by Mish

The EU-Canada trade agreement that had been in the works for seven years, and finalized two years ago.

It is rather amazing that a French-speaking region of Belgium can single-handedly veto a trade agreement that 28 nations including Belgium itself wanted, but such is the state of affairs of EU politics.

Please consider Belgium Sinks EU-Canada Trade Deal After Wallonia Veto.

European trade policy has been thrown into disarray after Belgium’s government said it could not overcome regional objections to an EU-Canada trade deal despite weeks of fruitless talks to rescue the agreement.

The so-called Ceta pact was to be signed at a ceremony in Brussels on Thursday at an EU summit with Justin Trudeau, Canadian prime minister.

Moves were under way on Monday to cancel the summit after Charles Michel, Belgian premier, said he could not sign the pact because of political resistance in Wallonia, the French-speaking region whose local parliament has voted against the agreement.

“The clear answer, at this stage, is no,” said Mr Michel in response to European and Canadian leaders who asked Belgium to clarify its intentions on Monday.

Ceta must be signed off by all 28 member states before it can take effect. Even though Mr Michel’s administration strongly supports the deal, it cannot be approved without regional support.

Each of the other 27 member states are ready to sign, meaning the deal has been blocked by representatives of 3.5m in a trading bloc representing more than 500m people.

Credibility Damaged

Last Friday, Chrystia Freeland, Canadian trade minister, walked out of talks with Walloon leaders. Negotiations and pressure continued over the weekend to no avail.

“Even if a solution is found in the coming weeks and months, the credibility of the EU as the world’s largest trading bloc has been damaged by the political grandstanding of the Walloon parliament,” said John Clancy, senior adviser at FTI Consulting in Brussels.

EU negotiations are typically last-minute affairs. I expected an agreement today following weekend pressure and a few trade agreement changes.

The deal may still go through, but serious questions about whether the EU can ever agree to another major trade deal are now in the spotlight.

What Killed CETA?

On March 14, 2013, Politics Canada reported Poultry Among Sticking Points in CETA Talks.

French Prime Minister Jean-Marc Ayrault says beef, poultry and pork remain sticking points in negotiations toward a Canada-EU trade agreement.

Ayrault made the comments to media during a press conference held with Prime Minister Stephen Harper on Parliament Hill, Thursday morning. He said that poultry is an issue on the Canadian side, while the other two items are a European concern.

Poultry has been a much-discussed stumbling block because, along with dairy, it is subject to the supply management system in Canada.

Foreign Affairs Minister John Baird told iPolitics that he would not negotiate in public.

“I don’t think any sensible or intelligent democracy with an open economy is going to negotiate a free trade deal through the media,” said Baird. “We’re not going to negotiate this through the media. We have a group of very professional public servants who are negotiators.”

Secret Negotiations

The article failed to mention the French objections.

Those objections were resolved, for France. Wallonia’s objections weren’t.

Regardless, the practice of secret negotiations is ridiculous. Perhaps a deal could have been achieved had it not been secret.

President Obama’s Trans-Pacific Partnership (TPP), a trade agreement with Asia seven years in the making has crashed because of objections in the agreement that were kept secret for years.

Belgium Given EU Ultimatum

The Guardian reports Belgium Given EU Ultimatum to Secure Canada Trade Deal, but Wallonia Defiant.

The European Union has given Belgium’s federal government until late on Monday to secure backing for an EU-Canada trade deal from the region of Wallonia or a planned summit to sign the pact will be cancelled.

Paul Magnette, the leader of the Wallonia region, told the Belga news agency on Sunday that the ultimatum from the EU “is not compatible with the exercise of democratic rights”. Belgium’s federal government cannot agree to the deal without the consent of five regional authorities, including French-speaking Wallonia.

Magnette, a Socialist, says the deal is bad for Europe’s farmers and gives too much power to global corporate interests.

Magnette hit out at the EU, despite efforts by the bloc to provide reassurances to his government over investment protection – one of the major sticking points in negotiations between Brussels and Wallonia. One European diplomat said that the reassurances “responded to all of Mr Magnette’s concerns”.

The deal is opposed by anti-globalisation groups who say it is a test model to push through an even more controversial EU-US trade agreement called TTIP, talks on which have also stalled.

On Saturday, 8,000 people including young people, farmers, union leaders and entrepreneurs joined a rally in Amsterdam in a show of solidarity, organisers said.

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They held banners saying “Our world is not for sale” and “Stop these bad trade treaties”.

“Situation Impossible”

Chrystia Freeland, Canada’s minister of international trade, walked out of eleventh-hour negotiations, calling the situation “impossible”

Canada Business reports CETA, Canada’s Major Free Trade Deal with the EU, is Close to Dead.

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CETA—the Comprehensive Economic and Trade Agreement, a major free-trade deal between Canada and the European Union, appeared to be close to collapse as Canada’s international trade minister, Chrystia Freeland, walked out of last-ditch talks in Brussels.

