In World Economy News 24/10/2016
European Parliament President Martin Schulz said he’s optimistic he can salvage a trade deal between Europe and Canada after talks broke down on Friday amid opposition from the Belgian region of Wallonia.
Schulz met Canada’s International Trade Minister Chrystia Freeland in Brussels on Saturday and had separate talks with Wallonia’s Minister-President Paul Magnette. Negotiations to rescue the Comprehensive Economic and Trade Agreement seemed all but over on Friday afternoon, with the Canadian minister fighting back tears as she walked out. European officials said they still hoped to reach a deal.
“The Canadian side is prepared to sign,” Schulz told reporters after the meeting with Freeland. “I’m very optimistic that we can solve the problems that we have within the European Union.”
The Belgian region of Wallonia, which accounts for less than 1 percent of the European Union’s population, blocked progress of the deal, citing the need for more time to negotiate. The stance is tying the hands of the Belgian federal government, which is in favor of the deal, but needs the endorsement of regional authorities. The other 27 out of 28 EU nations support the bloc’s first commercial accord with a fellow member of the Group of Seven industrialized countries.
New Text
Magnette is now waiting on a new text from the European Commission that he can present to the Walloon parliament, Le Soir newspaper reported, citing unidentified people.
“We still have a couple of small difficulties within Europe and more work and discussions are needed,” Magnette told reporters after meeting Schulz. “We never wanted to create problems, but we want a treaty which would have the highest level of social protection in the world and would serve as a standard for future negotiations. ”
The collapse of the agreement, known as CETA, would be another sign of headwinds facing free trade as politicians around the world fend off a populist threat that taps into voters’ fears that such deals destroy jobs. It could also damage the EU’s credibility as a global player at a time when it’s already struggling to deal with crises across its frontiers, from Brexit to Russia and Syria. Canadian Prime Minister Justin Trudeau has said failure to ratify the pact would raise questions about the EU’s viability.
The EU says the pact, which has been in the works for five years, would boost its economic output by about 12 billion euros ($13 billion) a year and expand EU-Canada trade by about a quarter. The deal’s failure would complicate separate negotiations with the U.S., Japan and other countries as a wave of populist parties around the world challenges the benefits of free trade.
Regional Approval
The European Commission, which negotiated the pact, decided in July that national and even some regional parliaments in Europe should be involved in the approval process after some countries warned against bypassing their lawmakers. EU officials are trying to retain support for their free-trade agenda as they pursue parallel negotiations with the U.S. on the separate deal, known as the Transatlantic Trade and Investment Partnership.
“If Europe fails with CETA, it’s very difficult to imagine we can be successful with TTIP,” Estonian Prime Minister Taavi Roivas said on Friday.
The accord would end 98 percent of tariffs on goods traded from the outset and 99 percent after seven years. Each side would dismantle all industrial tariffs and more than 90 percent of agricultural duties. Markets for services and public procurement would also be opened.
In Canada, a failure of the talks would deal a blow to the country’s struggling export sector, adding to questions about what will drive the economy forward.
The nation is already facing three straight years of growth below 2 percent, the weakest stretch since at least the 1960s. Business spending is still hurting from the oil-price shock, as well as volatility around a fractious U.S. election and Brexit. The breakdown in negotiations will chill two-way trade worth about C$93 billion ($70 billion) a year and about C$380 billion of direct investment.
“It’s time for Europe to finish doing its job,” Canada’s Freeland said on Saturday. “We very much hope that that will happen.”
Source: Bloomberg
