Door closing on prospects of deal to open borders to trade

EU ministers gather in the Slovakian capital of Bratislava today for a key meeting on EU trade policy as doubts continue over the feasibility of agreeing a trade deal with the United States before the end of the year.

Over the past month TTIP – the Transatlantic Trade and Investment Partnership – has once again hit the headlines, as some of the most senior figures in European politics have voiced opposition to the deal.

French prime minister Manuel Valls last month demanded a "clear halt" to the negotiations, describing the agreement on the table as "unacceptable". Germany's centre-left vice-chancellor Sigmar Gabriel said the negotiations with the US had "de facto failed".

Opposition to the deal at the highest political level has helped galvanise public opposition to the plan. Protests have taken place in Brussels and across Germany over the past week, with more than 300,000 people estimated to have taken part in protests in seven German cities on Saturday.

Public sentiment towards free trade has never seemed so grim. Anti-globalisation movements are on the ascendant across the world as sections of the workforce struggle to find a place in an increasingly globalised and mechanised world.

US protectionism

This is reflected in political discourse on both sides of the Atlantic. Protectionism has emerged as a central theme of the American presidential campaign as US presidential candidates Donald Trump and Hillary Clinton have both signalled their opposition to both TTIP and the Trans Pacific Partnership (TPP) – between the Americas and Asian states.

And with elections looming next year in a number of EU countries, including France and Germany, it is unsurprising that senior politicians in those countries are reluctant to back a deal so inimical to many of their voters.

Though German chancellor Angela Merkel is still ostensibly backing TTIP, officials point out that she is unlikely to stake any political capital by vocally endorsing the contentious trade agreement, particularly as she faces a political backlash over the migration crisis.

With the 15th round of TTIP negotiations scheduled for early next month, both sides may try to nail down those elements of the agreement that have already been agreed and park the process until the next US administration is in situ. However, huge gaps remain in areas such as access to public procurement and investor dispute mechanisms.

EU trade commissioner Cecilia Malmstrom said this week that there would be a "natural pause" in the negotiations to let the new administration settle in, as she conceded that the year-end deadline was becoming "less likely as time went on".

Sealing the deal

With trade on the agenda for the next EU leaders’ summit on October 20th and 21st, EU member states are instead expected to focus on sealing the EU-Canada deal known as CETA ahead of an EU-Canada summit on October 27th.

In a measure of how difficult the trade climate has become, the EU is now struggling to ensure that an already-agreed trade deal remains on track, as delays over TTIP threaten to cloud the debate over CETA.

While member states signed off on the EU-Canada deal two years ago, the agreement has run into complications following a decision by the European Commission in July that the deal must be ratified by up to 38 national and federal parliaments. At issue is an arcane but important legal point concerning “mixed competency” – ie, whether trade policy is a competence shared by both the EU and member states, in which case member states would have to give their consent to any deal.

For this reason, officials are awaiting a judgment from the European Court of Justice on the 2014 EU-Singapore trade deal for legal guidance on the question of member states’ competency over trade deals. In the interim, today’s meeting will discuss how to provisionally apply the EU-Canada deal ahead of full ratification. Some member states – including Ireland – argue that certain aspects of the agreement, such as those dealing with investment and labour law, should be carved out during the provisional application phase.

Cabinet ratification

If agreement is reached today on the provisional application of the trade deal, Minister for Trade Mary Mitchell O Connor is likely to bring CETA before cabinet in October or November for ratification.

Sinn Féin's Matt Carthy has criticised both TTIP and CETA, arguing that the agreements will lead to lower standards of rights for workers and consumers. But despite continuing reservations from Austria and Belgium's government of Wallonia about the EU-Canada deal, EU officials believe most member states will continue to differentiate between the two.

To this end, the decision by Sigmar Gabriel’s SPD party this week to back CETA, despite the opposition of Mr Gabriel and many of his party to TTIP, was seen as a key endorsement for the Canadian trade deal. Backing the agreement will allow countries such as Germany to demonstrate their free-market credentials, without fully endorsing the more contentious deal with the United States.

The focus on EU trade policy in the coming months is also significant in the wake of Brexit, with a number of member states – not least Ireland – eager to ensure that the European Union maintains its commitment to free trade and investment in the wake of one of its biggest free-trade proponents leaving the bloc.

As negotiators in London, Brussels and national capitals prepare for the tortuous exit negotiations for Britain next year, deals such as the EU-Canada accord are likely to be watched closely as possible templates for Britain’s future trade relationship with the European Union, even allowing for the specificities of the British case.

With negotiations on the EU-Canada free trade agreement spanning more than seven years, the prospect of a swift trade deal with Britain looks increasingly unlikely.