Brexit haunts EU trade plans as nations push to save pacts

[BRUSSELS] European Union governments meet in the Slovak capital Bratislava on Friday to discuss the bloc's flagging trade deals as the forces of populism that triggered Brexit look to claim their next victim.

Trade ministers will consider how to breathe fresh life into the nearly concluded EU-Canada free-trade agreement, and will debate whether it's time to quit talks on the more controversial Transatlantic Trade and Investment Partnership (Ttip) pact with the US.

Ttip still has many issues open for negotiation, with French and German representatives playing down prospects of a deal.

"You've got very uneven growth across Europe; you've still got very high unemployment, especially among the youth; you've got the rise of populism, both the right and the left; you have Brexit; you have the migrant crisis," Mike Froman, the US's lead negotiator on Ttip, said in an interview.

"Will the Europeans be able to bring the kind of attention and political will to the table in the context of all these challenges to be able to find solutions to these outstanding issues?"

Britain's decision to leave the EU, so far the pinnacle of the anti-establishment surge in Europe, has rattled leaders who see it as a backlash against globalisation.

The EU's attempts to strike free-trade agreements with countries around the world, of which the US was a leading advocate, have become more difficult as populist parties use them to show how governments have lost touch with the interests of ordinary voters.

"We need to stop the populist discourse which is making Europe unhappy," European Commission President Jean Claude Juncker told an audience in Brussels Thursday.

"If we want to play a role in the world we have to enter into negotiations with other partners in the world."

The EU-Canada deal, known as Ceta, needed five years of negotiations to conclude, and is scheduled to be signed by European and Canadian leaders at a summit in Brussels in October.

However, to come fully into force it needs the unanimous approval of governments around the bloc, including regional parliaments in some countries, and that isn't a given: two regional assemblies in language-divided Belgium are opposed while Austria's coalition government is split.

In Austria, while Vice Chancellor Reinhold Mitterlehner, who supports Ceta, told journalists in Vienna on Wednesday that he has "hope" for a "positive decision," Chancellor Christian Kern has said he can't agree to the deal without clarifications on sensitive issues.

The Ttip arrangement faces even greater difficulties, with governments questioning whether the remaining disagreements can be settled at all.

Ministers in Bratislava may opt to call for a break in negotiations until after the US elections - originally the unofficial target date for completion.

"Negotiations are continuing, it's true they are difficult and there's still a lot remaining, so the likelihood of a quick conclusion is becoming smaller and smaller, but it makes all the sense in the world to continue to talk," EU Trade Commissioner Cecilia Malmstroem said as she entered Friday's talks.

The Ttip talks have been held in several rounds since 2013. Because tariffs between the world's two largest trading blocs are already low or non-existent, discussion has focused on hard-to-resolve issues such as European bans on common US agricultural practices such as chlorine-washed chicken and hormone-treated beef, and US laws that limit many public contracts to local companies. While Ttip's advocates point to the economic benefits and the introduction of global standards, its detractors say it will erode wages and conditions.

The two pacts have triggered protests in several European cities in recent weeks. More than 320,000 people turned out across Germany on Saturday, according to organisers, while on Tuesday thousands picketed the headquarters of the European Commission in Brussels, which is conducting the trade negotiations on EU nations' behalf.

As the backlash has grown and officials have struggled to reach agreement in negotiations, politicians including France's Minister of Foreign Trade Matthias Fekl and German Economy Minister Sigmar Gabriel have talked down the prospect of a deal.

Mr Fekl in August went as far as to say Ttip was "dead".

"Ultimately it's going to be up to European leaders to manage the politics around this if they want to get this deal done," Mr Froman said, adding that he believed a deal can still be struck this year.

"Trade agreements become the scapegoat for other economic ills that you don't get to vote on and as a result it's become a major issue of controversy."

BLOOMBERG