Contentious Free Trade in and Beyond the WTO

Free Trade as Solution to the Crisis

Since the tacit death of the WTO Doha round in 2008-2009, the EU has pursued its agenda of services liberalization through so-called preferential trade agreements, either bilaterally, multilaterally or regionally. Agreements were, for example, signed with South Korea in 2010, with

Columbia and Peru in 2012, and Ecuador in 2015. At the time of writing, talks with countries of the Association of Southeast Asian Nations and the negotiations over the Comprehensive Economic and Trade Agreement (CETA) with Canada are being finalized. The aim of such agreements is to overcome the obstacles met in the WTO and reach not only quicker but also deeper integration (Horn et al. 2010). Services— among which some SGI—are clearly at the core of this process. Four areas lie at the core of recent developments in trade policy: an increasing focus on removing non-tariff barriers, that is, deregulation; liberalization of services (including the recognition of professional qualifications in order to facilitate the movement of people providing services); the securitization of private investment through procedures (called investor-state dispute settlement) which enable private companies to contest state regulation; and the liberalization of public procurement, that is, the opening of concessions and contracts granted for the provision of goods and services by public authorities to foreign providers. In addition to provisions on public procurement in various trade agreements, in 2011 the Plurilateral Government Procurement Agreement was signed by 42 WTO members. Public procurement, therefore, offers a further illustration of the internal-external policy dynamics promoted by the Commission (and the theory of implied powers) mentioned earlier, whereby, on the one hand, any area which is liberalized within the internal market can then be liberalized globally through trade policy and, on the other hand, the pressure resulting from international trade negotiations can be used to prompt and legitimize liberalization within the EU. Accordingly, the Plurilateral Government Procurement Agreement has been negotiated both by the Commissioner for trade, Karel de Gucht, and by the Commissioner for the internal market, Michel Barnier.

Yet, there is also a trend to emulate or protect European regulatory standards through trade agreements. In the CETA, for example, provisions can be found which ensure that Canadian products imported into the EU abide by food safety-related and environmental regulation as well as provisions which exclude health, education, social services, water collection, purification and distribution, and audiovisual services from deregulation measures. Furthermore, the establishment of international standards (like in the telecommunications or postal sectors) or the inclusion in trade agreements of the norms of the International Labour Organization do not exclude the possibility to use trade policy to promote re-regulation globally (Krajewski 2011).

The financial and debt crisis which has affected the EU since 2008 has only served to reinforce the liberalization agenda promoted by the EU Commission. A first move by Karel de Gucht, the Commissioner for trade since 2009, has been to make alarmist statements about risks of a return to protectionism.[1] But the main argument has been that, in times of slow domestic demand and non-existing resources for demand- driven policies, the further liberalization of trade was the only remaining engine for boosting Europe’s growth and, eventually, rescuing its welfare systems. In turn, the competitiveness imperative in global competition was used as a justification for ‘structural reforms’ in Europe mainly geared towards the reduction of labour costs (De Ville and Orbie 2014). The trade policy of the EU is therefore strongly geared towards an agenda promoting market expansion, not only to new regions of the world but also to new policy areas, including welfare services. Some caution towards the protection of European (and national) regulation can nevertheless be detected. This is to a large extent due to the occasional, yet vivid, politicization of trade policy.

  • [1] See, for example, ‘EU trade policy in times of protectionism’, Roundtable with the Centre forEuropean Political Practical Excellence, Brussels, 28 March 2012.
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