EU-Canada 'CETA' Trade Deal Now In Doubt

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By Stuart Burns

As if there hasn't been enough fallout from the U.K.'s decision last month to leave the European Union, a Financial Times article reveals that European Commission President Jean-Claude Juncker is set to ditch fast-tracking the European Union's trade deal with Canada, officially known as The Canada and European Union Comprehensive Economic and Trade Agreement (CETA), a deal that has already taken five years to negotiate.

In a move criticized as undemocratic, Juncker had sought to push approval through on the nod of trade ministers and ministers of the European Parliament, giving no recourse to the 38 parliaments (some of them are regional, only 28 are national members of the EU) if they don't agree to it.

France, Germany Block Fast-Track

Apparently, Berlin and Paris put a stop to the Commission's move, seen by some as yet another example of the Commission's undemocratic behavior put into the spotlight by Britain's objections to rising control from Brussels.

To be fair to the Commission and Juncker, they fear that with protectionist sentiment rising, the deal may never get ratified if it has to be debated by every national and regional government involved. That's a distinct possibility with growing support for parties like France's Front National and Germany's center-right parties taking a distinctly anti-globalization position.

Apparently, according to the FT, a similar deal with South Korea took four years to ratify, and that was with less overt opposition to what's facing CETA. Opponents accuse the CETA deal of offering a backdoor to companies to evade EU social and environmental regulations, but after five years of nit-picking and pedantic poring over of details, the reality is not that the deal would disadvantage Europe, rather that Europe's view has changed. It has become even more inward looking and protectionist than it was in the past - and Europe has never had a reputation of being the bastion of free trade with the rest of the world.

The View From Canada

The Canadians are putting a brave face on it, saying they support the democratic right of all national governments to debate the deal, but they are still sticking by Juncker's original target of ratification by Prime Minister Justin Trudeau at the next EU-Canada Summit in October. That's a very a faint hope in the light of Juncker's turnabout.

Europe's aversion to more globalization and opening its borders started long before Brexit. Just as in the U.S., the loss of manufacturing jobs and what are deemed the unfair trade practices of some emerging markets have added fuel to the region's natural tendency to look inward rather than adopt the often uncomfortable changes that are needed to compete.

Worse, for Europe, is that some governments favor more engagement and lower barriers while others openly oppose them, making negotiation and, in this case, ratification so very much more complex than for single nation states like the U.S. or Canada.