Trade: where are we heading ?
Since the election of Donald Trump as the new US President the troubles facing big trade deals have reached a new stage.
The TPP was already before the election under strong opposition in the US Congress. Any hopes that he might still be ratified in the “lame duck season” have faded away, and its future is doubtful. If a TPP is ever ratified in the US, it will be a new TPP. And to renegotiate this TPP will not be an easy task, nor a quick one, if at all feasible.
Closer to our shores, TTIP was also facing strong opposition, but this time in the EU, not in the US. The US election adds to the uncertain fate of the deal. With a Clinton Administration a re-evaluation of TTIP followed by a relaunching of the negotiations was a likely prospect, but now talks are suspended and resumption of negotiations is a long-shot bid.
TTIP and TPP have joined the WTO Doha Round in the land of the walking dead…
Other trade deals are still being actively negotiated by the EU, namely with Japan and with Mercosur. Japan will likely reassess a number of elements in the deal, as TPP is out and Brexit is looming. Mercosur is willing to move forward but the head winds against trade deals are stronger in the EU than before.
Possible trade agreements with Australia and New Zealand were also on the Commission cards. The impact on the EU agriculture will be negative, whilst the interest in other sectors escapes me as being of any significant interest.
So where are we heading from here?
No big trade deals does not mean that trade will fade away as an important issue. EU agri-food exports bring wealth and jobs.
In the short to medium-term, at least in the next couple of years, it is probable that the US focus will turn towards enforcement of existing agreements. The US agriculture interests will be frustrated by the failure of TPP, and will be more forceful on asking for implementation of others’ obligations. This means more turbulence, and less predictability.
Again on our shores, hormones and GMOs are exposed to renewed US pressure. Both issues have however solutions within the range of what was already agreed or implemented.
Worth recalling that the EU agriculture has been on the receiving end of trade disputes which originated outside the sector. On hormones and GMOs EU farmers by far and large are not asking for restrictions or prohibitions that put them at a disadvantage. The Russian bans are a consequence of geopolitical disputes.
So the immediate future will likely bring more trade frictions, without the buffer of ongoing negotiations. But it could turn worst if those trade frictions evolve into actual trade wars, even if the EU is not a part of. The spillover of new trade barriers between major players would be felt across the world, and affect the EU export interests.