EU insists trade deals must meet its labour and competition standards


Countries seeking a trade deal with the EU should meet European standards on labour law and fair competition, one of the bloc’s most senior officials has said in remarks that reinforce Brexit red lines, reports The Guardian.

Margrethe Vestager, the EU competition commissioner, described the trade agreement with Canada as a model for the future because it enshrined recognition of labour standards, human rights and animal welfare.

The comprehensive economic and trade agreement, known as Ceta, was signed off by the EU and Canada in 2016, after seven years of negotiation led by Vestager’s colleague, the trade commissioner, Cecilia Malmström.

“I think the work done by Cecilia is a model of how modern trade agreements can look,” Vestager said in an interview with the Guardian and other European newspapers. “It is about trusting the other part to do something that you find sufficient, not necessarily the same, but something that one way or another matches your own way of looking at things so that you do not import things that would not accept in your own jurisdictions.”

She stressed the EU’s deal with the UK would be different. “It is another relationship when you have been neighbours forever … and you have been integrated for so many years.” Nonetheless, avoiding a race to the bottom is baked into the EU negotiating stance.

EU leaders have agreed that a future Brexit trade deal should not give the UK “unfair competitive advantages” through lower social and environmental standards or tax competition. The bloc will also seek to guard against the British government handing out subsidies to favoured industries in a way that would tilt the playing field against European competitors.

However, Vestager indicated that the EU executive was open to rethinking its competition rules, by considering a “Buy European” policy favoured by France Emmanuel Macron.

The newly elected French president wants a “Buy European” act that would make it harder for non-European firms to bid for public contracts, as part of a more muscular response from Europe on foreign trade and investment.

Vestager said she had “not made up her mind”, but made it clear that the idea could not be discarded without discussion. “We have to allow any proposal to enter the debate, without saying beforehand, ‘This can never happen, this is a bad idea,’” she added.

The debate on globalisation had become polarised between two camps, she continued, “one saying this is the worst thing that has ever happened … [the] other saying you can never do anything and that is the way that history goes. If you want to change that shouting competition between the two camps, then you have to open the debate to be more nuanced.”

Her intervention contrasts with the commission vice-president Jyrki Katainen, who slapped down Macron’s idea when he said the EU could not afford to impose “artificial rules”.

The European commission has long been a bastion of liberal economic thinking, but is rethinking its view on globalisation amid surging support for anti-EU populists.

“We would like to have a different take on globalisation to make sure we don’t just consider it a tsunami, but something we would also like to shape,” Vestager said. The EU needs to be asking “what is fair competition in the modern day world”, she added.

In a recent policy paper, the commission concluded it needed to be tougher in demanding access to bid for government contracts in foreign countries. It argues that Europe has opened the doors to non-Europeans to bid for infrastructure projects, without reciprocal rights to compete in the US, China or Japan.

As enforcer of the EU’s competition rules, Vestager has called on Apple to pay a record-breaking €13bn (£11bn) in back taxes to Ireland, after finding the Us tech company had benefitted from a sweetheart deal that gave it an unfair advantage.

She played down comments by the chancellor, Philip Hammond, that the UK could “be forced to become” a low-tax haven if there was no good Brexit deal. Tax was a global debate, she said, alluding to international reforms the UK has signed up to. “It is more of interest that this global coalition actually exist to make sure profits are being taxed, where they are generated.”