The next big dealby David Hall
With its appetite whetted by the TPP, Europe wants a piece of the action down under.
Europe is about to get closer to New Zealand. Last week Cecilia Malmström, European Commissioner for Trade, announced she would seek approval from the European Union’s 28 member states to launch trade negotiations with New Zealand and Australia.
This formality is still a way off. First steps are an impact assessment and scoping study that could take two years to complete.
But that gives time to the champions and sceptics of international trade to gather their thoughts, to make sense of the public ambivalence that the Trans-Pacific Partnership leaves in its wake.
It’s no secret that the TPP renewed the EU’s interest in the Asia-Pacific region. With the global economic centre of gravity shifting eastwards – at least from the vantage point of Europe – the EU can’t afford to miss out. Also, the view from Brussels when I visited in July was that trade negotiations with New Zealand could break new ground. Hosuk Lee-Makiyama, trade expert and director of the European Centre for International Political Economy, told me: “This could be the most like-minded negotiation we will see.”
With so much common cultural ground and a plethora of existing co-operation agreements, effort wouldn’t be wasted on establishing the basics.
“The high regulatory standards [of Europe and New Zealand] are not an obstacle, but an opportunity to do something novel,” he says. “We could develop a completely new template of what the next generation of free-trade agreements could be.”
Of course, “free trade” likely only means “freer”. Malmström’s emphasis that negotiations will take account of “EU agricultural sensitivities” is an early sign our agricultural sector will again struggle to get what it most wants: unregulated market access.
But tariffs and quotas are only one aspect of contemporary trade agreements. If negotiators move deftly on intellectual property, it heightens the chances that New Zealand will diversify its economy in spite of itself, opening the door to the fabled “weightless economy”.
Moreover, the EU clearly wants to be seen as a different kind of trading partner. It’s already looking to avoid the TPP’s more controversial aspects, not least because the same controversies plagued its trade talks with the United States. The Transatlantic Trade and Investment Partnership (TTIP) stalled because of public unease over its lack of transparency, so the EU has since pledged to publish the final text and drip-feed sections along the way. It has recently promised to carry that greater openness into future negotiations.
Also, last month, the European Commission approved Malmström’s proposal to replace the current regime of investor-state dispute settlements with an Investment Court System more analogous to domestic courts, with judges and an appeal tribunal. This won’t satisfy critics who treat national sovereignty as sacrosanct – fair enough – but it will soften the criticism that disputes are mediated by ad hoc “kangaroo courts”.
Perhaps there’s a more general worry about the EU as a trading partner. After all, the word most associated with Europe lately is “crisis”. Whether it’s the refugee crisis, eurozone crisis, or the imminent crisis of the UK’s in-out referendum – you could be forgiven for thinking that the wheels are falling off the European project.
Yet the EU is not the kind of thing that wheels can fall off. To plumb a less inadequate metaphor, it’s like a mille-feuille, a series of institutional layers. Threats to one layer – such as the eurozone’s monetary union or the borderless Schengen Area – don’t necessarily threaten another – such as the European Economic Community’s single market or the EU’s political union. It’s this plurality that gives the EU its resilience. Trade is the modern-day opportunity to see how far these “layers” can reach.
David Hall’s travel costs to Brussels were assisted by the Delegation of the European Union to New Zealand.
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