressing the case for a more robust trade policy ahead of the summit.
“Trade is a powerful engine for jobs, growth and better living standards,” wrote Mr. Tusk in his invitation letter to the 28 E.U. heads of state that make up the European Council, which sets the bloc’s policy agenda. “Yet the benefits of trade are being questioned,” he added.
Mr. Tusk, a conservative former prime minister of Poland, said he was convinced the bloc would deliver a trade policy that was “fit for today’s concerns and tomorrow’s challenges.”
But, he cautioned, “Ultimately it hinges on our ability to adequately protect ourselves, and our citizens, when unfair practices arise. Because for trade to be free, it needs to be fair.”
As well as the ongoing trade negotiations with Canada and the United States, the Council will also discuss “the modernization of trade defense instruments,” said Mr. Tusk – a nod to trade tariffs aimed at protecting European manufacturers against Chinese goods illegally dumped into Europe.
Mr. Gabriel and Mr. Juncker see free trade’s perils and opportunities in a similar light.
The German economics minister, for instance, has formulated an internal policy paper that would give national governments the ability to fend off unwanted takeovers of domestic companies from foreign competitors, according to information obtained by Handelsblatt.
German E.U. Commissioner Günther Oettinger praised Mr. Gabriel’s proposal and promised his support.
Prodded by the critical base of his center-left Social Democratic Party, Mr. Gabriel recently took aim at the European Union’s rigid stance on TTIP negotiations with the United States and demanded clearly defined positions on CETA.
Mr. Gabriel told E.U. trade ministers at their meeting Tuesday in Luxembourg that the E.U.-Canada pact ultimately placed “the protection of people, consumers and workers at the center,” not solely business.
Such compromise, however, would “never, ever” be possible with the United States, Mr. Gabriel charged last week.
While Mr. Juncker has a different view of TTIP negotiations, he and Mr. Gabriel are on the same page when it comes to defending Europe against dumping – above all from China.
“We should not be naïve free traders, but be able to respond as forcefully to dumping as the United States,” Mr. Juncker said in his recent state of the European Union speech.
At the center of such concerns is the beleaguered European steel industry, which is suffering heavy losses and tens of thousands of jobs as cheap steel from China floods the market amid a global market overcapacity.
On Monday, 58 chief executives of European steel producers sent an open letter to E.U. heads of state calling for “more effective, faster measures to re-establish fair trade.” Specifically, the steel bosses asked for the European Union to restructure anti-dumping rules to be closely aligned with more aggressive U.S. regulations.
The E.U. Commission, the bloc’s executive body, is currently working on such enhanced trade protections for steel producers and other affected sectors, including aluminum producers.
Trade Commissioner Cecilia Malmström of Sweden plans to present her proposals in November. The commissioner outlined her positions in a recent paper sent to member states and the European Parliament ahead of this week’s summit.
In the paper, obtained by Handelsblatt, Ms. Malmström presents a new method for calculating dumping duties that also considers government influence on companies engaged in the practice. In certain cases, she called for the suspension of the so-called “lesser duty rule.” The rule has prevented the European Union from levying anti-dumping duties on par with U.S. levels.
Currently, E.U. trade duties do not reflect the entire advantage foreign companies possess when they price their products below actual manufacturing costs, thanks to government subsidies, even though the World Trade Organization explicitly allows it.
As a result, certain Chinese steel exporters that must pay trade duties of 255 percent to ship into the United States, for example, pay duties of just 25 percent to export to Europe.