Bilateral, Disputes & TDI, Regulations, Trade agenda

EU trade policy : autumn 2017 preview

The policy world is gradually flocking back to Brussels.  Trade and investment will be among the most packed agendas in an autumn overshadowed by the coming German general election.

 

Below are the key policy files to watch.

 

Trade defence & its reform

 

The European Parliament, the Commission and the Council will be wrangling over a politically charged reform of the EU’s trade defence instruments. One package is about a 2013 reform that increases transparency but also seeks to waiver  a so-called ‘lesser duty rule’ that currently puts a lid on the level of trade defence duties. The other file concerns the reform of the EU’s antidumping calculation methodology to compensate for the expected end of China’s treatment as a non market economy. Check out the latest state of play here.

 

In principle, the end of the year will bring a WTO dispute resolution body’s report on whether the EU is breaching its obligations under the WTO for missing a December 2016 deadline after which it should have done away with its  ‘analogue country’ methodology in trade defence cases targeting China. For China this issue is top of the agenda in its relations with the EU.

 

The EU is also seeking to settle a biodiesel antidumping case with Argentina and Indonesia, after WTO and CJEU rulings rebuked the Commission’s procedures to calculate damages and duties. The EU is considering duty reductions – the issue is expected to be in the limelight in September.

 

WTO

 

The EU is currently among the most active big players in Geneva, seeking to bring forward old discussions on subsidies to the agricultural sector ahead of the next Ministerial Conference in Buenos Aires in December. Whether WTO members will conclude a deal on domestic support and on the old discussion over exceptions to these rules for public stockholding remains to be seen. Fisheries and e-commerce are also in the running for a potential Buenos Aires text.

 

Apart from India, other difficult partners will be China – which is doggedly pursuing its agenda to get recognised as a market economy in trade defence – and the US. Washington has signalled to China it won’t move on the issue, and indicated to its WTO partners it is not very interested in a negotiated outcome in Buenos Aires.

 

What is clear now: it’s not the deal that is at stake, it’s the global trading order.

 

Investment

 

The EU is trying to find a way to restructure its international trade agreements following the Court of Justice of the EU’s ruling on the distribution of legal competencies between the EU and the member states in the EU Singapore free trade agreement.  In May 2017, the CJEU ruled that, whereas investment protection falls under the purview of the EU, investor-state dispute settlement is a shared competence with the member states.

 

The EU and Singapore are now in final discussions over the shape of their deal before it is sent to the European Parliament for ratification in the coming months.

 

In his State of the Union speech on 13 September 2017, Commission president Jean-Claude Juncker is expected to launch a new regulatory process on a divisive topic: investment screening. EU member states are divided over the file, which is being pushed by Paris, Berlin and Rome (see here). But the Commission is expected to work its way around the problem by seeking to harmonise approaches to national regulations on investment screening in ‘strategic sectors’ – where these exist.

 

Free trade agreements

 

The EU Canada free trade agreement CETA is due to come into force provisionally on 21 September.

 

Belgium is expected to send a request for an opinion to the CJEU on the compatibility of CETA’s investment court system with EU law in the coming weeks. The ICS will not come into force in September as it is considered as falling under the mixed competence of member states.

 

24 member states still need to ratify CETA for it to come fully into force. France and Italy will likely steal the limelight in the potentially rocky ratification process, as Rome prepares to ratify the text in September. French president Emmanuel Macron to decide what to do with CETA once an expert report on the deal’s compatibility with environmental and social goals is out. In case you missed it: the French constitutional court greenlighted CETA. CETA will become an issue in Germany after the election too.

 

The EU and Japan will also work on the final stretches of their ‘politically’ concluded free trade agreement or Economic Partneership Agreement. It looks like Japan will escape having to sign up to the EU’s ICS system – something Tokyo is vehemently opposed to – given the above developments on investment in Europe’s common commercial policy.

 

The EU and Singapore are now in final discussions over the shape of their deal before it is sent to the European Parliament for ratification in the coming months.

 

The legal scrubbing and translation process of the FTA with Vietnam concluded in 2015 is reportedly reaching its final stretches. Whether a diplomatic row between Berlin and Hanoi that broke out this summer over the alleged abduction of a Vietnamese regime opponent by the Asian country’s authorities on German territory will have an impact on the ratification process remains to be seen.

