CETA, feta and trade deal difficulties

For once, Greece could not be blamed for scuppering a major agreement in Brussels. Nevertheless, there is much for Greeks to ponder following the collapse last Friday of the European Union’s efforts to clinch the Comprehensive Economic and Trade Agreement (CETA) with Canada.

Coming in the wake of the EU and the USA reaching a dead-end in their attempt to agree the Transatlantic Trade and Investment Partnership (TTIP), CETA’s demise has raised questions about whether the Union is united enough to be able to clinch deals of this magnitude.

According to Eurostat figures, 11 percent of the trade EU countries conduct outside of the bloc is with Canada. The total value of the trade in goods and services between the EU and Canada was worth more than 90 billion euros last year, while Europeans invested 274.7 billion euros in Canada. The foreign direct investment from Canadians in the EU stood at almost 167 billion euros.

In a period of slow growth for most EU countries, Canada is a significant trading partner. This is particularly true for Greece, whose exports to Canada were worth 142 million euros last year, while imports from across the Atlantic came to 86 million.

Viewed from this angle, a new framework facilitating trade between the EU and Canada appears an enticing prospect.

Not everyone saw it this way, though. In the end, it was the Francophone Belgian region of Wallonia that blocked CETA by refusing to give its consent for the country’s central government to sign the pact. However, before that there had been many dissenting voices, including from non-governmental organizations, just as there had been against TTIP.

Two of the key concerns about CETA were that the investor-state dispute settlement (ISDS) mechanism included in the deal was weighted too much in investors’ favor and that EU food safety, social and environmental standards would be compromised because the Union’s right to regulate would be undermined.

That NGOs and civil society should rally so strongly against CETA and TTIP underlines specific concerns but also the growing fears about globalization and its effects on workers’ rights, the environment, sovereignty and the bypassing of national institutions, among others. This is a direct challenge to the perception that anything about such trade agreements is “free.” This is true even within the EU, where the free movement of goods, capital, services and people have been generally viewed as being drivers of stability and prosperity.

It is an issue that Harvard professor Dani Rodrik has been focusing on for a long time. He has written about the global economy facing a “trilemma,” which is that democracy, national sovereignty and economic integration are not compatible. “We can combine any two of the three, but never have all three simultaneously and in full,” he wrote almost a decade ago.

As Rodrik outlined in a blog post published on Saturday, there are political scientists who argue that international agreements, which establish widely-accepted rules, can strengthen democracy – a theory that is termed “democracy enhancing multilateralism.”

However, the emergence of issues such as sovereignty and national interest at the forefront of European politics in an economic environment marked by low growth, high unemployment and fiscal consolidation means that free trade is viewed more suspiciously than it was when the single market was created in 1993 and in the subsequent years of plenty. European politicians are under more pressure than they were before not to sign such pacts because of fears of wage dumping, job losses and threats to national production.

The debate in Greece over CETA is a case in point. Most of the discussion at the political and media levels was devoted to just one issue: The fate of feta cheese. As with the TTIP negotiations, the main worry expressed by decision makers in Athens was that CETA would lead to Canadian producers being able to manufacture feta and drive Greek firms out of the market.

Feta was not among the long list of European products with geographical indications that would be guaranteed protection across the Atlantic as the deal allowed Canadian companies already producing feta to continue doing so rather than revert to “feta-style” products. What producers in Europe see as a legitimate way of protecting products, and therefore livelihoods, from particular regions is viewed as protectionism by others.

It seems strange, maybe even petty or parochial, for a multi-billion-euro trade deal to be boiled down to a discussion about how to name a cheese, but within the context of Greece’s struggling economy, ensuring that feta’s uniqueness, and consequently its sales, cannot be challenged is serious business.

According to the Panhellenic Exporters’ Association, feta exports have skyrocketed in recent years. In 2011, the total annual value of feta exports reached just over 250 million euros. After a series of steady increases, exports of Greece’s national cheese were worth almost 370 million euros last year (Canada was the 14th largest importer, buying 3.9 million euros’ worth of feta). This upsurge seems even more impressive when one considers how Greek exports have struggle in recent years, when increasing taxes, a lack of liquidity, political uncertainty and currency risk have damaged so many local firms.

It is no surprise that Greek dairy producers made their concerns about CETA and TTIP known to local politicians. Faced with disgruntled domestic constituents, it did not take much for Greek decision makers to view the transatlantic trade deals with scepticism. SYRIZA had been ideologically opposed to free trade but the extent to which the negativity spread through the political system was underlined last week when New Democracy MEP Manolis Kefalogiannis told a group of Greek journalists in Brussels that the conservative party (whose leader Kyriakos Mitsotakis favors liberal economic policies) would vote against CETA in the European Parliament if the deal is concluded.

The CETA-feta complications are a microcosm of the difficulties Europe faces in clinching sweeping trade deals in today’s adverse economic and political climate. They highlight how local concerns can clash with global forces and what one man sees as an opportunity another views as a threat. It seems this dilemma, or even trilemma, will trouble decision makers in Greece and the rest of Europe for many years to come.