Opinions Trade

Free trade: EU Member States have a say in the bilateral deals

Cooperation as a tool for the regulation of free trade - An opinion piece by Frédéric Daerden

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The European Union’s trade strategy is shifting: the focus is no longer on multilateral trade agreements, but rather on the creation of bilateral deals such as CETA. How can the EU Member States cooperate in this context, when international protectionist tendencies are rising?

The failure of the Doha round of negotiations has temporarily ended multilateral talks for the liberalisation of international trade. At the same time, Asian giants such as China and India have become unmissable actors of globalisation who have not hesitated to use protectionism to distort the global market. In this context, the United States and the European Union have decided to redefine their trade strategy. Their priority has shifted from multilateral trade agreements to “WTO plus” bilateral deals. The Comprehensive Economic Trade Agreement (CETA) is a perfect example of these “new generation” trade agreements.

Trade strategy shift: internal factors

The shift of the EU’s trade strategy is not only due to the systemic factors described. Internal factors – namely the promotion of neoliberal policies combined with austerity measures – have caused Brussels to favour competitiveness and exports. It is difficult to believe that these policies have created more jobs in Europe. Europe needs investment if it wants to create quality jobs and it should always push for multilateral solutions within the World Trade Organisation (WTO). Unfortunately, this strategy is not on the EU agenda and the current trade policy is not being called into question, even though we know that free trade can cause negative effects. Some communities and sectors do lose out in the face of international competition and open markets. How can European states regulate free trade within this context?

Potential solutions

First, European states need to ensure that the Union is strongly committed to a rule-based global trade system. The WTO offers the most appropriate platform to create ambitious and balanced trade agreements. In parallel with bilateral comprehensive trade deals, the EU should continue its efforts to complete the Doha Development Agenda to ensure that the issue of dumping is addressed and that developing countries continue to play a role in international trade. Free trade agreements should therefore be a stepping-stone towards multilateral trade agreements, rather than a threat to them.

Second, we know that European states cannot act independently regarding free trade. The European Union has exclusive competence in international trade, except where treaties are considered “mixed”. In this case, EU Member States must ratify them in accordance with their domestic ratification procedures. In Belgium, ratification procedures also involve the approval of the regional and community parliaments.

National resistance to bilateral trade deals

Everyone has heard about the resistance of civil society and the government of the Wallonia region of Belgium to signing the CETA. The Parliament of Wallonia, lead by Paul Magnette, decided to take up the issue as Wallonia’s citizens asked to be more protected from the consequences of the EU-Canada deal. They concluded that the CETA be ought to be accompanied by a legally binding interpretative instrument to clarify the treaty on key issues, including the rejection of any private arbitration mechanism. People refused to see their public health, public services and environmental legislation attacked under the pretext of protecting multinational investments, and the government responded to their legitimate concerns. Therefore, in the case of mixed agreements, European states have the capacity to act and prevent the negative effects of trade deals.

Member States must cooperate

Very recently, the European Court of Justice set a precedent by stating that the European Union will need approval from national parliaments in order to finalise a free trade deal with Singapore (a mixed agreement, like CETA). The Court’s opinion reaffirmed the important role of Member States in the ratification process of comprehensive trade agreements. 

The European Court of Justice is sending a clear democratic message to Member States. They can regulate free trade, but not alone. We hope that this signal will enhance Member States’ cooperation to analyse trade agreements with EU institutions and find common ground together within the Council and the WTO. 

Frédéric Daerden is Member of the Belgian Parliament and the Progressive Alliance of Socialists and Democrats in the European Parliament.