“I personally have worked very hard, but it is now evident to me — evident to Canada — that the European Union is incapable of reaching an agreement, even with a country with European values such as Canada, even with a country as nice and as patient as Canada,” a statement from Freeland read. “Canada is disappointed and I personally am disappointed, but I think it’s impossible. We are returning home.”

The ultimate obstruction to signing CETA, which had been under negotiation since 2009, was put up by the Belgian region of Wallonia. Wallonia’s politicians believe CETA would threaten their farming and industrial sectors, because they won’t be able to compete with cheaper Canadian exports. The concern comes in the wake of complaints by environmental activists and trade unions that this deal and others will erode standards for food, work and industry.

If passed, CETA would eliminate thousands of tariffs on goods traded between Canada and EU nations. The European Union enforces more than 9,000 different duties on imported goods; in its final proposed form, CETA was to have made 99% of them duty free for Canadian exporters. Canadian duties would similarly be dropped for EU exporters. Canadian officials placed the potential value of CETA to the Canadian economy at about $12 billion per year.

Newfoundland Held CETA Hostage in 2015

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In March of 2015, Canada Business reported Newfoundland is Holding CETA Hostage.

When Canada and the EU first sat down to hammer out a trade deal in 2009, the Europeans insisted the provinces be at the table, since many of the topics up for debate—procurement, labour mobility, agriculture—lie within provincial jurisdiction. This new status gives the provinces unprecedented clout. One of the biggest sticking points in CETA was the EU demand that Newfoundland relax its rules requiring fish to be processed provincially. To get the province to give ground, Ottawa initially tried tying a billion-dollar federal loan guarantee for the Muskrat Falls hydro project to a change in the fish-processing rules. When continued pleading didn’t work, Ottawa then offered to share the cost of a $400-million fisheries fund. But while the feds understood this deal to be contingent on actual harm occurring to the fishery business, Newfoundland now wants the feds’ $280-million share regardless.

While we wait to see how much Newfoundland is able to extract, note that Ottawa offered two other similarly vague compensation deals to get CETA through: One on drug prices, tied to a lengthening of patent protection, and another to the dairy industry as protection against an increase in duty-free European cheese. Keep your eye on the cheese deal. CETA’s compensation spats may be a preview of the future endgame for solving Canada’s thorniest trade dilemma of all—the total elimination of supply management.

“The removal of supply management will be a huge trade issue when it finally goes down, and it certainly will in the next 10 to 20 years,” says Saul Schwartz, a professor at Carleton University’s School of Public Policy & Administration in Ottawa. Newfoundland’s fight can be seen as a dry run for when the federal government finally bows to international pressure and dismantles the antiquated rules that protect Canada’s provincial dairy, poultry and egg markets from foreign competition.

EU-Ukraine Agreement Collapsed

On April 76, 2016, the New York Times reported Dutch Referendum Rejects Trade Deal Between E.U. and Ukraine.

Voters in a Dutch referendum on Wednesday overwhelmingly rejected a trade and cooperation agreement between the European Union and Ukraine, casting doubt over the future of the accord and delivering a new blow to supporters of European integration.

After all votes were counted and reported to the election service of the national news agency, ANP, 61.1 percent rejected the pact and 38.1 percent voted for it, Dutch broadcasters NOS and RTL reported.

In addition, the turnout was 32.2 percent — above the 30 percent required for the result to be declared valid, the broadcasters said.

In a Twitter post, Geert Wilders, a lawmaker who campaigns against Islam and is an opponent of the European Union, celebrated Wednesday’s result. “It looks like the Dutch people said NO to the European elite and NO to the treaty with the Ukraine,” Mr. Wilders said in his post.

“The beginning of the end of the E.U.,” he added.

US-EU Trade Talks “De Facto Dead”

On September 23, 2016, I reported US-EU Trade Talks “De Facto Dead”.

President Obama was hoping to get two trade agreements in the waning days of his administration.

However, this week the German Economy Minister stated the US-EU TTIP talks were “de facto dead”. The US-Asia TPP talks have been dead as a doorknob for some time.

Both deals were allegedly about free trade. In fact, neither was.

Nonetheless, that both deals died after years of negotiation is systematic of a bigger problem: rising protectionism everywhere, led by the US and EU.

The Power of One

Numerous Trade deals, two of them seven to nine years in the making, collapsed this year.

The EU deal with Canada and the EU deal with Ukraine collapsed because one nation, or a part of nation, rejected the deal. 27-1 simply was not good enough.

Heck, the Dutch referendum on the Ukraine trade deal was not even binding.

Obama’s TTIP and TPP deals collapsed on their own weight. They were negotiated in secret, and contained numerous odious provisions.

UK Better Off

One-on-one negotiations are hard enough! One on twenty-seven is impossible to get correct.

Mish Position of Free Trade

My position on free trade is best summed up in these two articles:

  1. April 7, 2015: Obama’s Trans-Pacific Partnership Fiasco vs. Mish’s Proposed Free Trade Alternative
  2. April 9, 2015: Readers Question Free Trade; Does Nonreciprocal Free Trade Cost Jobs? Paul Krugman “Was” Right!

Mike “Mish” Shedlock

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