Singapore has accepted to renegotiate its 2014 trade and investment deal with the EU. To Christofer Fjellner this is yet an example of how the Commission has let Singapore down time and again to handle the EU’s internal politics on investment protection.
The free trade talks between the EU and Singapore are a prime example of how the EU should not treat its partners.
Time and time again the EU has let the Singaporeans down and forced them to negotiate completely on our terms. The European Commission is treating the EU-Singapore free trade agreement (EUSFTA) very differently than the agreement between the EU and Canada (CETA). More recently, the director-general for DG TRADE, Jean-Luc Démarty, gave Singapore a new ultimatum: Unless you open up the agreement’s investment chapter – that you did not see any need for in the first place – and change it according to our terms, there will be no deal. That is not the way to treat our partners.
There is a Swedish saying that “if one is big, one has to be kind”. That principle should guide also the EU’s trade and investment policy. As the world’s largest economy, the EU has often embodied this ideal – at least compared to the the United States. The EU does use the lesser duty rules when calculating its anti-dumping tariffs.
Our procurement markets are comparatively open to most other large economies, and the EU has never used anything similar to the Byrd amendment where collections from anti-dumping duties are sent to the bank accounts of domestic companies. But in the case of the EUSFTA, the EU far from acted in this spirit.
The story of EU-Singapore trade negotiations is long and intriguing, but definitely not honourable for the EU. Negotiations on a goods and services agreement (GSA) between the EU and Singapore started in late 2009, after the Lisbon treaty entered into force and thereby gave the EU competence to conclude investment treaties. Both parties negotiated in good spirit.
In late 2011, the EU also wanted to start separate negotiations on an investment partnership, and Singapore accepted. When the negotiations for the goods and services agreement subsequently were concluded in 2013, Singapore requested this agreement to be ratified so that trade barriers could be removed. However, the EU refused and wanted both the goods and services agreement and the investment treaty to be concluded in one single agreement. Again, Singapore accepted. The negotiations for the investment treaty were finalised in October 2014.
Singapore deal used to manage internal debate about investment protection
Subsequently, the Commission decided to let the European Court of Justice determine whether the agreement is a mixed agreement or not, that is to say if the agreement also covers member states’ competences. Notably, the Commission did not refer the agreement with Canada to the Court, despite that its substance concerns the same areas. Finally, even though negotiations have been completed, the Commission now demands that Singapore signs up to the EU’s new and hereunto untested Investment Court System, or there will be no deal whatsoever.
The EU received a clear mandate to negotiate with Singapore. In other words, the member states have been clear that they want an agreement with Singapore. The truth is that the Commission repeatedly has let Singapore down to gain time to handle the Union’s internal debate about investment protection. It is important to have a democratic debate in Europe, but we should not allow that debate to turn the EU into an unreliable partner that tries to force a new Investment Court System upon a small nation after negotiations already have been closed.
If the EU wants to maintain its reputation as an honest and open partner and trade negotiator, we must not try to change deals that have already been concluded simply on our terms. Had a new investment dispute settlement system been the interest of the EU, we should have put that card on the table during the negotiations, not afterwards. Nor should we treat a deal with a small country such as Singapore any differently than one with a large country such as Canada. The EU currently has more ongoing bilateral trade negotiations than ever before. To achieve as deep and comprehensive deals as possible, the EU cannot treat its negotiating partners the way it treated Singapore.
As the world’s largest economy, the EU must be a trusted partner in trade. It is to the benefit not only for our trading partners but also in our own interests in the long run. If we are not, it will become very difficult for the EU to promote free trade in the future.
Christofer Fjellner is a Swedish MEP, and Vice-coordinator of the EPP Group in the Committee for international trade.