Good morning. Today, our trade correspondent assesses the EU’s recent lacklustre achievements in clinching trade deals, while I hear how Estonia is seeking to solve Europe’s debate on spending frozen Russian assets by just doing it themselves.
Trade-off
Negotiations on a trade deal with Australia should be finalised within weeks, the EU’s trade commissioner said yesterday at a press conference to reannounce an agreement concluded a year ago with New Zealand.
But as Valdis Dombrovskis hailed the pact with a “like-minded partner”, a slate of other trade talks remain stuck, writes Andy Bounds.
Context: The EU’s big problem is signing deals with unlike-minded partners, ie developing countries. It recently clinched one with Kenya only by leaving out investment, services and agreeing less ambitious labour and sustainability commitments than those with New Zealand.
A 2018 deal with Mexico remains unsigned, while talks with the Mercosur bloc are souring over EU demands for Brazil, Argentina, Uruguay and Paraguay (its members) to sign binding commitments to protect the rainforest after concluding a deal.
Yesterday’s rubber-stamping ceremony seemed organised to give Sweden something to announce after a six-month-long presidency of pushing freer trade with frustratingly little result.
Johan Forssell, the Swedish trade minister, said the EU was in a better place than six months ago. “I think we have succeeded in what we said we were going to do to give this important theme a big push forward,” he said.
Dombrovskis said the “end game” with Australia was close, with a possible deal by mid-July. He added an upcoming EU summit with Latin America and the Caribbean was an “important milestone for the EU agreement with Mercosur”.
Brazilian president Luiz Inácio Lula da Silva, whose election last year had EU officials hopeful for a fresh start in the trade negotiations, has however said he considers an EU request to attach additional climate and sustainability commitments to the deal a “threat”.
EU officials say that behind closed doors, the Brazilian rhetoric is more muted. But even if Mercosur is signed, the EU faces a struggle to get member states’ approval. The Austrian and Dutch parliaments have passed resolutions against the deal, while France is sceptical. The fear of cheap beef imports is as big a factor as their love of the Amazon.
When the FT asked free-trade champion Forssell what he had learned from herding the EU towards a more open market, he laughed and skirted around the question.
Chart du jour: Between a rock and a hard border
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The British territory of Gibraltar with its 34,000-strong population heavily relies on Spanish workers. But the probable victory of the conservative People’s party (PP) in Spain’s upcoming election could undermine negotiations for a post-Brexit deal on the territory’s status, writes Barney Jopson.
Test case
As EU governments, the European Commission, and the European Central Bank squabble over the legalities of spending frozen Russian assets, Estonia has decided it’s done waiting for a decision. They’re just going to crack on and do it themselves.
Context: In response to Russia’s war against Ukraine, EU member states have frozen more than €224bn in Russian assets as a result of sanctions. Many countries want to find a way to use that to help rebuild Ukraine. Others say there are too many legal barriers and financial risks to do so.
Estonia’s government is set to propose legislation this autumn to use the assets to compensate for specific damage caused by Russia, in effect charging sanctioned individuals for the crimes of their state.
“We have decided all together that Russia should pay . . . Now, the question is about the legal solution,” said Estonia’s foreign minister Margus Tsahkna. “We have to move forward as the European Union . . . What Estonia is offering nationally is this process. And this is an example for everybody else.”
Estonia’s thinking is simple: Tired of hearing that various legal approaches won’t work, they want to show that under their national law, it is possible, and that afterwards the world keeps turning.
A court will review each claim, and those whose assets are requisitioned will have the opportunity to seek redress.
The two caveats are that Tallinn is only targeting frozen assets belonging to sanctioned Russian individuals and entities, which in Estonia only add up to around €50mn. That’s a far cry from the main debate on Russian central bank assets frozen in the EU. They are worth more than €200bn according to the EU Commission, and their use could have much more far-reaching implications for global markets.
“Most of the things we have done together in the EU, they first were said to be a bad idea,” said Tsahkna. “In Estonia we have bad weather, but we have great optimism.”
What to watch today
EU Commission presents proposal on digital euro.
Estonian prime minister Kaja Kallas and Finnish premier Petteri Orpo meet EU chiefs in Brussels.
French president Emmanuel Macron hosts Nato secretary-general Jens Stoltenberg in Paris.
Now read these
Competitive disadvantage: High-end manufacturers in the UK increasingly feel the headwinds of trading with their EU clients after Brexit.
Keeping control: Wagner has been a key tool of Russian power in African countries. What will happen after its thwarted mutiny?
Power play: Janan Ganesh argues against the “Tech Bro view of geopolitics”, and why the case for democracy remains strong.
Source: Economy - ft.com
