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German exporters wavered between hope and pessimism about the prospects for new European Union trade deals during its upcoming five-year term, with Germany’s largest export-oriented industry warning that the bloc must change the way it treats global partners or risk being left behind.
When she gave a speech European Parliament European Commission President Ursula von der Leyen avoided the topic of new free trade agreements (FTAs) when she sought re-election in July, which did not generate much enthusiasm among those who wanted the European Commission to send a tougher signal at a time of tension. Global trade protectionism is on the rise.
However, Long-awaited trade deal makes progress Optimism was rekindled last week in the negotiations between the European Union and Latin America’s Mercosur bloc – a European Commission spokesman confirmed on Thursday (August 8) that the negotiating teams of the two major blocs are “working at a technical level to make progress on the remaining outstanding issues”.
“I am optimistic that progress can be made,” Matthias Blum, head of foreign trade policy at Germany’s chemical industry association VCI, told Euractiv.
“But of course, if you take (von der Leyen’s) speech literally, I’m afraid that the ambition to reach a free trade agreement might decline because of the political difficulties within Europe,” he added.
The chemical industry is one of Germany’s three largest export industries, along with automobiles and machinery manufacturing. Its representatives hope to reduce tariffs and other trade barriers by reaching free trade agreements with third countries and regions.
In a more detailed description Imagine In her second term, von der Leyen opted for the vaguer term “partnership,” stressing the need to cooperate with countries in Asia, Africa and Latin America in specific areas such as “cyber, space and the secure supply of critical minerals.”
“We don’t yet know exactly what this means and how to institutionalize it,” Bloom said.
“We think that the free trade agreement can actually be the basis for good, stable relations with regions like Mercosur, India and the (Southeast Asian) ASEAN countries,” he said.
However, Claudia Schmueck, director of the Center for Geopolitics, Geoeconomics and Technology at the German Council on Foreign Relations, believes that von der Leyen remained silent because “the topic of free trade – especially free trade agreements – is currently (very) controversial and there is little chance of progress at the EU level.”
New hope for EU-Mercosur agreement
As for the EU’s most high-profile pending trade deal, the EU-Mercosur trade agreement, there are new signs that the agreement will be adopted before the end of the year, with confirmation that a new round of negotiations will take place in Brasilia from September 4 to 6.
In addition, as Financial Times In its initial Report In terms of progress on the agreement, EU officials are prepared to overwhelm France and Austria in voting to push the deal through.
This means that the “trade” part of the deal, including tariffs, over which the EU has exclusive jurisdiction over its 27 member states, can be adopted by a “qualified” majority of at least 15 countries (representing more than 65% of the population) and ratified by the European Parliament, without requiring approval from all national parliaments.
“Obviously, they’re just trying to overwhelm France at the vote right now,” Schmucker said.
“I’m surprised they’re doing it, but I think it’s great. If they can get a deal done, it’ll be a huge success,” she added.
While negotiations with the Latin American group (Argentina, Brazil, Paraguay, Uruguay) officially concluded in 2019 after 20 years of talks, the FTA’s adoption was contingent on a side agreement that would resolve some outstanding environmental issues.
France and Austria in particular have taken a tougher stance because they are concerned that the deal could increase deforestation risks in partner countries, including in the Amazon rainforest, and could have an impact on the EU agricultural sector.
In response to questions from Euractiv, a European Commission spokesperson said on Thursday (August 8): “The focus (of the EU negotiating team) remains on ensuring that the agreement delivers on the EU’s sustainable development goals (…) while of course respecting EU sensitivities in the agricultural sector.”
But France remains governmentless after more than two months of internal political reshuffle following EU elections in June, which has weakened its position in Europe.
“I think there is more optimism now than before that this deal can be reached very early in the new commission’s term,” John Clarke, former head of international relations at the European Commission’s Directorate-General for Agriculture and Rural Development (DG AGRI), told Euractiv.
“I am very sure that Macron understands the economic value of the agreement for France and the European Union,” he said, suggesting that France might also acquiesce to the deal.
However, Clark added that while the deal was “very interesting for Europe from a business point of view”, French politicians would have to “find a way to appease (the country’s) very vocal farmers”.
Exporters warn EU stance remains problematic, threatening future growth
Meanwhile, the situation for other trade deals is not looking promising.
“I can still see that all the other important agreements are not really moving forward for a variety of different reasons,” Schmucker said, noting that India and ASEAN countries have had difficulty with sustainable development issues. Carbon Border Tax (CBAM) and its Anti-deforestation law It also doesn’t help negotiations, she added.
The two laws, aimed at extending EU environmental regulation to countries outside Europe, have been resisted by trading partners who see them as excessive intrusions on their sovereignty.
“Fewer and fewer countries are willing to follow our instructions. Those days are gone,” Ulrich Ackermann, head of foreign trade at the German Mechanical Engineering Industry Association (VDMA), told Euractiv.
He said this would continue to put pressure on trade negotiations.
“If the EU institutions continue as before, if they continue to pursue the same course as they have in the past five years, they will not achieve anything in the next five years,” he said.
“It’s a real tragedy that the EU has achieved so little in the past five years. And there aren’t many signs that things will improve,” Ackermann said.
Before von der Leyen was re-elected at the end of June, German Chancellor Olaf Scholz (SPD/S&D) expressed similar views. Speech to the German Industry Association BDICalled the lack of progress on a trade deal “unacceptable.”
A spokesman for the German Automotive Industry Association (VDA) told the European Events website that EU trade policy “has not made decisive progress in recent years” and called on “Brussels to take a more pragmatic approach when negotiating free trade and investment agreements.”
He added: “The world is not waiting for the EU – markets and access routes have been opened by other countries, and the EU’s lack of resolve has led to a loss of growth, prosperity and ultimately geopolitical relevance.”
Additional reporting by Thomas Moller-Nielsen and Sofia Sanchez Manzanaro.
(Editing by Anna Brunetti/Daniel Eck)
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