Trade deal débâcles bring criticism of Union mandate

Date: 10/07/1997

AS TWO free trade agreements struck by the European Commission come under continuing attack from national governments, criticisms are growing over the way EU trade policy is being conducted.

A deal with Mexico recently ran into problems over human rights and maritime transport, while another with Jordan is blocked over access to the EU market for Jordanian tomato paste.

Yet in both cases, the countries involved had been given the impression that the agreements were largely concluded, leaving them angry and the Commission with egg on its face.

Under EU trade rules, the Commission can negotiate trade deals in goods once given a mandate by the Council of Ministers. While it is committed to keeping national capitals informed, it essentially has the right to initial agreements under its own steam before inviting governments to sign up.

But ever since the Uruguay Round of world trade talks, countries such as France have expressed increasing concern at what they see as the Commission's tendency to overstep its mandate and negotiate deals they fear could undermine EU industry.

The Amsterdam summit's rejection of Commission demands for more negotiating powers in services and intellectual property was a clear example of the new atmosphere of caution that has emerged.

The present mess, leading to the renegotiation of deals which other countries believed had been settled, is likely to strengthen both protectionists' and free traders' resolve even further, entrenching already uncompromising positions.

The case of Jordan is particularly embarrassing, because the deal was initialled with great aplomb at a summit of 27 nations. At this year's Euro-Mediterranean meeting, the EU agreed to allow Jordan to sell it 3000 tonnes of tomato paste a year as part of an association agreement.

The figure was substantially lower than the 7000 tonnes demanded by Jordan, so in return the Commission agreed to re-examine the quota later if it proved to be too small.

EU governments, led by tomato-growing Spain, were furious at the outcome, warning that it set a terrible precedent and left too many doors open. They also expressed concern at the implications for trade deals under negotiation with Egypt and Lebanon.

But when the Commission asked Jordan to relinquish the commitment (in return for a slightly bigger quota), Amman warned that it also had seven areas of discussion it wished to reopen, causing everyone to shrink back and producing an apparent deadlock.

Suitably chastened, the Commission was careful not to initial a deal it reached with Mexico last month, but it did let it be known widely that it had concluded negotiations and was merely waiting for ministerial approval.

Predictably, EU national governments very quickly rejected the human rights clause in the text as sub-standard, and began questioning articles on maritime transport. They also felt that the agreement was too weighted towards trade in goods rather than services (to Mexico's advantage).

Following an emergency meeting late last week, it appears that Mexico has accepted changes in the text, but only in return for more trade concessions.

Trade analysts warn that these and similar events are likely to make potential third country partners more reticent about talking terms with the Union in future.

“This really shows how important it is that the Commission gets a bigger trade mandate,” said Philip von Schöppenthau of EuroCommerce, which represents traders and retailers. “Foreign governments do not know who they are negotiating with. As a result they are playing their cards much closer to their chests, making deals more difficult to reach. This is not in the interest of the Community.”

Critics argue that unless EU member states agree to give the Commission more leeway, its trading power is bound to be eroded.

External Relations Commissioner Manuel Marín recently admitted to EU foreign ministers that his team did sometimes stray beyond its strict bounds, arguably strengthening the case for more control. But negotiators warn that if guidelines become too rigid, too much will be given away too early, and deals will be impossible to reach in practice.

The third option - maintaining the status quo - is already failing and looks likely to create even more problems in future.