Andrew Hammond is an associate at LSE IDEAS (the Centre for International Affairs, Diplomacy and Strategy) at the London School of Economics.
Officials from Brussels and Belgium are trying to prevent a complete breakdown of negotiations for an EU-Canada free-trade treaty that has taken seven years to finalize. The so-called Comprehensive Economic and Trade Agreement (CETA) talks appeared to collapse last Friday, highlighting again how 2016 has seen free trade under growing political attack across much of the world.
For at the same time that CETA now appears potentially on the verge of defeat, two other major, controversial free trade deals are on political life support.
The Trans-Pacific Partnership (TPP), which encompasses 12 countries (Canada, the United States, Australia, Japan, New Zealand, Brunei, Singapore, Malaysia, Mexico, Peru, Chile and Vietnam) that collectively account for about 40 per cent of world GDP, is languishing in the U.S. Congress.
Meanwhile, there are growing signs that the Transatlantic Trade and Investment Partnership (TTIP) between the European Union and United States, which would create an economic bloc accounting for around 50 per cent of global GDP and represent the largest regional free trade and investment agreement in history, may be also unravelling.
The latest bout of turbulence, over CETA, came on Friday when Wallonia – a region of Belgium with a population of around 3.5 million – told Canada that its opposition to key provisions of the trade deal are red lines. While the totality of the Walloon government's objections are not yet clear, it has previously expressed concerns about increased pork and beef exports from Canada, and introduction of an independent court system to settle disputes between states and foreign investors that has been heavily criticized by some as weighted toward the interests of multinationals.
Should Wallonia not cave in on its refusal to support CETA, Belgium's national government cannot give the deal its approval. While it remains possible that the regional government, one of the country's six legislatures, may yet be seeking to get a better deal from Ottawa, or concessions from the EU or Belgium national administrations, Canada's Minister of International Trade Chrystia Freeland asserted on Friday that agreement was now "impossible," and the previously planned signing of the deal in Brussels this Thursday by Prime Minister Justin Trudeau is in jeopardy.
If CETA collapses, it could set a potential precedent not just for the demise of TTIP, which has recently been roundly criticized by multiple European politicians from French President François Hollande to German Economy Minister Sigmar Gabriel. In addition, it could point to significant problems for any Brexit deal that the United Kingdom negotiates to secure its departure from the EU.
The scale of potential challenges facing these negotiations is reflected in the fact that CETA, like TPP and a Brexit agreement, need approval by some 38 national and regional parliaments across Europe before they can be implemented. Concerns have already been voiced by senior EU officials who appear exasperated that the comparatively small region of Wallonia could potentially derail CETA for the EU's approximately 500 million residents, and Canada's roughly 35 million citizens.
For instance, EU Trade Commissioner Cecilia Malmström has asserted that "if we can't make [a deal] with Canada, I'm not sure we can make [one] with the United Kingdom." European Council President Donald Tusk has gone even further saying that "if you are not able to convince people that trade agreements are in their interests …we will have no chance to build public support for free trade, and I am afraid that means that CETA [should it yet be passed] could be our last free-trade agreement."
Reflecting the angst over free trade across the continent, President of the European Commission Jean-Claude Juncker has also urged the 28 member states to "fight against stupid populists." Specifically, he is pushing for Brussels to enhance so-called EU "trade defence instruments," such as countervailing duties, to strengthen its hand against imports such as heavily subsidized steel.
The Canada-EU setback underlines just how much free trade is under political attack. If CETA collapses, it could set precedent for the demise of TTIP and also indicate significant problems ahead for any Brexit deal.