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Hot Air Walloons

Posted by hkarner - 22. Oktober 2016

Date: 20-10-2016
Source: The Economist

Wallonia is adamantly blocking the EU’s trade deal with Canada

A tiny region of Belgium opposes trade for reasons that are hard to understand

Bravely resisting the Canadian menace

“HEY Canada, fuck you.” Within hours this tweet (the result of a hack) from the Belgian foreign minister’s account was replaced with a friendlier message: “keep calm and love Canada”. Yet his country’s actions are closer to the original. On October 14th the regional parliament of Wallonia voted to block the Comprehensive Economic and Trade Agreement (CETA), a trade deal between the European Union and Canada.

Twentieth-century trade deals slashed tariffs. Newer ones between rich countries, such as CETA, focus on cutting other barriers to trade. After seven years of haggling, European negotiators dream of European toys and electrical products being sold straight to Canadians, without having to go through a second round of health and safety checks.Coordinating standards with another country inevitably means surrendering a little sovereignty. This riles many Europeans, who worry that CETA will dilute environmental standards and labour laws; they suspect that new courts established by the treaty to settle investor disputes with governments will favour corporations over regulators.

But plans for such courts have already been reformed, notes Marietje Schaake, a liberal Dutch MEP. The latest proposals make them more independent and transparent. On October 18th Cecilia Malmstrom, the EU’s trade commissioner, wearily offered to add a “plain language” declaration to clarify the deal.

CETA has other more traditional detractors who hate the fact that it also hacks away at 99% of customs duties between Canada and the EU. Wallonia boasts one cow for every three humans and its lavishly subsidised farmers are wary of cheap Canadian competition. Erwin Schöpges, a Walloon dairy farmer who joined the protests outside parliament, says he already faces milk prices below his production costs. “We want to trade with Canada, but we would rather not abolish tariffs,” he says.

In any trade deal there are winners and losers: the former, more numerous; the latter, more passionate. The Belgian government may buy off its farmers, but even so more hurdles await. CETA must be ratified by 38 regional and national EU parliaments before it can be implemented fully. Mr Schöpges says the protest in Wallonia was less lively than the one he attended in Hamburg a few weeks earlier; opposition in Germany and France could just as easily derail proceedings.

CETA would make Europe €5.8 billion a year richer, by one estimate. But the real danger of letting Wallonia derail it is the precedent it would set. With so many potential vetoes, says Chad Bown of the Peterson Institute for International Economics, it is hard to imagine the Transatlantic Trade and Investment Partnership (a much bigger deal between America and the EU) being passed. And as for Britain’s prospects after Brexit, Ms Malmstrom says: “if we can’t make (a deal) with Canada, I’m not sure we can make (one) with the UK.”

Date: 20-10-2016
Source: The Economist
Subject: Trade agreements: Asterix in Belgium

In the face of feisty opposition, politicians must do more to champion free-trade deals

PLUCKY little Wallonia! On October 14th the parliament of this rust-belt region of Belgium voted against the Comprehensive Economic and Trade Agreement (CETA), a proposed trade deal between the EU and Canada. To its admirers, this French-speaking corner of ancient Gaul, with a population of just 3.6m out of the EU’s 508m, has taken an Asterix-like stand against the implacable forces of globalisation. Free-traders may seethe that such a tiny minority can threaten a proposed treaty seven years in the making. But they cannot disregard it. Failure to secure a deal with Canada would undermine much of the EU’s trade-negotiating policy, and raise troubling questions for Britain about trade with the union after Brexit.

Wallonia, once Belgium’s steel-and-coal heartland, is the sort of place where a bleak view of globalisation flourishes. Industrial plants are shutting down. Unemployment is high. In such poverty traps it is easy to misconstrue free-trade deals as giving supranational capital the right to trample over local legal systems, as well as environmental and labour standards. Yet political leaders, instead of facing up to this plight and presenting free trade as a way out of a dying past, make a case for it that is ever more convoluted. At best, they focus on technical fixes to finagle agreements such as CETA through. At worst they pander to rising protectionism with xenophobic rhetoric.

CETA has raised hackles across Europe. It had already been dealt a blow by Germany’s constitutional court, which, in a suit with 190,000 plaintiffs, this month ruled that it must not cut across areas under national (as opposed to EU-level) “competences”. Protesters against CETA have taken to the streets of many European countries. Anti-globalisers fear that it would pave the way for a proposed EU-America agreement, the Transatlantic Trade and Investment Partnership (TTIP).

If only. Trade pacts are the walking dead of diplomacy, repeatedly rising from the grave and lurching ghoulishly through yet more rounds of “last ditch” talks. So CETA is not buried yet—though, as we went to press, the prospect that it might be signed as planned on October 27th looked remote. TTIP, whose condition seems terminal, also limps on. The TransPacific Partnership (TPP), covering America, Japan and ten other Pacific-rim countries, has yet to be ratified by Congress. Hillary Clinton and Donald Trump both say they oppose it.

Part of the problem is that even supporters of these agreements fail to defend them. In CETA negotiators have made striking improvements in contentious provisions, such as those for settling disputes between investors and governments—a bugbear of its opponents. They have protected national laws on health and the environment and provided for transparent arbitration proceedings. They have guarded against a foreign-trade invasion to a fault: hundreds of its 1,598 pages cover national “reservations”, protecting everything from the livelihoods of veterinary surgeons in Alberta to executive-search services in Slovenia.

All the carve-outs, side-letters and “interpretative declarations” point to how trade policy skirts around the benefits of more openness, more trade and more globalisation. Most leaders understand that, as Barack Obama wrote in these pages two weeks ago: “Trade has helped our economy much more than it has hurt.” Yet in America many still dream that the best way to pacify Congress is through procedural gestures, and that the lame-duck session after the presidential election will at last ratify the TPP. (Perhaps they hope the electorate will not notice.) As for Europe, its stuttering recovery can ill afford to forgo the fillip from CETA and TTIP. Britain would be foolish to rejoice in the idea that, if those deals fall through, the Conservative government might easily strike some post-Brexit bilateral replacements. Britain’s future arrangements with the EU will be far more important. And if the union cannot reach a trade agreement with cuddly Canada, what hope is there for renegade Britain?

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