Free rein for EU-Canada trade

DGermany dissolves its trade ban. On Thursday, the Bundestag passed the law ratifying the EU free trade agreement Canada. The contract, which goes by the abbreviation Ceta, has been in existence since 2016, but the vote in Parliament was delayed due to various reservations. The concern was that climate policy efforts could be undermined, consumer rights undermined and normal legal channels circumvented. But under the impression of the Russian war of aggression in Ukraine and an increasingly aggressive government in China, the mood has turned.

Coalition speakers campaigned for more deals in the debate that preceded the vote. It is not enough to conclude a contract with Canada, said the SPD politician Verena Hubertz. “We need more partners instead of fewer.” Specifically, she named Mexico, Australia, New Zealand, Chile and Brazil. One strives for more agreements with the democracies of the world, said the chairman of the FDP parliamentary group, Christian Durr. “That is the goal of the coalition.” The FDP politician announced that she would also try again for a free trade agreement with the United States.

fear of abuse

The Greens had their approval too Ceta linked to the condition that the controversial chapter on the protection of investments is supplemented by an interpretative declaration that prevents “abuse” by corporations. Behind this is the concern that companies could claim damages for lost profits from states if they tighten their climate laws, for example. An interpretation clause negotiated by the European Commission and the Canadian government now makes it clear that something like this should not be considered “indirect expropriation”. This does not change anything in the text of the contract itself.

With Germany, 17 EU countries have now ratified the agreement. However, large countries such as France or Italy are still missing. The ratification of Belgium, whose Wallonian regional parliament had blocked the conclusion for a long time, is still pending. It will therefore be some time before Ceta is fully ratified. Nevertheless, there is great hope in Brussels that German ratification will give momentum to the process, precisely because the Greens were involved.

The approval of the Bundestag has geopolitical significance. It is said that in Canada it was increasingly strange that the “partner Germany” had not ratified. That is “difficult” in times of the Ukraine war and the energy crisis. Above all, however, the Commission is hoping for momentum for the rest of its trade agenda. This includes a solution to the blocking of the agreement with the South American Mercosur states, such as the partially completed, partially ongoing negotiations with countries such as Chile, Mexico, Australia, New Zealand and India. It’s not just about further sales opportunities for European products. It is about a partnership of democracies and the geopolitical influence of the EU – speak above all about pushing back the Chinese influence. A resumption of negotiations with the United States is also being discussed again.

Chancellor Olaf Scholz (SPD) and Economics Minister Robert Habeck (Greens) indicated Germany’s change of strategy at the Asia-Pacific Conference of German Business in Singapore in mid-November. The SPD politician described free and fair trade as the basis of prosperity. Huge free trade areas in the region are an incentive for Europe. “We would also like to make rapid progress in the ongoing negotiations with Australia, India and Indonesia and remain open to new agreements,” emphasized the Chancellor. The Green politician also mentioned an agreement with ten Southeast Asian countries (Asean countries) as a possibility. Germany was blocked on trade issues, that is changing, Habeck emphasized.

As the news portal “The Pioneer” reports, citing the Ministry of Economics’ confidential China strategy, not only new reporting obligations are planned for German companies that are heavily involved there. In the case of state safeguards for investments, there should be a stronger incentive to expand into other countries in order not to be even more dependent on China to become. It should become more expensive to claim new guarantees in countries that are already in high demand. An annexation of Taiwan by China is expected by 2027 at the latest, the 100th year of the founding of the People’s Liberation Army. Germany’s potential for blackmail is high given the economic ties, they say.

Economically, the Ceta ratification is largely irrelevant as the trade portion has been “applied provisionally” for the past five years. There are no customs duties on 98 percent of all goods. However, the controversial investor protection is not one of them. The Commission draws a positive balance. “We have demonstrated that Ceta promotes jobs and growth and does not bring disadvantages,” said Trade Commissioner Valdis Dombrovskis recently on the fifth anniversary of the application. “Ceta has created an impressive 700,000 jobs in the EU.” Trade volume has increased by 31 percent to 60 billion euros. EU exports to Canada have increased by 26 percent – compared to 17 percent for the rest of the world. The “profits” are distributed differently nationally. Italy and Ireland have benefited above average. Germany has “only” achieved an increase of 8 percent in goods exports.

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