Is free trade dying?

Pattrick Smellie writes:

In Europe, a French-speaking parliament in Belgium has all but killed a long-sought deal between Canada and the European Union.

The Comprehensive Economic and Trade Agreement (CETA) may yet somehow be signed in Brussels this Thursday, but as of Wednesday in New Zealand, there was no clear pathway for that to happen.

The European Union risks effectively shutting up shop for trade deals with anyone until a way through the impasse can be found.

Yep, no point in negotiating when not even a state parliament but a regional parliament can veto a deal.

You feel sorry for the rest of the EU who want this deal but under EU law are fobidden to negotiate trade deals outside the EU. So the Wallonia Assembly gets to veto everyone else.

Former trade negotiator Charles Finny has just returned from Washington DC, where he found a far higher hurdles than he expected to TPP’s progress. The prospect of a protracted renegotiation now looms.

Yeah TPP looks dead because the NZ and Australian negotiators got too good a deal it seems. But if US won’t ratify I say leave them to their tariffs and lets focus on countries in Asia who do want to reduce barriers.

Thirdly, there’s always the UK. Brexit looks almost attractive if the EU loses its ability to write Europe-wide trade deals with other parts of the world.

While the UK can’t formally negotiate a free trade agreement with anyone until it’s left the EU – and that could take four years or more – that doesn’t stop informal negotiations starting in preparation for swift ratification once the way is clear.

Already, there’s informal chatter about linking together a Commonwealth initiative, involving New Zealand, Australia and Canada, to push for an FTA with the UK. If TPP fails and an NZ-EU FTA proves too hard, the UK may well emerge as an unlikely candidate for focus. On that note, a more united ANZAC trade strategy may start to make more sense in both Wellington and Canberra.

All in favour of an FTA with the UK.

And fourthly, New Zealand might consider whether its support for the inclusion of investor state dispute settlement (ISDS) provisions in FTAs with developed economies is past its use-by date.

ISDS has been a primary lever used by opponents of trade liberalisation to create the rising tide of opposition to FTAs in general. While there may be a case for clauses aggressively protecting investors’ rights in countries where the rule of law is uncertain, they have no clear place in agreements between developed economies.

I tend to agree. There is a case for them where property rights are less certain and governments have a propensity to confiscate assets without compensation. But we shouldn’t need them in agreements with other OECD members.

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