Trade requires rules

Globalisation is not a destiny to which we must yield without question. It can be shaped – in a social, democratic and sustainable way. Globalisation is an opportunity. We are aware of this especially in Sweden and Germany. As members of the EU, we take advantage of open borders, exchange and trade. Our prosperity and a large number of our jobs depend on this. Highly qualified employees in both of our countries produce excellent, innovative products, which we sell not only at home and in the EU, but around the world. And yet, globalisation and free trade are coming increasingly under fire, and particularly in countries that – and this is borne out by all the indicators – benefit tremendously from this trend. This is demonstrated at the moment by the trade agreements between the EU and the US and Canada in particular.

For many people, TTIP and CETA are a symbol of unfettered market radicalism. They fear that the social welfare state will be dismantled, standards watered down and that jobs are under threat. We Social Democrats have to acknowledge this fear. But we who believe in the possibilities of free trade have obviously not done enough to explain how the development that comes with trade and welfare actually goes hand in hand. The answer is not to close the door on the rest of the world and stop developing. The solution is to be part of the development and to offer a strong safety net and an active labour market policy. Welfare and an active labour market policy with social insurance schemes can build bridges between old and new jobs. People with secure jobs are not afraid of progress. While the conservatives have nothing bad to say about unfettered markets, nationalists want to build new walls and pull up the drawbridge, and left-wing radicals are quick to reject the agreements. Social Democrats have every reason to be self-assured. We are of the view that free trade and globalisation require clear, binding and predictable rules. And as long as there is no world trade regime that is internationally binding for all of the world’s countries, the EU’s agreements with other states represent a great opportunity. There are good reasons why responsibility for trade policy lies with the EU and not with the member states. This has been the case for decades.

In a globalised world, national rules are not fit for the future – neither for Sweden, nor for Germany. The EU institutions shoulder a particular responsibility. The European Commission negotiates while the Council and the Parliament take decisions. This calls for the greatest amount of transparency and inclusion, however. Only in this way can trust develop. Secrecy is a breeding ground for conspiracy theories. After all, many people are afraid of a globalised world. While there is certainly plenty of scope for improvement here, it is also clear that the repatriation of responsibility to the national level is not a convincing response. Europe has every reason to conduct negotiations in a self-confident manner. We can set standards around the world in environmental, social and consumer protection policy.

CETA shows just how much is possible. Thanks to Canada’s cooperative new left-wing liberal Government, the final stages of the difficult negotiations have been imbued with a fresh dynamism and openness. Open, clear and stable conditions for international investment are important for growth and jobs on both side of the Atlantic. The investment protection in CETA confirms Governments’ right to regulate and includes a new reformed system for resolving disputes between investors and States. A public Investment Court System with two instances will be set up. National interventions are still allowed for, and there are definite safeguards against arbitrary decisions. Public services are protected and culture is exempted from the regulations, while water supplies are not at risk of being privatised and public healthcare will not have to face any restrictions. Moreover, genetic engineering will not be smuggled through the back door under the CETA regime. Consumer and environmental standards will not be eroded, despite the fact that the EU, with its strict precautionary principle, has a different legal tradition than Canada or the US. In its negotiations with the United States, the EU has, unfortunately, yet to achieve a genuine breakthrough.

We intend to press on; indeed we have an obligation do so. Trade agreements such as CETA and TTIP are a necessary intermediate step, although they are not all that is needed. Trade policy must aspire to reduce social division. After all, fairness and justice are principles that apply not only to us, but also to coffee-growers in Africa and to seamstresses in Bangladesh. A forward-looking European Union trade policy must help not only to safeguard standards for EU citizens, but also to improve them in a tangible way for people outside Europe. This will involve quite a bit of legwork on our part. Progressive politics need not fear CETA and TTIP. On the contrary, shaping globalisation remains one of the key tasks for European social democracy.

By Ann Linde and Michael Roth