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Deal or No Deal?

No economic issue is as polarizing as free trade deals. Motivated by the continued resurgence of neoliberal economics since the 1980s, the number of economic partnerships between Western states has been steadily increasing. The principal aim of such partnerships is to increase international trade and therefore also domestic output, often without direct governmental intervention. Instead, these deals utilize trade liberalization to encourage companies to get involved in export.

Over the past thirty years, the complexity and cosmopolitan outlook of free trade deals have grown proportionally to the sheer number of deals that were signed. In the USA, a clear evolution can be seen from the 1984 Israel-United States Free Trade Agreement to NAFTA (signed in 1994), to the proposed Transatlantic Trade and Investment Partnership (TTIP). Free market ambitions are growing and the proponents of such agreements believe that the viability of these contracts is not inversely proportional to their size. Naturally, these proponents alone do not dictate the shape of the modern global market, as critics of these constantly expanding trade accords have also been becoming more vocal.

The main arguments levied against liberalizing and globalizing trade are made up of three claims: that trade agreements give international corporations too much power, that globalization undermines culture and identity, and that too much economic connectivity causes the poorer states to depend on their richer counterparts. In fact, it is precisely due to these criticisms that the two largest trade deals ever proposed (TTIP and the Transpacific Trade Partnership) are hanging in legislative limbo, while the Comprehensive Economic and Trade Agreement (CETA), a landmark deal between the E.U. and Canada narrowly avoided being abandoned altogether. Investigating what exactly causes such heavy opposition to these agreements and what allowed CETA to avoid the legal impasse sheds light on the state of global trade today.

Eliminating 98% of existing tariffs which amount to 500 million euro in duties paid by European exporters, the agreement between the European Union and Canada seemed like a mutually beneficial contract that would streamline trade across the Atlantic. With these statistics and the fact that CETA is estimated to increase bilateral trade by 12 million dollars, there is no obvious reason to explain the reluctance of certain states. Indeed, although a unanimous agreement of all EU member states is necessary to ratify any multinational trade deal, an overwhelming majority (27 out of 28) of EU countries voted in favor of the deal without major debate or protests domestically, showing that in the majority of cases CETA was seen as a win-win contract. However, the semi-autonomous Belgian region called Wallonia, voted against signing the treaty and thereby initially prevented the Belgian parliament from providing the final, assenting vote.

Yet despite the tiny size of Wallonia, which has roughly three million inhabitants, the concerns it cited to explain their opposition are certainly of a global scale and are echoed by much larger political entities when discussing grander proposals like TTIP or TPP. Among other points, the Wallonian minister-president Paul Magnette highlighted that the abolition of tariffs would cripple the agricultural economy of Wallonia, which already relies on Belgian subsidies to survive. Furthermore, he expressed concerns over the loosening of existing safety and ecology regulations that had given Wallonians a foothold in the European market, allowing their artisanal traditions to trump the imported Canadian produce geared to industrial and mass-market friendly domestic supermarkets. Now, with laxer standards designed to accommodate Canadian methods of production, Wallonian farmers fear that their products will become obsolete and lose their current price support.

These claims have now been resolved with a special Belgian amendment to CETA whereby a special tribunal will evaluate and oversee the socio-economic and environmental impact of clauses in the deal before binding Wallonians to follow them. Nevertheless, the events surrounding the eventual signing of the agreement do not portend a positive climate for the drafting of similar, future proposals.

For starters, the only reason CETA moved forward is because only a very small faction, with very regional concerns opposed it. Therefore, a small provision to accommodate these specialized claims was enough to surmount the obstacle. But turning to the case of TTIP and TPP which are respectively valued at 90 billion euros and 980 billion dollars in imports (and involve many times the number of parties participating in CETA,) it is clear that such case by case exemptions will not be a viable solution. It is also therefore unsurprising that TTIP is currently in a stalemate, with negotiations behind closed doors set to have finished in April 2016 being prolonged indefinitely. Additionally, after eight painstaking years of drafting of the TPP, Washington is still reluctant to submit the terms to Congress for a final acceptance vote with Senate Majority Leader Mitch McConnell (R-KY) stating in August 2016 that the vote will not occur this year but, “It will still be around. It can be massaged, changed, worked on during the next administration.”

The same factors are holding back both deals; both sides are not able to reach a consensus of what currently protected sectors they would open up, and in what way. Because the deals have not yet been fully shown to both the EU parliament and U.S. congress, the negotiators are still in the process of making a draft that will have a reasonable chance of passing in the national legislative bodies. This process primarily entails considering which particular groups might oppose particular clauses and subsequently limiting the liberalization of the sectors in question. Since after all, these are free trade negotiations, both parties are highly reluctant to grant such protectionist concessions.

The nature of the negotiations surrounding CETA, TTIP and TPP all lead to one observation: the degree of contention in negotiations is directly proportional to the cosmopolitanism and value of the treaty. At the heart of this conclusion lies the fact that there is no such thing as truly free trade. However liberal we consider Western markets to be, there still exist frameworks and regulations that shape and guarantee this liberty. Any supranational treaty fundamentally changes the existing ramifications of economic freedom in the signatory states and whether or not these treaties pass ultimately depends on how willing political agents are to tweak the complex and abstract concept of liberty.