Dying Deal

Saving CETA: A Trade Treaty in Trouble

German Economy Minister Sigmar Gabriel met with Canada's Prime Minister Justin Trudeau before their meeting to discuss last CETA details in Montreal. Source: Reuters
German Economy Minister Sigmar Gabriel met with Canada's Prime Minister Justin Trudeau before their meeting to discuss the last CETA details in Montreal.
  • Why it matters

    Why it matters

    The Canada-European Union Comprehensive Economic and Trade Agreement (CETA) hangs in the balance, as attitudes towards massive free-trade deals like the Transatlantic Trade and Investment Partnership sour on both sides of the Atlantic.

  • Facts

    Facts

    • The junior partner in Germany’s ruling coalition, the Social Democrats (SPD), is set to convene on Monday to discuss the Canada-European Union Comprehensive Economic and Trade Agreement (CETA).
    • Canada’s International Trade Minister Chrystia Freeland is set to attend the SPD’s convention to lend support to Economics Minister Sigmar Gabriel in pushing a positive vote.
    • The Social Democrats leadership is trying to push a proposal that would allow for adjustments to CETA after it has been signed, but party members are skeptical of the possibility.
  • Audio

    Audio

  • Pdf

The stakes are high for Germany’s deputy chancellor and economics minister Sigmar Gabriel. His Social Democratic Party (SPD) is set to convene on Monday to discuss the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), a sprawling free trade deal on which Mr. Gabriel has wagered much of his political future.

Ahead of the convention, Mr. Gabriel, who is also the SPD leader, traveled to Montreal on Thursday to discuss final clarifications on the deal with the Canadian government. He called CETA the “most progressive” trade agreement possible.

But many of his party colleagues at home don’t share his sentiments. Especially on the left-wing of the SPD, resistance is growing. That doesn’t bode well for Mr. Gabriel. Should the party delegates fail to back CETA, Gabriel’s standing as the SPD leader and a potential chancellor candidate would suffer terribly. Such a setback could be his last.

“If Europe can’t agree a trade deal with Canada, then with whom?”

Paul Martin, Canadian former Prime Minister

But Mr. Gabriel still has voices on his side – like the “Die Familienunternehmer,” an association representing family-run businesses in Germany, which warned against allowing CETA to fall apart. In a letter to the SPD convention’s delegates seen by Handelsblatt, the association appealed to the party’s “progressive orientation” and advised against strengthening far-right parties like Alternative for Germany or France’s National Front as they engage in “scare-mongering towards protectionism.”

The association of family-owned businesses also said the debate around free trade was marred by imagined dangers, such as the creation of a secret parallel justice system for businesses, without an examination of facts.

“There’s hardly any room left to try to improve upon the free trade deals,” the letter’s authors wrote.

“For Germany, its businesses, and its work force, a lot is at stake,” they said. Europe and Germany would miss out on huge chances if “a good trade deal with our most important partners is torpedoed,” they added.

But that’s exactly what CETA opponents want, like Marco Bülow, a member of parliament from the SPD.

“I appeal to the delegates to vote against CETA at the convention,” he said, demanding a vote among all the party members on the trade agreement with Canada. “The delegates should not cave to pressure from the party leaders and issue a carte blanche – because that is exactly how I read and understand our leadership’s latest resolution.”

Indeed, the Social Democrats leadership is trying to head off worst case scenarios with a proposal that would allow for adjustments to the deal, like in terms of investor protection or public services. These changes would have to go through parliamentary ratification – so after the trade deal has been signed.

But that makes the free-trade deal’s skeptics suspicious, especially since the European Commission has already ruled out post-deal negotiations. That’s why the SPD leadership’s assurances that changes could still be made “are already worth nothing,” Mr. Bülow said.

His sentiments are echoed by fellow party member Klaus Barthel: “We shouldn’t delude ourselves, or the public.”

The SPD’s chapters in the southern German state of Bavaria, as well as the north German port city-state of Bremen, oppose CETA. North Rhine-Westphalia, the federal state with the most SPD members, hasn’t released an official position – although its state premier Hannelore Kraft, who is also an SPD deputy leader, has expressed support for the agreement.

The SPD bodies in the federal states of Hessen and the Rhineland-Palatinate haven’t signaled a position either. For Mr. Gabriel, the 230-strong convention would be a leap into the unknown.

Major protests against TTIP and CETA are set to take place in seven major German cities over the weekend. Source: DPA
Major protests against TTIP and CETA are set to take place in seven major German cities over the weekend. Source: DPA

 

When Canadian international trade minister, Chrystia Freeland, attends the SPD convention in Wolfsburg, some 200 kilometers west of the German capital, she’s expected to remind delegates about how accommodating her country has already been in the talks – allowing compromises on points including investor dispute settlement courts, public procurement processes or designation of origins.

But attendees fear her presence might get in the way of a vigorous debate on the trade deal. And tensions surrounding the deal have already escalated in the rest of Germany.

On Saturday, large protests are set to take place in seven major German cities against CETA and the Transatlantic Trade and Investment Partnership (TTIP). Apart from environmentalists and consumer rights activists, unions are expected to attend as well. According to a survey by research firm Ipsos, 38 percent of Germans familiar with CETA reject the deal, while only 18 percent approve of it.

Canada’s former Prime Minister Paul Martin has openly wondered at the Germans’ distrust: “If Europe can’t agree a trade deal with Canada, then with whom?”

 

Heike Anger is an editor for economics and politics at Handelsblatt. Thomas Sigmund is the bureau chief in Berlin, where he heads all political coverage. Gregor Peter Schmitz, the Berlin bureau chief of WirtschaftsWoche, a sister publication of Handelsblatt, contributed to this article. To contact the authors: anger@handelsblatt.com,  sigmund@handelsblatt.com, and gregeorpeter.schmitz@wiwo.de

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