German court gives green light to EU trade deal with Canada

Germany’s highest court has given the EU’s historic free-trade deal with Canada the green light in a ruling that will be a big relief to Angela Merkel’s government, which strongly supports the agreement.

The decision comes at a time of growing protectionist sentiment around the world and a public backlash against globalisation, even in Germany, an export-oriented economy that has been a large beneficiary of free trade.

The constitutional court rejected a series of emergency petitions brought by a coalition of campaigners to block German approval of the Comprehensive Economic and Trade Agreement. However it set a number of conditions for the treaty to go through. These include the government having to ensure that Germany can still withdraw from the treaty even after parts of it temporarily come into force.

The decision paves the way for the pact to be signed at an EU-Canada summit in Brussels on October 27th.

However, the court still has to rule on a related and much broader constitutional challenge that could scupper the treaty. It was brought by an alliance called No to CETA that includes non-governmental organisations such as Foodwatch, a consumer protection group.

Tariffs

The court’s ruling on Thursday will be welcomed by

Sigmar Gabriel

, deputy chancellor and leader of the centre-left Social Democrats, who had warned that any move to block CETA would inflict enormous damage on the economy.

CETA’s European backers say the pact, which aims to remove tariffs and other obstacles to trade, will lead to lower prices for consumers and open Canadian markets to EU companies, creating jobs and increasing prosperity.

However opponents say it gives too much power to international corporations and could lead to a watering down of strict European consumer protection laws and environmental standards.

In particular they object to its dispute-resolution mechanism for investors under which foreign companies will be able to appeal directly to a permanent tribunal. Critics say this will allow businesses to get around national, democratically elected institutions.

Food safety

They also see CETA as a proxy for the much larger EU-US Transatlantic Trade Investment Partnership (TTIP) , which is facing even tougher resistance in Europe. Anti-TTIP groups say it will weaken tough European rules on issues such as food safety. They also argue that TTIP would give US companies special rights to sue EU member governments and block environmental and other regulations.

Germany is not the only country to see rising popular opposition to globalisation. The new mood is encapsulated in the US presidential campaign where Donald Trump, the Republican candidate, has campaigned on the theme.

Even Hillary Clinton, the Democratic candidate, has come out against the Trans-Pacific Partnership, a landmark free-trade deal negotiated between the US, Japan and 10 other Pacific Rim countries that she once espoused. – Copyright The Financial Times Limited 2016