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Is Trade Policy the Next Big Issue facing the European Union?

October 26, 2016


The CETA (Comprehensive Economic and Trade Agreement) deal that the European Union and Canada finally came to terms over after seven years of ongoing negotiations is now in jeopardy. The agreement requires ratification from all 28 member states of the European Union. The deal is currently being held up by the regional assembly in Wallonia – the French speaking region of Belgium – who have blocked the ability of the Belgian national government to ratify the agreement.

This type of de-facto veto enacted by Wallonia is a concern for policy-makers in Brussels. It represents a threat to future trade deals with other nations, but it also raises large questions over local and national sovereignty. The European Union negotiates trade as a unified, central bloc, rather than individually state by state.

Trade has become an increasingly central issue for politicians and citizens alike in today’s interconnected, globalized world. It has been a hot-topic issue in the upcoming United States’ presidential election, it was oft-debated in the lead-up to the Brexit referendum, and now has become at the center of debate for the European Union. The larger issue of disconnect between policy-makers in Brussels and ordinary British citizens was a primary tactic of the leave campaign during the Brexit referendum. Other right-wing populist parties in Europe, such as the VVD in the Netherlands led by Geert Wilders (People’s Party for Freedom and Democracy), are looking to the British as an example and exploring the possibility of holding similar referendums about leaving the EU. Wallonia, the region of Belgium holding up CETA, is traditionally industrial region located in Europe’s rust belt with a left-leaning political leadership. The economy has been on the downswing, with 16 percent unemployment. Walloon politicians are concerned over the economic, legal, and environmental implications of CETA on the region.

All of this begs the larger question, how can the European Union maintain a balance of national and regional sovereignty while still negotiating in the best interests of the Union as a whole in matters of trade? Is what’s good for Bavaria or Lombardy also good for Wallonia? Is what’s good for Germany also good for Romania? The answers to these questions are complicated. John F. Kennedy once said, “A rising tide lifts all boats”. It’s no secret that Germany and France are the economic engines of the EU and as a result they hold tremendous influence in Brussels. The responsibility of countries such as Germany and France to lead is even greater now that a Brexit is imminent. Angela Merkel and Francois Hollande realize this, and have developed an extremely close working relationship, the like of which has not been seen in post-WWII French-German relations.

A two agreement solution has been proposed by politicians in Brussels in order to reach a compromise. This proposal would give the EU the power to negotiate larger, more comprehensive aspects of the deal, such as tariffs and regulations. However, it would maintain national and regional sovereignty by allowing them to negotiate “second-tier” issues such as investment protection and local health and environmental standards. Legally and logistically, this proposal has many hurdles to clear. Trade negotiations and deals take years, sometimes even a decade or more to reach. The two track solution would run the risk of limiting the negotiating power of European Commission. Future trade deals could potentially break down at the national or regional levels, resulting in frustration over the lost time and resources spent negotiating.

Yet, ceding power to Brussels means surrendering key aspects of national sovereignty. Romania and Bulgaria were until recently sceptics over CETA based on the restrictions on visa-free travel for their citizens in Canada. While neither objected CETA based on principle, they saw the negotiations as an opportunity to gain rights for their citizens that all other EU-member state’s citizens previously held. This marks another problem with current EU trade policy, the possibility of internal state politics muddying the process.

The European Union can now add trade policy to its already long list of issues to address. It has become evident that there are rippling effects globally for internal EU politics. CETA represents just one deal with Canada, a large and prosperous nation, but what will happen when the United States, or Japan, or China, come to the negotiating table for new agreements? Will the process again be held up in a region of 3.5 million people? If yes, maybe the United Kingdom was right in leaving, as countries like Canada and the United States will sidestep the long, drawn-out headache of negotiating with the EU in favor of quick, efficient dealings with the UK.

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