Internal EU politics

New French reform proposals on trade policy: more nationalism in offing?

fekl-and-sellal
Matthias Fekl, French Secretary of State for External Trade and Pierre Sellal, Permanent Representative of France to the EU, at the Foreign Affairs Council in Brussels on 11 November 2016. Credit: Council.

France’s government submitted a set of proposals to reform the EU’s trade policy. The move comes after the protracted political process in the run-up to the signature of the flagship Canada-EU trade agreement CETA. During that process, a regional government of Belgium, held up CETA for several days and nearly toppled it. The French move also comes as the fate of the highly contested and controversial TTIP with the United States appears sealed for now, victim of domestic opposition in the EU, and of the political calendar and new realities in Washington.

 

The proposal achieved what it wanted: domestic plaudits. It also shows some real lessons were learned on transparency, notably on the side of the European member states. But it does not resolve the fundamental problem of EU trade policy: the trend towards renationalisation. It makes it worse.

 

More transparency

 

The proposal includes a series of measures, the first being greater transparency in trade policy making in the EU. Member state mandates to the Commission on specific trade agreements should no longer be secret, the report says. Council meetings should also be transparent. Paris also wants the names of persons in the EU’s trade negotiation teams to be revealed.

 

In reaction to the EU’s decision to revive negotiations towards a free trade agreement with the South American bloc Mercosur last year, on the basis of a member state mandate that dates back to the mid 1990s, Fekl also wants “no more mandates beyond their due date”. Mandates should expire after a given time.

 

More trade defence

 

Fekl, like just about everyone in the French political establishment, is fascinated by “trade defence”. He wants the Commission to double the number of persons working on antidumping. “In the United States, 400 federal agents are in charge of trade defence”, Fekl holds, “against less than 200 in the EU”.

 

The paper also fully endorses the EU’s current plans to overhaul its trade defence instruments – which are going in a more aggressive, defensive, of not protectionist direction.

 

More democracy

 

Fekl wants the Council to obtain a stronger role in EU trade policy. “The Council will need to meet in a decision-making format more often than now (4 meetings per year currently)”.

 

The French minister also says that ‘members of parliament’ must be part of free trade negotiating teams. He does not however make clear whether he means national or European representatives. MPs should have access to negotiating documents from the very start of free trade negotiations, Fekl’s office believes.

 

The EU’s current TTIP advisory board with its civil society and business representatives should be enlarged to include more members, and a similar body should exist for every free trade negotiation, so Fekl.

 

More social and environmental rights

 

The proposal lingers on the need to more carefully undertake impact assessments ahead of new trade negotiations, calling namely for three different types of studies made by groups “on a pluralistic scientific base, mobilising clearly distinct schools of economic thinking”. The impact assessment should insist more strongly than hitherto on social, environmental, climate and sectoral effects of FTAs.

 

In future FTAs, social and environmental provisions should be made sanctionable under the deals’ bilateral state to state dispute settlement arrangements. So far, this is not the case.

 

The EU should in parallel to negotiate free trade agreements strengthen its industrial policy and modernise the European globalisation adjustment fund.

 

Defending the ‘investment court system’

 

The EU has attempted to replace investment arbitration with a mechanism involving publicly appointed judges. Its first breakthrough came with CETA. Paris says that this is a way to protect the states’ right to regulate in future. This position is not surprising: the Court system was designed with strong French involvement.

 

Now, what to make of this?

 

Most of the proposals, are, how the French would say, “knocking down an open door”. From trade defence to industrial policy to global adjustment fund reforms: all these processes are already underway. Some of the other proposals such as doubling trade defence staff are a no-go area.  Unless he wants money taken away from the CAP, notably after the British contribution to the EU budget falls through in two year’s time? MP direct involvement in free trade negotiation rounds won’t fly either.

 

Fekl’s calls for greater transparency, notably to the Council, are a true step forward, though. Of all the EU institutions, the Council is the least transparent, say institutions like Transparency International. It would really be beneficial if member states were much clearer with their domestic constituencies back home on what they are actually up to in Brussels on trade.

 

The focus on social and environmental issues in trade agreements is a partisan preference – a socialist party is in power in France – it also reflects an underlying trend in public opinion. It is also one constructive (if perhaps inadequate) response to the clear rejection of globalisation as expressed in the current populist insurgency in the West.

 

Real agenda: keep member states in charge

 

Yet the underlying agenda of France appears to be choking off the EU Commission, in minimising its role as trade negotiator, and ignoring altogether the role of the EU Parliament.

 

There is no sign of conceding to the fact that the CETA drama has to do with the adoption of the deal as a mixed agreement. This requires endorsement by member states unanimously, rather than under the as an EU-only agreement falling under the EU’s exclusive competence under the common commercial policy, and hence requiring qualified voting majority and ratification by the EU Parliament.

 

Fekl continues to advocate ratification of CETA as a mixed agreement. There is nothing very new in Fekl’s proposals. They are in line with an underlying trend in French attitudes to the EU: press it, squeeze it, give the member states all the say. Ignore the European Parliament as a source of democratic legitimacy. This is a narrowly transactional approach to EU policy making that is short sighted. And this approach is is independent of who is in power in Paris: it was strong already under previous centre-right administrations. It is also now gaining ground in Berlin.

 

So: expect more trade policy accidents like CETA in future. Perhaps death must happen once for a big deal to provoke a fundamental rethink of member state strategy on EU trade policy.

 

More than ever it will be preferable to hang together than to be hung separately. After all the new guys the EU will be dealing with in trade are Messrs Trump, Putin, Modi, and Xi. Expect them to be ruthless with a weak and divided Europe.

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