{"id":3526,"date":"2017-09-21T15:23:38","date_gmt":"2017-09-21T15:23:38","guid":{"rendered":"http:\/\/chief-exec.com\/?p=3526"},"modified":"2017-11-02T09:07:23","modified_gmt":"2017-11-02T09:07:23","slug":"speed-dating-to-spice-up-trade-talks","status":"publish","type":"post","link":"https:\/\/chief-exec.com\/?p=3526","title":{"rendered":"Speed dating to spice up trade talks"},"content":{"rendered":"

Two courtiers \u2013 the EU and UK – are competing for Australia\u2019s and New Zealand\u2019s hand in a new trade relationship, Geoff Kitney<\/em> writes.<\/span><\/h4>\n

It must be reassuring to the Brexit crowd, as doubts about their project grow, to read soothing words from old friends.<\/p>\n

A few days ago, in the Financial Times<\/em><\/a>, there was a feature article written by Australia\u2019s High Commissioner to London Alexander Downer dedicated to reaffirming that there was still a very enthusiastic Brexit cheer squad in the \u201ccolonies\u201d.<\/p>\n

Downer, a former Australian foreign minister and an influential figure among Australian conservatives, gave short shrift to Brexit doubters.<\/p>\n

He used some quite old fashioned language to do so, describing the European Union (EU) as \u201ca club\u201d with which a dynamic and open-minded Great Britain had no need of membership.<\/p>\n

Downer reasserted that Australia stood ready to play its part in helping Britain along the road to future prosperity outside the \u201cclub\u201d. In particular, he strongly reaffirmed that Australia stood ready to be at the front of the queue to do a trade deal with the UK the moment it was free to negotiate.<\/p>\n

There was a strong political point to Downer\u2019s article \u2013 that doomsayers about Britain\u2019s prospects for going it alone in the world are dead wrong because great trading nations like Australia see a bright future for British trade.<\/p>\n

At almost the same time that Downer\u2019s article was being read by FT readers, EU officials in Brussels were briefing correspondents in a language which was very similar to Downer\u2019s.<\/p>\n

The message was that the President of the European Commission (EC), Jean-Claude Juncker, in his annual \u201cState of the Union\u201d address to the European Parliament, would be announcing the EU\u2019s plans for an accelerated agenda of trade deals. And at the top of his list of countries for doing a deal with was Australia, together with its near neighbour, New Zealand.<\/p>\n

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It was a very obvious \u201cup yours\u201d moment in the increasingly tetchy politicking between the EU and the UK.<\/span><\/h4>\n<\/blockquote>\n

The symbolism couldn\u2019t have been more striking.<\/p>\n

Australia and New Zealand are being caught up in a free trade dating game. Two courtiers are competing for their hand in a new trade relationship.<\/p>\n

But the key point in Junker\u2019s speech<\/a> was that the EU stood ready to begin Free Trade Agreement (FTA) negotiations almost immediately. The UK, on the other hand, will be stuck at the starting line until the Brexit process is completed because it will be bound by EU rules banning member states from negotiating bilateral trade deals with non-EU countries.<\/p>\n

Junker, in other words, was saying that by choosing Brexit, Britain would be disadvantaging itself by being forced to wait longer than EU countries for the economic benefits of new trade deals the EU could do with Australia, New Zealand and possibly many other countries.<\/p>\n

It was a very obvious \u201cup yours\u201d moment in the increasingly tetchy politicking between the EU and the UK.<\/p>\n

Suspicions that this was really only about politics were supported by documents published by the EC which revealed that the value to the European Union of an FTA with Australia would amount to just 0.02 per cent of EU GDP over time, a tiny fractional gain compared to the big political point being made by Juncker.<\/p>\n

However, digging deeper into the EC\u2019s briefing papers on the proposal for FTAs with Australia and New Zealand, there were some matters of substance which suggest that, while the deals themselves would make small trade gains, the framework on which they would be built would involve a very significant policy shift which would have big implications for EU trade policy and potentially for international trade.<\/p>\n

The EC proposes \u2013 as part of the Australian and New Zealand FTAs \u2013 the creation of a new international tribunal to settle disputes involving claims by trans-national corporations of damages to their businesses by policy changes by the partner country to any free trade agreement.<\/p>\n

The proposed system would replace what are known as Investor-to-State Dispute Settlement<\/a> clauses that are now common to all FTAs. So far in 2017 there have been 33 FTAs registered with the World Trade Organization and every one includes ISDS clauses. Trade experts say that none of the deals would have been possible without the ISDS clauses.<\/p>\n

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Consumer activists and interest groups are passionately opposed to ISDS procedures, arguing that it is unconscionable to give global corporations legal power to compromise national sovereignty.<\/span><\/h4>\n<\/blockquote>\n

But ISDS clauses are extremely controversial.<\/p>\n

They are seen as \u201csovereignty sapping\u201d, in that they allow big corporations to go to secret tribunals to lodge claims for compensation against the governments that are parties to the FTAs where the corporation believes a policy change by a government has harmed their business. The tribunals include members nominated by the aggrieved corporation and none of their proceedings are open to public scrutiny.<\/p>\n

The stand-out example of this was the action taken by the United States tobacco giant Philip Morris against the Australian government over its decision to introduce plain packaging for tobacco products to discourage smoking.<\/p>\n

Although the UK is a long way from being able to begin negotiating FTAs, evidence given to House of Commons committees indicates that the British government would include ISDS clauses in any agreements it negotiates.<\/p>\n

But consumer activists and interest groups are passionately opposed to ISDS procedures, arguing that it is unconscionable to give global corporations legal power to compromise national sovereignty.<\/p>\n

It was this issue that almost derailed the recent EU-Canada free trade agreement, CETA, when activists convinced the Belgian state of Wallonia to veto the agreement if ISDS provisions weren\u2019t removed. Wallonia claimed that the ISDS clauses were in breach of EU law.<\/p>\n

Under current EU rules, FTAs have to be approved unanimously by all EU member states and their regional governments.<\/p>\n

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1\/ Today the EU-Canada Trade Agreement enters into force. How will #CETA<\/a> benefit the EU? #EUtrade<\/a> pic.twitter.com\/VRFC22qIiB<\/a><\/p>\n

\u2014 European Commission (@EU_Commission) 21 September 2017<\/a><\/p><\/blockquote>\n