Free Trade Agreements and the White House – where are we now?

23 January 2017 by David Hart KC

Trump’s inauguration seems not a bad moment to be having a look at the Free Trade Agreements (FTAs, actual or potential) which are swirling around at the moment, and their likely reception in the changed world which we face.

First on the list, our own tried, tested, and found electorally wanting, EU Treaties. They are FTAs, but with lots of knobs on – free movement of people, of establishment, level playing fields about employment rights, the environment and consumer protection, to name but a few.

The first thing to say is that FTAs, wherever they are, don’t come all that unencumbered these days.

You may agree on the applicable tariffs to each other’s exports, but if you do not agree about the other’s trade ground rules, then it is difficult for either party to trust the other not to put up barriers about health or the environment which the other party may regard as unwarranted.

Take two US/EU examples. The first is the meat growth hormones case which the US sent to the WTO complaining that the EC was unfairly objecting to imports containing such hormones.  The second is the long-running EU objection to widespread GMO crops and foods. I happen to think that the first objection is entirely well made, but the second, by now, is SO not – it smacks of EU protectionism coupled with political timidity. But those are the sorts of disputes which states may need to sort out before they do a trade deal.

You will get my gist already, that these deals don’t come easy. And it is naive beyond belief that they will come without a serious haggle as to their non-tariff terms.

And it seems absolutely clear that each remaining EU member state will be involved in the deal-making with the UK, and be able to put its foot down if the deal is not to its liking – as we shall see in the CETA instance below.

So FTA No.2 – TTIP (Transatlantic Trade and Investment Partnership) about which I have posted before here. This was a US-EU trade deal which has got to a fairly advanced stage between what we now have to call “the old elites.” The major objections from this side of the Atlantic revolved around

(i) employment/regulatory/environmental dumbing-down which it was thought the EU would follow when negotiations got nasty;

(ii) the secrecy which would attend that stage of EU/US negotiations; and

(iii) the Investor Dispute provisions which enabled aggrieved investors (Big Boys, no less) to sue states when they thought that the investors had been hard done by. Environmental measures imposed by states have been invoked by investors as amounting to being hard done by – see my previous post here.

Despite this, the deal was being waved through by the EU and indeed Cameron (remember him?), but the arrival of one DT in the White House is generally thought to be the end of this major pro-globalisation project. Anything which allows European goods, cars in particular, to arrive in the US more competitively than they do at the moment, does not seem to be top of the President’s immediate wish-list, whatever the countervailing benefits which may have been fuelling TTIP from the US side. Notably, any reference to the deal has disappeared from the White House website since inauguration.

Now to FTA No.3 – CETA – EU-Canada Comprehensive Economic and Trade Agreement, finally concluded on 30 October 2016. Trudeau fils may be a welcome antithesis to Someone Else these days, but he was on the warpath for an EU agreement of one sort or another – see his post on the new agreement here. The progress of CETA did not run smooth, as in the last few days before its planned signing, one part of one EU member state cut up rough. Enter the Walloons, the French-speaking inhabitants of southern Belgium. Belgium has a federal system under which all its constituent states must subscribe to a treaty of this sort. And Wallonia, under a left-wing government which was deeply wary of the big-business globalising impulses of such a treaty, put its foot down. Outcome – some important last-minute caveats to the dispute resolution side of CETA, not least in respect of the Investor Dispute provisions. The agreement will stand, but the legality of the Investor Dispute provisions is to be referred off to the CJEU – and we know what it feels about courts trespassing on its patch – see my post here about it deciding that it was unlawful for the EU to subscribe to the ECHR, because the ECtHR might become top dog over the CJEU. And each of the 28 member states must finally sign up to its terms. And what will the UK do as an exiteer, not having left the stage yet? I sense some bargaining chips being computed somewhere, just now.

FTA No.4 Singapore may seem a bit far away, but it might have lessons close to home. It is the EU Singapore FTA, which has come before the CJEU in recent times. On 21 December 2016 Advocate-General Sharpston in Opinion 2/15 (here, but warning, massive opinion running to 570 paragraphs) decided that such a FTA would normally have to be approved by all member states, and wisely reserved all issues as to Investor Dispute resolution to the case in which they directly arose. But hectic Brexiteers might want to note how long it all took. It was decided that the EU Council should negotiate a treaty with South East Asian nations – in 2006. That got difficult, so the EU decided to start with Singapore. Those negotiations started in 2010, but only led to a defined text in 2013, save for the investment chapter which took nearly another 2 year to sort – not an unimportant element of any EU/UK deal. So a mere 5 years to negotiate a deal which did not begin to have implications for the whole European project.

FTA No.5 TPP – a dead duck, from the moment Trump was elected. The Trans Pacific Partnership, a proposed 12 country agreement, including Japan, Australia, New Zealand, and, aah, Mexico is to bite the dust. An upbeat US plug for it here gave the previous approved version – apparently, a way of making US farmers great. Bit old hat now, it seems.

FTA No.6 – US-UK? Supposedly to be offered by the new US President – but on what terms? More liberal in terms of UK trade exports to the US (cue inauguration address)? and where will it stand on things like the environment? TTIP but a good deal worse? I would hope that the saner heads in the current Cabinet would be deeply wary about a US/UK deal doing better for the UK than whatever may emerge from the EU.

So, for all these complex and politically contradictory reasons, the globalising push has stalled. Only plucky Canada seems to have made it through in the last year, and that deal is subject to CJEU approval in respect of the controversial dispute resolution provisions.

Related posts:

• EU judges oppose accession of EU to ECHR
• TTIP – More foreign judges criticising our laws
• TTIP news and whether the UK should encourage big business to sue it