Time for an end to EU protectionism


Picture of Jan Zahradil
Jan Zahradil

Jan Zahradil is Vice-Chairman of the International Trade Committee in the European Parliament

The Slovak Presidency of the European Council declared in the summer that the end of 2016 is still a feasible deadline for the finalisation of the Transatlantic Trade and Investment Partnership (TTIP). But this deal – and several others – are under threat.

Despite all previous declarations, the Commission took the unprecedented political decision to subject the Comprehensive Economic and Trade Agreement with Canada (CETA) to approval by national parliaments in addition to the European Parliament. That’s at least 36 parliaments, both national and provincial, who need to approve the deal. It could mean four or five years before
the agreement takes effect.

The Commission is striving to react to criticism. It has come up with a new model of investment protection, the investor-state dispute settlement model (ISDS). It has substantially increased negotiation transparency. It publishes reports on the potential benefits of successfully-concluded trade deals. But this isn’t enough to reach out to those across the EU who are hostile to free trade. Member states remain under intense pressure from strong lobbies and civil society.

The EU is growing more protectionist, and has been since well before Britain voted to leave. It’s true that discontent with globalisation and suspicion of the EU’s trade – and other – policies were prominent in the debate leading up to the British EU referendum. But the EU itself reacted to the Brexit vote with a protectionist stance. Some EU capitals were keen to punish London for fear that other countries would follow Britain out of the EU but with favourable access to the single market. Pursuing this strategy would be damaging for both sides, so a more sensible and “depoliticised” approach needs to be found. Taking into account the significant trade deficit the UK has with the rest of Europe, currently at a record high level, one could even argue that the EU needs the British market more than Britain needs the EU single market.

Widespread public concern over free trade agreements is understandable. We are negotiating a new generation of trade deals that go beyond the elimination of tariff barriers and include discussions on food safety, international standards and consumer protection. In the case of TTIP, it even has geopolitical and strategic importance. Citizens want to know whether these deals will help growth to be restored and new jobs to be created. They want higher, not lower standards of health, labour and environmental protection. Opposition is often based on the perception that deals are negotiated in secret, for the benefit of multinational companies and at the expense of ordinary people.

If we are serious about fighting protectionism, we have to make a more convincing case about the benefits of trade liberalisation. Trade increases spending power, especially for those on low incomes, and enlarges the variety of goods and services people are able to buy. We must also be clear about the scope of trade agreements. The Commission has already made considerable
efforts in terms of transparency, but more has to be done. It’s clear that the benefits aren’t evenly shared across the EU or inside countries. We have to (re)define the responsibility institutions,
both at the EU and at national level, have towards those who may be affected. We must prevent crisis situations and be more pro-active.

Rejecting free trade means we are on the defensive. It’s an admission we aren’t competitive enough to progress on the global stage. Protectionism is very much a European and American problem; it’s not by any means a general global trend. We have to understand that the future of global trade doesn’t depend on our participation anymore. Canada, China, Australia and others are actively negotiating trade and investment agreements. We can either take the lead, conclude deals and set new models and standards, or we can stand by and let others set conditions for us. We face enormous challenges: chronically slow economic growth (especially in the eurozone), persistently high unemployment, and energy insecurity. We have to make clear to our citizens that open trade is a crucial instrument for growth and a way out of these difficult situations. Free trade was one of the engines of the prosperous decades following the Second World War in Europe, America and beyond. We should have the courage and political will to champion it.

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