Doha is dead. The current negotiations at the World Trade Organisation has been dragging on for just shy of a decade now, with no resolution in sight. The European Union, frustrated with the slow progress of Doha, has been looking for alternative ways to promote free trade and, as the largest internal market in the world, it has a fair amount of negotiating clout behind it. Should it be more willing to “flex its muscles” in this field? To help promote free trade globally? Could the EU be a “free-trade superpower”? As Eric argued in response to our recent post:
Global trade liberalization, not the WTO, is the goal. The WTO is a means.
Perhaps, then, the EU should be expanding and enlarging its Free Trade Agreements (FTAs) with third countries? We spoke to Ivan Hodac, Secretary General of the European Automobile Manufacturers’ Association (ACEA), and asked him what he thought. On the face of it, he was supportive. However, he was also fiercely critical of the current approach:
We would prefer Doha was concluded. We prefer multilateral negotiations to bilateral negotiations. The FTAs are the second-best way forwards. However, all the FTAs that have been negotiated so far have not at all been true free trade agreements. With Korea, for example, the automotive industry has clearly been a bargaining chip to get a deal.
We could say the same thing about India; the prospects of a so-called FTA with India fills us with sheer horror. The Indian market is basically closed to us. It’s protected by tariffs that are 60% or above. The Indians don’t want to move, and to open the automative market is a non-starter. Some of the negotiators, however, just want to close the negotiations for any price. If the Indians were to come and give us 40%, we don’t want that. We want to see a level playing field. You accept the regulations, you accept the technical standards and we do the same.
The same thing will happen when the EU negotiates with Malaysia. We also don’t see any benefit from an FTA with Japan because that market is also closed for us. The Japanese will get a dismantling of the 10% which they have to pay to trade in Europe. What the EU negotiators are doing is opening the market to the Japanese, Malaysisans, etc. but not insisting on reciprocity. We agree with your commenters that the FTAs should be opened – but they should be REAL free trade agreements. We always hear that this is a red-line for the Koreans; this is a red-line for the Indians. I have never heard that this is a red line for the European Union.
Not everybody is so critical, however. We also spoke to Arnaldo Abruzzini from the Association of European Chambers of Commerce, and asked him if FTAs could be a solution to the stalled Doha round:
Option number one should be Doha. But, because of the difficulties of progressing in the negotiations in Doha, the EU should expand its capacity to negotiate and conclude bilateral agreements. But always in the spirit of the global scenario. If we go for free-trade agreements with ten different countries, and each of those agreements is different, then businesses – and small businesses in particular – will find things much more complicated because they do not have the capacity to analyse 20 different FTAs. So there has to be a systematic approach to these negotiations. It’s too early to say whether this will be the case.
What do YOU think is the answer? Do you agree with Eric that we should not put all of our eggs in one basket with the WTO? Or perhaps you share the concerns of Christos (and Ivan Hodac) that these agreements are not as reciprocal as they could be? Or maybe you agree with Jean that we need an alternative approach entirely? Let us know in the form below and we’ll take your comments to European experts and policy-makers for their reaction.