Failed Trade Deal, Brexit, Migrants: EU Struggles as Leaders Warn of Risk of Collapse

By James Carstensen | October 26, 2016 | 3:00pm EDT
German Chancellor Angela Merkel, right, and German Foreign Minister Frank-Walter Steinmeier, left, talk during a meeting of the German federal parliament, the Bundestag, in Berlin on Thursday, Oct. 16, 2014. (AP Photo/Michael Sohn)

Berlin ( – The European Union is the world‘s largest trading block, but its credibility is on the line after it failed to agree on a Canadian free-trade deal.

The failed trade deal adds to a list of increasing challenges for the union, as it struggles to also agree on a similar free-trade agreement with the U.S., fights for unity and a tough stance against Britain after its vote to withdraw, and deals with heavily divided opinions over the migrant/refugee crisis.

Germany’s foreign minister, Frank-Walter Steinmeier, has warned a failure to address these issues could spell the end of the European Union.

“The financial crisis, the wave of refugees to Europe and the shock of the referendum in the U.K. have plunged the European Union into severe turbulence," he told Suddeutsche Zeitung early this week.”

The refugee crisis and the perception that globalization creates “winners” and “losers” have provided a platform for far-right anti-E.U. parties to gain votes across Europe.

Populists use the opportunity to leverage negative sentiment toward the E.U. in a bid for votes, Steinmeier said.

The crisis over the mass influx of migrants and refugees has sparked debate over the E.U.’s ability to work as a cohesive union. Germany, under Chancellor Angela Merkel’s directive, adopted an open-door policy, but other members such as Hungary and the Baltic states rushed to toughen border controls.

An E.U.-Turkey migration agreement has seen a drastically reduced number of migrants entering Europe, but has also placed the E.U. under scrutiny from human rights groups.

The latest blow to E.U. prestige and unity came on Friday, when ministers failed to sign off on the Comprehensive Economic and Trade Agreement (CETA) with Canada, due to opposition from Belgium‘s French-speaking region of Wallonia.

CETA and the Transatlantic Trade and Investment Partnership (TTIP) with the United States would reduce a wide range of barriers to E.U.-Canadian and E.U.-U.S. trade and investment, but both face opposition.

The trade deals have been the subject of protests and public demonstrations. In April, President Obama’s visit to Germany saw more than 25,000 protest against TTIP. In September more than 100,000 people took to the streets in cities across Germany to protest under the slogan “Stop CETA and TTIP for fair world trade.”

Italy’s economic development minister Carlo Calenda told Europe Online magazine last week that a failure to sign CETA “would really spell the death of E.U. trade policy, because then nobody will ever want to negotiate a deal with us.”

Even if CETA was approved, the minister said “the E.U. will still look divided and fragmented.”

Part of the backlash is fueled by the perception that globalization, and by extension institutions such as the E.U., is oood for some but bad for others.

Critics see deals such CETA and the TTIP as only furthering the interests of multinational corporations and leading to less local jobs – thereby creating “losers.”

“Globalization has given us prosperity but also created winners and losers in Western societies,” Calenda said.

Britain’s vote to withdraw from the E.U., a process expected to formally begin in March, succeeded in part by playing on the “winners and losers” theme.

Concern that Britain will leverage special treatment because of European dependence on exports, and that other countries may follow Britain’s lead as a result, has left uncertainty over the European single market.

German minister of economic affairs and vice chancellor Sigmar Gabriel warned in a news conference last August the E.U. would go “down the drain” if other members followed Britain’s lead.

In a bid to maintain European unity, Merkel called earlier this month for a tough stance against granting any exceptions to the U.K. in the withdrawal negotiations.

Jens Spahn, parliamentary state secretary in the Federal Ministry of Finance, said the tough line was necessary. If Britain is given special treatment, “then there won’t be a European Union anymore,” he said.

German heads of industry indicated support for Merkel’s tough stance. Eric Schweitzer, president of the Association of German Chambers of Commerce and Industry, said at a briefing after Merkel’s statement that letting Britain pick and choose trade freedoms could untangle the unity of the union, and “creates the risk that the whole of Europe would fall apart.”

Hans Peter Wollseifer, president of the German Confederation of Skilled Crafts, noted however that the E.U. should also learn from Britain’s departure, saying that it should be “more restrained in passing laws and regulations that affect even the smallest business.”

In a similar vein, Germany’s foreign office plans a tour by officials of Germany and wider Europe to discuss the E.U. and its future with the public. The tour will be held from October until March next year, starting with about 30 locations throughout Germany.

“We want to face criticism; to be able to understand what is right and what is wrong with Europe,” Steinmeier said.

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