The so-called “Golfgate” scandal has terminated the tenure of EU Trade Commissioner Phil Hogan following his appointment only just a year earlier. His responsibilities will be assumed by Executive Vice President Valdis Dombrovskis. However, it is currently uncertain, what will happen to the two major Free Trade Agreements EU-Mercosur and CETA.
“Silly Season” what silly season? By breaking a number of the Coronavirus rules applicable in his home country Ireland, Trade Commissioner Phil Hogan made plenty of (negative) headlines. After Hogan initially remained intransigent, he finally resigned on 26 August 2020.
On 8 September 2020, Executive Vice President Valdis Dombrovskis was named as his successor; he had already temporarily taken over the trade portfolio following Hogan’s resignation. Dombrovskis will also retain his current responsibility for economic policy and his role as representative of the Commission in the Eurogroup. However, the new Irish Commissioner Mairead McGuinness (EPP), previously Vice President of the EU Parliament, will in future assume responsibility for Financial Services. However, the fact that the Commissioner from the EU country known as tax haven, shall be responsible for such a subject area, does also attract criticism. The European Parliament has now to approve the appointment of McGuinness and the expansion of Dombrovskis’ portfolio.
Merkel expresses Scepticism about EU-MERCOSUR Trade Agreement
There are a number of challenges waiting for Dombrovskis. On the one hand, the Coronavirus crisis has led to a massive slump in global trade and triggered – apart from export restrictions – also a general discussion on global supply chains. For this reason too, the EU Commission launched a major EU trade policy review in June. On the other hand, there are currently some turbulences as regards to the ratification of prominent trade agreements. Following a meeting of the German Chancellor Angela Merkel with Greta Thunberg and another three climate activists, the latter let it be known that the Chancellor had announced she would not sign the EU-MERCOSUR Trade Agreement in its current form. Merkel’s Press Secretary later announced, that in the Chancellor’s opinion there were indeed “significant doubts as to whether the agreement can be implemented in its intended spirit “. A short time later, German Agriculture Minister Julia Klöckner and her Austrian counterpart Elisabeth Köstinger took a similar line
However, this realisation is not new. Trade unions, NGOs and environmental organisations on both sides of the Atlantic, have for a long time warned against the devastating consequences, which the Agreement would entail for both environment and population. However, how serious the German government, which currently holds the Presidency, is about this announcement, is not yet clear. In the written response to a Parliamentary question it announced that there was no intention to renegotiate. However, according to the letter, one would discuss “possible considerations on accompanying explanations” with other Member States
Chief Trade Enforcement Officer appointed
About a month prior to Hogan’s resignation, Denis Redonnet was the first Chief Trade Enforcement Officer – CTEO to be appointed. In her mission letter to Phil Hogan, Commission President von der Leyen had already announced the appointment of such an officer, “who under direct guidance from the Trade Commissioner shall monitor and improve the compliance of our trade agreements.” In view of the latest upheavals, this post will probably gain more relevance. Redonnet might also have an important role to play to convince critics of the EU-MERCOSUR Trade Agreement.
Turbulent times for the German Presidency
On 3 September 2020, the EU-MERCOSUR Trade Agreement was also discussed by the European Parliament’s Trade Committee. The meeting was attended by the Federal Minister for Economic Affairs and Energy, Peter Altmaier, to talk about the trade policy priorities of the German Presidency. According to Altmaier, the EU-MERCOSUR Trade Agreement would be a strong signal for open and sustainable trade. However, Germany was aware of the discussions on the Agreement, a reason why this issue had been intentionally carefully formulated in the official programme of the German Presidency. The time was not yet ripe for cast-iron statements on the issue – neither in one nor in the other direction.
Altmaier above all pointed towards the special challenges, the German Presidency had to deal with in view of the current situation. Apart from that, his statements were consistently rather vague; he did not or only very evasively reply to questions by MEPs. He mainly restricted himself to repeating the mantra of open markets, rule-based trade and a close cooperation with international trading partners.
Cypriot Parliament votes against CETA
On 31 July 2020, the Cypriot Parliament voted with a clear majority against the ratification of the Comprehensive Economic and Trade Agreement between the EU and Canada (CETA). The Agreement, which since September 2017 has been provisionally applied, also includes an investment chapter, which means that it has to be ratified by all 27 national parliaments of the EU. Whilst this has already been done by 14 Member States – among them Austria – the majority of Cypriot MEPs has now voiced their opposition to the Agreement. Among other, one of the reasons named for the rejection was the lack of protection for agricultural products; in concrete terms this concerns above all the Cypriot cheese Halloumi. However, many MEPs of the Left and Green parties respectively might have also felt strongly about other critical issues, such as the strengthening of multinational corporations and the negative impact on the environment. Still, it is not yet clear which consequences the result of the vote will have on the Agreement. Many of the MEPs want the Agreement to be improved. However, should the result of the vote be formally conveyed to the European Commission, it would mean the end of the Agreement. Hence, one has to be prepared that the EU Commission will build up pressure to make Cyprus vote a second time.