Trade negotiations are increasingly impinging on the way economies are regulated domestically, making it harder to ‘sell’ free trade, argues Dr Gabriel Siles-Brügge.

‘The European economy stands or falls on our ability to keep markets open, to open new markets, and to develop new areas where Europe’s inventors, investors, and entrepreneurs can trade’, said the then EU Trade Commissioner Peter Mandelson in 2005.

With these words Mandelson aptly summarised the motivations behind the important trade policy shift taking place under his tenure. After the stagnation of the Doha Round that followed the Cancún and Hong Kong Ministerials, and the relative inaction of his predecessor Pascal Lamy, Mandelson became the architect of the EU’s new ‘Global Europe’ trade strategy, announced with great fanfare in October 2006.

‘Global Europe’ not only saw the EU abandon its self-imposed moratorium on new free trade agreements (FTAs), but also firmly established trade policy as the ‘external dimension’ of the EU’s Lisbon competitiveness agenda. Keeping EU ‘markets open’ and – most importantly – providing exporters with new avenues to export to rapidly growing markets were seen as central to maintaining and boosting EU competitiveness in a globalised economy.

The strategy saw the EU launch a series of FTA negotiations with East and South Asian economies in 2007. In line with the broadly liberal objective of keeping EU markets open and opening markets for exports, the European Commission explicitly foresaw a strategy of trading away the EU’s last remaining ‘pockets of protection’ (outside agriculture) in exchange for world market access, thus essentially ‘killing two birds with one stone’.

This dynamic culminated in the EU-Korea FTA. The first and most ambitious trade agreement implemented since ‘Global Europe’ saw the EU trade away tariff protection in the motor vehicles sector, giving South Korean car manufacturers improved access to the EU market – despite the opposition of the EU motor industry. In turn, EU services providers – such as the banking and insurance industry, professionals such as lawyers and the telecommunications sector – gained improved access to the South Korean market.

In an unfavourable economic climate and despite the opposition of the powerful automobile sector – which was reeling from the effects of the economic crisis – the European Commission secured the approval of the EU-Korea FTA by EU Member States and the European Parliament over the period 2009-2010. Crucial to this success was precisely the competitiveness rhetoric deployed in defence of the agreement: opponents of the FTA were no more than a ‘protectionist hangover that had failed to adapt to the changing nature of the global economy’ and its competitive rigours.

By this time, however, limits to the EU’s economic rhetoric were already emerging. From the start of his tenure, Mandelson gave a strong push to the EU-ACP (African, Caribbean and Pacific) Economic Partnership Agreement (EPA) negotiations, notably in advocating a number of regulatory provisions – for example, relating to services liberalisation, investment and competition policy.

Mandelson and the European Commission deployed very similar arguments to those used for the EU-Korea FTA – emphasising the importance of boosting ACP competitiveness in a globalised world. Despite this, a concerted campaign by civil society activists, allied with certain ACP governments, successfully opposed the inclusion of binding commitments on these provisions on the grounds that they unduly restricted the policy space of ACP states.

This strong reaction points to an important limitation in the rhetoric adopted by the European Commission since ‘Global Europe’ to legitimate free trade. The argument appears to work well in the case of distributional conflicts over trade policy – in other words, over who benefits from trade liberalisation (as in the case of the EU-Korea FTA). Here, it is easy to tarnish opponents of free trade by simply labelling them as ‘protectionists’.

The EPA episode, however, illustrates that such arguments are far less persuasive where trade policy conflicts are ‘normative’, concerning broader questions of how economies should be regulated.

The Transatlantic Trade and Investment Partnership (TTIP) negotiations being conducted between the EU and the US are a case in point. On the one hand, these negotiations represent the culmination of the economic logic driving free trade talks since ‘Global Europe’. At a time of crisis and austerity TTIP represents, in the words of outgoing Trade Commissioner Karel De Gucht, ‘the cheapest stimulus package you can imagine’, allegedly generating extra GDP growth of €120bn annually and boosting EU competitiveness.

The problem is that despite attempts to emphasise its economic benefits, policymakers are already on the back foot when it comes to defending TTIP against mounting opposition from civil society groups in Europe, as well as a number of members of the European Parliament. Not only have these groups challenged the economic rhetoric of ‘growth and jobs’, but they have painted it as a threat to hard won social and environmental protections – claims that so far have had considerable political resonance.

To an extent, these claims echo those of the anti-globalisation movement of the 1990s. Their campaigning was a factor behind the limited progress in several global economic talks at the time, such as on the failed Multilateral Agreement on Investment.

In a world where trade policy is seen to increasingly impinge on the way in which states regulate their economies – and is no longer simply a distributional game – there may be growing limits to the European Commission’s ability to sell ‘free trade’.

• This blog is based on an article from ‘The limits to selling free trade: From distributional to normative conflicts in EU trade policy’, published in GREAT insights Magazine, Volume 3, Issue 9. October/November 2014.