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Modern trade policy can’t cope with wider politics

Scrutiny of trade deals is a major issue of 2021 with the EU facing big questions over agreements with China, Mercosur and the United Kingdom. Trade policy is nowadays too important to be left to trade experts. We need the politicians to give us a steer.

There is more scrutiny of EU trade policy and deals by both quantity and quality than ever before. The greater openness since the TTIP furore started in 2013, spearheaded by former trade commissioner Cecilia Malmström, has been marked.

There are a lot more opportunities to comment during negotiations, through ratification, and as FTAs are implemented. Civil society organisations may still complain of too much about secrecy, but with a lot less justification than previously.

This is part of a global trend. Something similar happened in New Zealand after the election of Jacinda Ardern in 2017 at a time of concern over the provisions of the Transpacific Partnership TPP. Elected politicians in the US have always taken a keen interest in trade and that continued at Katherine Tai’s confirmation hearings.

Even in the United Kingdom, where the government has treated trade negotiations like their divine right to do whatever they want combined with confidentiality demands usually associated with military secrets, greater scrutiny is gradually becoming accepted.

The global trend suggests the increased public attention trade policy is receiving is entirely necessary. Trade and investment agreements are increasingly raising serious questions of foreign, economic and environmental policy. These questions come on top of the existing detailed content covering such sensitive areas such as market access, tariffs, intellectual property, fair competition, movement of people, rights to invest – and so on.

We need greater political pre-clearance for trade policy

We have arguably reached the point where there is too much at stake in trade and investment deals.

The content of the EU-China Comprehensive Agreement on Investment is far less discussed than the impact on triangular relations between the EU, US, and China. Similarly the main focus of the EU-Mercosur discussion in Europe seems to focus on the EU’s future policy on climate change than the provisions included in the actual text.

Only slightly less complex is the ratification of the EU-UK Trade and Cooperation Agreement in the light of tensions over Northern Ireland. The general point is the same in all cases. There is the content, and then there is the wider politics. Putting the two together is simply too much for a scrutiny process to bear.

Ideally the EU needs deeper political level discussion for trade agreements, beyond trade ministers, before negotiations start, and again after signing. This would provide a level of pre-clearance for negotiators on how to relate details to the wider politics of issues such as climate change or great power politics. It would probably be useful to have a clearly agreed statement of the political agreement to negotiate.

To a large extent this doesn’t happen well in any system. There is a tendency to just want to get on with negotiations. The UK is not having a debate about the interaction of a focus on the Indo-Pacific with its own neighbourhood. Neither the EU nor US have a fully coherent China policy.

The increasing risk at least in the EU is that this leads to completed agreements held in limbo with no obvious path forward.

Key details need open agreement during negotiations

Once the politics are clear there is a need to get the details right, particularly in a sensitive negotiation. This may have to come in a more public way that previously. Political trust in negotiators will in any event be crucial, something largely under-appreciated.

There would be much more concern in the EU over the TCA and relations with the UK if Michel Barnier had not done such a good job throughout the Brexit process in linking the politics and content of the agreement. EU-Mercosur is a good example of the opposite case, a negotiation that went on so long that it isn’t clear what trust there was, resulting in detail that many member states seem to have concerns about particularly in the area of environment.

Again there are parallels elsewhere, for example the UK with concerns over food standards that may be changed for a US trade deal or CPTPP not yet satisfactorily addressed. It is leaving an awkward question of trust that will remind some of TTIP. We can’t yet be sure this will not happen in current or future EU negotiations.

More than ever it seems that making public the key details of trade agreements really can’t be left solely for discussion to a post-signing scrutiny process. Climate change and deforestation have been major elements of discussions with Brazil for so long that it seems strange the issue wasn’t resolved during EU-Mercosur talks. Even worse there still seems to be little consensus on an EU sustainable development chapter.

Trade deals are too important to leave to trade experts

Beyond the specifics of individual deals lies the wider point that the political impact of trade policy is becoming ever more obvious. Whether it is the impact on domestic production, power politics of large countries, the battle against climate change, or fighting against a pandemic, trade policy is evidently a crucial part. Yet few politicians in the EU or globally have really understood this, and the one that probably did, President Trump, is not much of a role model given his tariffs policy.

There are big questions that have to be answered by politicians rather than technocrats, like how much we expect trade policy instruments to support the battle against climate change, or the extent to which the EU and US want to engage with China through bilateral agreements. Once we have the answers there are plenty of potential solutions that will be available. But the likes of carbon border adjustment taxes are sufficiently complex that without political backing they won’t succeed.

Trade policy then is nowadays too important to be left to trade experts. We’re very good at the technical details, but sometimes we need the politicians to give us a steer. Much though it goes against the grain of EU trade policy to involve politicians too much, now is one of those times.

 

 David Henig runs the column ‘Perspectives’ on the politics of global trade for Borderlex. He is also a UK director at the think tank ECIPE.

2 Comments

  1. roderick.abbott@ecipe.org

    “… too important to leave to trade experts”. It depends on the kind of experts you have in mind, it is a broad array of people with ideas about almost everything..
    If politics means knowledge of national security and geopolitical issues, such as Myanmar, you are probably right. If it means knowledge of the wider political impact on the EU and on its economic external relations, such as spats with USA on agriculture, I would take a different view. Have known many smart trade people ….

  2. David Henig

    Of course trade people are smart! But probably not specialists in the geo-politics of US-China relations, or how best to engage with Brazil on climate change, and those are increasingly the issues we are asked to resolve.

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