This week was largely dominated by the European Parliament’s work on trade, the transatlantic trade rift and the deepening crisis of the WTO’s Appellate Body.
This is what we wrote about this week:
- The WTO Appellate Body crisis here and here
- Southern Africa and UK trade post Brexit
- State of play on Australia and New Zealand FTAs
- Safeguards in EU FTAs
- An update on the Airbus-Boeing saga
Here’s even more:
Western Sahara trade preferences up in air
This is going to be messy.
The EU agreed on a protocol to an association agreement in Morocco back in 2013 that was subsequently slapped down by the Court of Justice of the EU on the grounds that it de facto covered Western Saharan exports. The European External Action Service, in coordination with the services of Pierre Moscovici, commissioner in charge of customs policy, went on to renegotiate the deal with Morocco directly, and after trying to consult with local Western Saharan organisations. The parliament, which considered it has not been consulted in the renegotiation process, threatened to slap down the final exchange of letters between the EU and Morocco. The Council approved the deal in July, but now needs the backing of MEPs.
In the meantime, preferences granted to Western Sahara no longer apply. “Due to regard to the work of the parliament – we could have done this differently – the commission did not propose to apply the new arrangement provisionally,” Moscovici told MEPs on Wednesday. “Products from Western Sahara no longer benefit from preferential tariffs.”
Moscovici has called on the parliament to ratify this agreement as soon as possible to avoid hardship for the tens of thousands of inhabitants of the former Spanish colony occupied by Morocco affected by this change. “This clearly contradicts our desire to support the development of the territory,” he said.
Moscovici’s debate with MEPs revealed a high degree of scepticism. Among others, lawmakers criticized the fact that the EU held negotiations with Morocco and that oversight of the new deal was left to Rabat, which some believe cannot be trusted to properly label Western Saharan products.
Moscovici argued that the deal was largely a technical response to a legal challenge and urged the parliament to depoliticise a file that is complex and highly emotional. Patricia Lalonde, rapporteur on the file in the trade committee, concluded: “It will be difficult to disconnect the technical question from the geopolitical one.”
A delegation of MEPs will travel to Western Sahara next week to make up their minds about the issue.
Thailand FTA push
The EU is mulling whether to revive free trade agreement negotiations with Thailand, following a request by member states in December to look into the matter. The Council suspended four-year negotiations in 2014 after a military coup there. The EU is keen to get going with the talks, but wants Thailand to hold free elections first. These have been postponed month after month, though there are signs that they might happen in early 2019.
MEP Franck Proust reported back to the trade committee about his July mission to Thailand. He said Thailand is “ignoring the EU as a whole and seeking to develop concrete ties with individual member states”. Thailand also continues to attract European investors in the automotive, pharmaceutical and aerospace sectors. The main challenge for EU business is to ensure that the bloc’s standards continue to be recognised. Chinese economic and strategic influence is rising significantly in Thailand, as elsewhere in the region.
Proust called on the EU to start exploratory talks with Thailand as soon as possible on how to reduce non-tariff barriers and to ensure that European standards continue to play a role in the Thai economy. The aim is to be ready the moment negotiations with Thailand can resume.
David Martin, rapporteur for ASEAN, said: “Thailand can potentially be a very important interlocutor for us. Politically we cannot start formal negotiations until elections have actually been held and until a government has been formed in Thailand. There is no reason not to have technical discussions with the Thai authorities on an informal basis.”
A commission official said: “We are in a process of re-engagement with Thailand. We had a working group on trade and investment issues in July.” He also said an ‘intellectual property dialogue’ meeting was scheduled with Thailand in September. Last month, the commission had “an initial exploratory discussion on the possibility to restart the FTA”. Its assessment: “Quite some work still needs to be done before we will be able to take up those negotiations again. Also because EU trade policy has evolved quite a lot since the negotiations were put on hold.”
Trade committee opines on budget
INTA appears to be the best friend of fiscal and gender conservatives….
On Wednesday, the trade committee adopted a one-page draft opinion on next year’s EU budget. Maverick Eurosceptic British MEP William Dartmouth drew up the piece. INTA endorsed the short and pithy five points made in the opinion. Its key asks:
- Allocate more funds for ‘aid for trade’ activities of the EU
- Restructure the budget of the next multiannual financial framework (MFF)
- Give greater support to small and medium-sized businesses
- Allocate more resources to involve citizens in EU trade policy
- Watch out for the Brexit-related loss of funds for trade policy
On money, the walk doesn’t equal the talk at INTA. All amendments tabled by Alessia Mosca and Inmaculada Rodriguez Piñero (S&D) and Helmut Scholz (GUE/NL) making concrete proposals, including with monetary amounts, were slapped down. Such amendments included more money for the European Economic and Social Committee for trade advisory groups and greater inclusion of civil society groups. Gender equality isn’t exactly a big hit with INTA members. Amendments by Mosca and Piñero aiming to introduce greater attention to gender in the rollout of trade policy by the EU were rejected, too.
Beyond next year’s budget, INTA is also gearing up activities related to the next five-year financial framework for the EU, also known as the MFF. It wants to have a greater say. An amendment by Marietje Schaake to that end in this week’s report reinforced the point.
Scholz is drafting a report on what the next MFF should look like on trade. Watch that space this autumn.