Last week in the European Parliament in Strasbourg we had the opportunity to listen to Jean-Claude Juncker’s State of the Union address. Many policy grounds were covered, but perhaps the focus was on future trade opportunities, with the President of the European Commission announcing draft mandates which will open trade negotiations with Australia and New Zealand.
This comes just before the EU-Canada (CETA) deal is set to come into force provisionally and is the first set of trade negotiations launched by the EU since the UK referendum. The mandates will now be submitted to the 28 governments in the Union for their approval. Afterwards, the negotiations can begin and they could be completed before Brexit is finalised.
Although the European Union is the third largest trading partner for both Australia and New Zealand, it does not currently have any trade agreements in place with either, which means that World Trade Organisation (WTO) tariffs apply to all 28 Member States, including the UK.
What would a trade deal with New Zealand and Australia mean for Brexit Britain?
Leave campaigners and this government have been keen to argue that the UK would be free to set its own trade agenda outside of the EU, in particular with respect to commonwealth countries. However, it seems like the EU is a step ahead in achieving that.
If the UK decides to leave the Customs Union and the EU concludes preferential agreements with New Zealand and Australia, then we will be at a disadvantage compared to the EU in trading with Oceania after we leave.
Will the NZ-AUS-EU deal include an ISDS/ICS?
The draft mandates authorise the Commission to negotiate for the highest possible liberalisation of trade in goods and services, but they do not authorise it to negotiate on investment arbitration or the Investment Court System (ICS) which is a major win for progressives. In effect, we’ve managed to put investment protection away for now (more on why we need transparent and progressive trade policy to combat public disillusion with politics).
ICS represents the EU’s attempt to deal with the public opposition to ISDS and although it is a more transparent system, it essentially remains private justice for multinationals. We have vehemently opposed this in the European Parliament since the very beginning.
As part of efforts to increase transparency and to foster public engagement in the discussions on trade policy, the Commission published its draft negotiating directives.