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The Japan-EU trade agreement in a Trumpian world

It is celebrated by free trade pundits as a success in the Trumpian era: yesterday’s signing of JEFTA, or the Japanese European Union Free Trade Agreement which covers a third of the world economy.

Contrasted with Trump’s pulling out of the TPP,  CNN writes, “The dismantling of trade barriers stands in stark contrast to the approach taken by President Donald Trump, who has imposed tariffs on a range of foreign goods and is threatening more action.” 

What does civil society have to say about this?

Again, in a letter signed by almost 70 European organizations, civil society organizations raised concerns about the deal with their national politicians. With most of the agreement secret, and only certain chapters leaked, the agreement, touted as all being about tariffs and trade, is often about something much more nefarious: the reduction of the public policy space in the favour of unregulated markets controlled by corporations. In the letter, they write:

“JEFTA contains rules severely limiting policy space in the EU and in its member states. As the agreement covers all levels of decision-making, it would become a straightjacket for the EU, for member states, and even for regional and local governments.”

In particular, the groups note that there are rules which lock in the privatization of public services, and public companies, help deregulate the financial sector, remove food and chemical safety protections, and impede nations from protecting personal data.

What is interesting to note is that fresh off of the battles against CETA, the Canada-EU deal, and TTIP, the almost aborted Canada-US deal, ISDS is not in the agreement.  ISDS (investor state dispute settlement) or corporate courts allow companies to sue for decisions which affect their investment. 

It is a hot potato in Europe thanks to campaigning by Europeans and Canadians. Council of Canadians Honorary Chairperson Maude Barlow toured Europe on many occasions sharing our lessons from NAFTA, and how NAFTA’s Chapter 11, the ISDS clause has hampered our public interest and environmental policies.

But it is not out of the deal for long.  The EU and Japan are cooking up another investment agreement.  This is a way to skirt EU rules saying that trade agreements with investment protection are not just EU competency, but member state competency.  Because CETA has investment “protections” in it, it is still having to be passed by all 28-member states.  JEFTA, without ISDS, is being proposed as an EU-only deal.

But the debate on JEFTA is worrisome.  Somehow, Trump’s trade temper tantrums and illogical trade war is pushing certain progressives into believing that if President Trump is against free trade, then somehow free trade agreements must be good.  That somehow, what is liberal, progressive, and democratic is at stake.  In order to have open societies, and welcoming immigration policies, we must also have open markets without regulation, and without public intervention.   And that trade agreements are somehow going to get us there.

In a brilliant Lobby Control interview with Christoph Scherrer, Professor of Globalization and Politics and Kassel University, he says that, “The EU and Germany use Trump to justify their liberalization agenda.” (free translation)  We could say the same thing about Canada, too.

He argues that President Trump’s deal is not to be protectionist, but to use protectionism as a hammer to force countries to open markets  for U.S. corporations.  In that way, he is not so different from Obama.  He says that much of Trump’s opposition to the TPP and  free trade is about demagoguery.

“Under Obama, the strategy was pursued to create a particularly large trading area with favorable rules for the US, and then to confront China in particular. With the completion of the Trans-Pacific Partnership Agreement (TPP), the US was close to achieving this goal.

He continues, “But TPP was not popular in the US. Traditional free trade skepticism of the US population was successfully mobilized for the first time in the election campaign. Trump in particular took advantage of this mobilization, which also forced Hilary Clinton to distance herself from the TPP. The reason probably lies in the fact that in the past the presidents could always claim further trade liberalization as a leadership strength of the USA – the USA as leader of the free world. The leadership also included the liberalization of trade.”

In other words, again, the media has pitched this as a good and evil battle between the destructive Trumpian protectionist impulses, versus what is true and good in open, unfettered markets. 

As I said earlier, this dichotomy is unhelpful for advancing the kind of trade we want which advances people and the planet.  And it is also prevents us from discussing the content of these agreements.  We just perpetuate the mysticism around them: that they are a magic bullet for increased trade.

Perhaps, in the end, protectionists and free traders are both on the same side: the side of corporations.

Photo: Herman van Rompuy, Flickr Media Commons