 

The EU is also expected to prioritise the conclusion of free trade negotiations with Mercosur, talks which were revived in 2016. Difficult market access discussions lie ahead on industrial tariffs (EU demands mostly) and agriculture protections (EU tariffs and quotas on meat and sugar).

 

Brussels and Mexico city also want to clinch a deal on their ongoing modernisation of their 2001 free trade pact. Developments in the ongoing NAFTA renegotiation are likely to have a major impact on the pace and content of the talks.

 

The Commission is expected to bring free trade agreement negotiation mandates for free trade agreements with New Zealand and Australia over the finishing line and start the talks in a few months. It is also expecting a mandate from the member states to negotiate the modernisation of the EU Chile Association Agreement.

 

Plans to launch negotiations to modernise the EU Turkey customs union have failed over divisions in the European Council over Turkish demands regarding a possible role in the Council’s trade policy committee and over the free movement of truck drivers. The continuous deterioration of political relations between European countries with Turkey has made matters worse.

 

The EU is moving ahead with free trade talks with Indonesia. Free trade negotiations with the Philippines are de facto on halt, as the EU is in a wait and see mode over how the Duterte administration is handling human rights abuses.

 

Chances are minimal to see a revival of the transatlantic TTIP negotiations before the end of 2017. But the Commission has been sounding out business and stakeholders over what to do next. Fears of a trade war are fading, as the Trump administration has dropped plans this summer to introduce a ‘border adjustment tax’. A national security investigation over imports of steel and aluminium that was keeping the EU worried is seemingly petering out.

 

Stalled DCFTA negotiations between the EU and Tunisia will likely be revived, as a second round of talks is pencilled in for the autumn 2017 in Tunis.

 

The EU is also modernising its PCAs with Azerbaijan and Kyrgyzstan. A second round of talks with Azerbaijan will take place in September 2017: trade is expected to feature strongly in that negotiation, though Azerbaijan’s non membership in the WTO will likely put a limit on what is possible to achieve.

 

Dual use regulation overhaul

 

A planned update of the EU’s 2009 dual use regulation will wind its way through the European Parliament . Its political groups are deeply divided over plans to use a regulation originally aimed at curbing high tech, engineering and chemicals exports to avoid the spread of weapons of mass destruction, to control exports of goods that could be used for cybersurveillance purposes and human rights violations.

 

Brexit

 

Brussels professionals are not prioritising Brexit in their lobbying concerns, but trade relations with Britain will likely move up the agenda later in 2017. The reality of what this means for EU agriculture, fish, industries, and services exports is gradually dawning on business. Some countries are pushing for early talks on the future trade relationships between the EU27 and Britain. This is notably the case of Ireland, for which both vital trade relations and the Northern Ireland peace process are at stake.

 

A fresh round of Brexit talks is taking place in Brussels this week (week 28 August 2017). The Council will decide in October, at a dedicated Article 50 summit, whether to agree to start talking about the future trade relationship with Britain. Many doubt this will happen.

 

Some important dates for the coming weeks

 

EU Indonesia CEPA: 11-15 September – negotiation round

 

German general election: 24 September

 

Mexico: 25 – 29 September, 5th round of free trade negotiations

 

EU Mercosur FTA: intersessional talks between 4 & 8 September in Brussels; formal negotiation round in Brasilia on 2 to 6 October

 

WTO mini ministerial meeting in Marrakesh: 9-10 October

 

General affairs Council on Brexit: 17 October

 

EU Council: 19-20 October in Brussels

 

An EU CELAC Summit in San Salvador: 26-27 October

 

Special EU Foreign Affairs Council on trade: 10-11 November

 

Eastern Partnership summwit in Brussels: 24 November

 

EU-Africa summit is in Abidjan: 29-30 November

 

WTO Ministerial Conference in Buenos Aires: 11-14 December

 

Check our regularly our calendar for detailed updates on the EU trade agenda.

 

If you are taking a free trial, don’t forget to subscribe: we follow every free trade negotiation closely, with real technical understanding! Examples here and here.

 

By Iana Dreyer and Hermine Donceel.

Leave a Comment

Your email address will not be published. Required fields are marked *

*