Country to country, business to business way forward for trade?
There are many examples of exemplary trade developments created without the need for formal, regional free-trade agreements. Picture: David Creedon
Then British prime minister William Pitt’s proposal for a free-trade agreement between Britain and Ireland was rejected in 1785 by the Irish parliament. To judge by the Irish farmers' reaction to the EU trade agreement with New Zealand, that deal would have been rejected, too.
Free-trade agreements in the EU have never been given a smooth ride by the farming community, who maintain that every trade deal increases competition for Irish and EU farmers. The free-trade deal with Australia, which has been in the making since 2018, will not happen any time soon, the latest attempt to wrap things up falling apart in dramatic fashion last year, with the EU market opening to beef and dairy being the stumbling block.
Ireland and a few others have yet to ratify a free-trade agreement with Canada, and the Mercosur deal, a troubled story stretching over 25 years, remains in limbo. This time, the trade agreement with the South American group of nations, formed by Argentina, Brazil, Uruguay, and Paraguay, was scuttled by France’s Emmanuel Macron in December, after he faced criticism from environmentalist groups.
There are many good reasons to support regional free-trade agreements, but there is also much to be gained by pursuing direct country-to-country positive-trading partnership arrangements through diplomatic and trade missions.
It is now 12 years since Ireland signed a strategic partnership co-operation arrangement with China. Since signing this reciprocal partnership, Ireland’s exports to China have surged five-fold, the latter becoming Ireland’s sixth-largest trading partner in this short time. The trade growth would not have been possible without the support of regular trade missions, which opened the massive Chinese market for Ireland's technology products, but also for dairy and other agri-products. Meanwhile, the EU has failed to reach a free-trade agreement with China, despite much diplomatic talking.
Many other exemplary trade developments have been created without the need for formal, regional free-trade agreements. Ireland's trade with Malaysia is a classic example: Without any formal EU free-trade agreement, but with the support of locally organised trade missions, Irish export sales have grown substantially, doubling last year to €1.5bn.
In addition to the main technology sector exports, Malaysia had been identified through Bord Bia’s market prioritisation study as a key market for dairy and meat exports. The market is import-dependent, so the latest trade mission, last November, gave businesses the perfect opportunity to raise the profile of the Irish food industry, learn about the market dynamics, and be guided by the best consumer and market insights.
And looking further east, the impact of the much-heralded EU-Japan trade agreement has been very muted in the five years since its signing, with Ireland’s exports growing at much the same rate as before.
The international trade story has changed over the past few years, which will affect old-style EU free-trade agreements. We still face the fallout from the 'America First' agenda, Britain's Brexit, the 'Made in India' policy, and a surge of EU investment-screening schemes. In a growing number of corners, globalisation is no longer seen as the engine for sustainable economic creation, and is instead blamed for income inequality and social decline in rich nations.
The rules-based system of the past, based on institutions such as the World Trade Organisation, is giving way to states pursuing their own interests with tariffs, export restrictions, and, in the case of the EU, regulatory hyperbole. The EU's stance is the main cause of Irish and other European farmers' long-standing calls for reciprocity in global production standards.
Large multinationals may survive the changes by side-stepping national rules, surpassing the regulatory reach of most countries. The small-to-medium enterprises will rely more and more on national co-operation arrangements and the direct business-to-business contacts created by trade missions. And with the rise of the digital economy, large tech corporate boardrooms, with their vast reach across borders, may dictate the patterns of trade in the future.
Recognising the risks and rewards of free-trade agreements, it is critical to Ireland’s interests to continue to be supported by a measured participation in EU negotiations. However, the balancing act of developing national partnership arrangements must continue, acknowledging that formal foreign trade agreements have been ceded to the EU.
