This week in Bratislava the EU Council will decide the on the the Comprehensive Economic and Trade Agreement (CETA) with Canada. In contrast to TTIP between the EU and US, CETA is a done deal pending approval of regional parliament in Wallonia. The negotiation process so far has been unusually swift for EU standards. Given this efficiency, CETA can serve as a model for concluding the Australia-EU free trade agreement, a new EU-Australia Comprehensive FTA. As the current cooperative agreement between Australia and the EU is focusing on mutual recognition to reduce non-tariff barriers, a bold FTA approach leaves much room to enjoy ‘hard core’ trade liberalization. What are the lessons of CETA from which Australia may benefit?
The most important lesson is that the EU is willing provide access for agricultural products if the price is right. With Canada, opening de EU meat markets is traded for access in services, especially in construction and mining. It is a no-brainer that such a deal is also interesting for EU-Australia trade negotiators. In addition, CETA is about market access for services. Again, a no-brainer that free access to the EU market would of interest to many Australian companies in media, telecom, and IT related services. For EU companies in these industries, Australia could just be the servicing platform to Asia they need.
Second, the investor dispute resolution puzzle can be solved if countries accept a WTO kind of arbitration system. The novelty in CETA is that governments can appoint independent arbiters and that direct industry interests can be sidelined – an important obstacle in dealing with the US in the TTIP negotiations. This dispute setup gives non-industry stakeholders just enough confidence that settlement system cannot be used to put severe restrictions on national policy makers in sensitive areas like consumer protection and sustainability. As a consequence, the agreement is adopted under strict democratic processes of national ratification, and so does do not rely on some kind of ‘fast track’ EU trade policy authority.
This opens to the third lesson: EU-Australia negotiation on a CETA should be just as transparent as those with Canada. TTIP has suffered much from the ‘behind closed doors’ way of negotiation between the EU and US. This lack of transparency is viewed with suspicion by EU stakeholders. With CETA, the process of checks and balances is set up at the start of the process. In addition, information on the progress of negotiations has been much more proactive. As a consequence, the adoption of the agreement is smooth and benefits from political legitimacy.
When the Wallonian regional government this week agrees, the invitation to Justin Trudeau can be posted to attend the October 27 meeting to sign the agreement. After that, the EU should shift gear and provide a fast track for concluding CETA’s with similar countries, using the full EU trade authority now that – as we say in the Netherlands – ‘one sheep is over the dam’. Australia’s policy makers should check their agendas to see whether there is room for a ticket to Bratislava next week, and start working on deepening free trade between Australia and the EU.