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Why Negotiating Trade with the EU is Problematic

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I am currently enjoying a Visiting Fellowship at the World Trade Institute at the University of Bern in Switzerland.  It is a great opportunity for me to come and work with and learn from senior trade scholars. Indeed, some of the “big names” in trade politics, law and economics are associated with this institute, so I am rather enthusiastic about being here in Bern.  As well, how can one not be enthusiastic about missing Johannesburg winter.  Especially this one!

I digress.

On the second day of being here, I attended the WTI’s yearly conference on its research projects. To kick off the event, a senior European Commission official in DG Trade joined us to give a presentation on the state of European trade.  Clearly, an element of this was how the EU was pursuing free trade agreements/economic partnerships/multilateral trade talks.  One thing that was said struck me…and let me paraphrase here:

“The EU is happy to negotiate trade agreements with other countries, particularly developing countries.  But we are not willing to negotiate away from the rules.  The rules are the rules and they must be obeyed.”

I was struck by this comment because it suggested that in fact the EU was not willing to negotiate at all.  IF the rules are the rules and they must be obeyed…then where is the negotiating space?  In any free trade talks the focus and application of the rules are always what are negotiated.  What the senior official was saying was that the EU is happy to enter into free trade agreements if their version of the rules are applied.

What a bizarre position to maintain.

It is bizarre for a couple of reasons: first, for anyone interested in trade the Doha Development Agenda negotiations have been deadlocked for a number of years now.  This is because there exists a general dissatisfaction amongst emerging and developing economies with how the trade rules are currently applied.  For example, emerging and developing countries are not permitted to maintain subsidies for their agriculture industries, but the US and EU are.  So, they (developing countries) are taking a stand and saying ‘no’ to completing Doha until the US and EU budge on this issue.

Second, it is pretty common knowledge that those countries holding up Doha (India and Brazil, in particular) are the emerging economies of tomorrow.  The BRICS countries are where it is at, in economic terms, and all are really unhappy with the way the current international trade architecture favours the global North, the developed world. Indeed, one of the main reasons for the founding of BRICS was to create a global south-south partnership that could challenge the current structure of international governance.  So the fact that the EU is walking around with such bravado is quite frankly, confounding.

It seems apparent to me and inevitable that if emerging economies are dissatisfied with the system, and all the other developing countries are too, and that BRICS countries offer so much potential for economic growth, that the writing might be on the wall: the rules are gonna change!

In such a context, the EU might benefit from being a little more open to actually negotiating free trade agreements.

For in a political world, rules and laws only have traction in so far as there are people and states willing to follow them.  If the grumbling and shifting is starting now – wouldn’t it be in Europe’s interest to actually work with these countries to renegotiate the rules in advance of them just being ignored?  Surely, it is better to be part of shaping a new international order than not.

Just a thought.

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