EU member countries have become more vocal in trying to protect their own backyards from competition in the ongoing free trade negotiations with Canada and the United States, writes Bruno Maçães.
By Bruno Maçães, Secretary of State for European Affairs, Portugal.
Supporters of free trade in Europe have good reason to be worried. The last two weeks have brought a number of ominous signs to public attention, even if nothing of what is happening seems particularly new.
On the one hand, vested interests trying to protect their own backyards from competition have become increasingly vocal. On the other hand, some national states have threatened to make the debate more about their own specific concerns than the common interest of the Union.
We in Portugal want to be very clear about this. We regard global trade as a strategic element of our future prosperity. Our economy is now one of the most open in the European Union, so guaranteeing access to global markets has become an issue of vital interest to us.
A study commissioned from the Centre for Economic Policy Research (available here) shows that Portugal could add as much as 40 thousand new jobs as a result of the Transatlantic Trade and Investment Partnership (known as TTIP). Over the long run the impact of an ambitious free trade agreement between the EU and the United States could grow to around 1% of GDP, close to two billion euros each year. We will not stand idly by while other EU Member States turn this issue into fertile ground for special interests and politics as usual. It is simply too important an issue.
Let’s try to be clear on a number of principles. First, we all know that trade negotiations are a balancing act of utmost complexity and skill. Credibility matters in a number of ways. It is therefore of crucial importance that the outcome of a long negotiating process be not subject to new uncertainty. Agreed texts cannot be reopened. To do so in the case of the Comprehensive Economic and Trade Agreement between Canada and the EU (known as CETA) would not simply jeopardise the very concrete gains we have obtained during difficult negotiations over a number of years. It would most probably cast a long shadow of doubt over our ability to reach stable and credible outcomes in other trade agreements being negotiated, including of course TTIP.
Second, let’s not compromise the ambition of our trade agenda. In particular, we need to make sure that financial regulation is not excluded from the framework of our agreements with Canada, the US and others. This includes investment protection. Some of the objections to such inclusion are difficult to comprehend. Over the years many countries in Europe have developed a complex maze of bilateral investment treaties with other economies, including the United States and containing Investor-State Dispute Settlement (ISDS) provisions. These offer a high level of protection for investors. Higher perhaps than it should be.
That is precisely the point. We need to create some order out of this ISDS chaos. Cleaning up excesses and preserving policy space for democratic decision-making, while creating a level playing field within the EU is precisely the argument for including ISDS in our trade negotiations. A country like Portugal, which has over the years suffered from not having investment protection treaties as developed as Germany or the UK, will not easily tolerate the status quo on this matter.
My third and last point: I cannot regard favorably any attempt to turn this into a strictly national debate, focused on the limited perspectives of different national public opinions and constituencies. Trade policy is an exclusive competence of the EU and for good reason. We will all be deeply affected by the outcome of past and future trade negotiations, especially when they are as ambitious as CETA or TTIP.
Every attempt to block or derail the process because of specific concerns of national constituencies will raise serious concerns and will naturally offend our established practice on EU matters. I am confident that good sense and dialogue will eventually prevail and that every small bump on the road will make us stronger, more capable of defending our common interest in the crucial negotiations ahead.