The EU-Singapore FTA: trade relations and democracy Background text

Transcription

1 1 Free Trade Agreements in a Changing Landscape of Global Governance GIFTA Seminar London June 30 th July 1 st 2015 Marjolein DEROUS The EU-Singapore FTA: trade relations and democracy Background text The recently concluded EU-Singapore Free Trade Agreement (EUSFTA) provides us with several new empirical and theoretical questions. One very interesting one deals with the interaction between trade and democracy. How do the EU s trade objectives interact with the incomplete democratic political setting in Singapore? I look at this interaction from two angles. Firstly, how is it different for the EU (with DG Trade as agent) to negotiate a bilateral FTA with a country that is not democratic? Secondly, what is the impact of the FTA on the democratic level of Singapore? This first question looks at the context for the negotiation process and its outcome, whereas the second question looks at the FTA in force. To be sure, the economic and geo-political arguments for the EU to pursue a bilateral FTA with Singapore are straightforward. As one of the EU s top-20 trade partners a comprehensive trade agreement with Singapore comes in place to tackle - mostly non-tariff - trade barriers and protect European investments (DG Trade, 2013). The EU s trade engagement in Southeast Asia also comes at a time when the US is negotiating an ambitious Trans Pacific Partnership in the region. Although internal disputes are blocking its entering into force, the EU-Singapore FTA is formally concluded by the negotiating teams and somewhat of a template for the EU FTA s with the other ASEAN 1 members. This research will draw on scholarship on both (EU) democracy promotion and EU trade policy in general. In my broader research project, I aim to develop concepts on implicit democracy promotion to add to this literature. Explicit democracy promotion in East Asia has been proven to be ambiguous at best, and 1 Association of Southeast Asian Nations: Singapore, Thailand, Indonesia, Malaysia, the Philippines, Vietnam, Laos PDR, Cambodia, Myanmar, Brunei.

2 2 the relationship between European commercial interests and the undemocratic nature of Asian partner countries complex (Youngs, 2001: 127). But the case of the EUSFTA and the peculiar political context of Singapore also engages with work on the concept of democracy itself: what kind of democracy is (to be) promoted (Meyer-Resende & Wisniewska, 2009 Kurki, 2010). Not the least because Singapore and its leadership (still) are the proponents of the Asian values discourse. The view puts forward a constructed contrast between Western values - individualism and political liberalism - and an Asian preference for consensual policy-making (Thompson, 2000). An important element in the Asian values argumentation is the need to limit political rights in order to establish sound economic growth. This argument is even called the Lee hypothesis referring to Lee Kuan Yew, Singapore s prime minister from 1959 until The remainder of this background text first provides an overview of the EUSFTA timeline and the political context in Singapore. This is followed by a research plan for both research questions. Ultimately, very brief, I present my overall PhD research project and other selected cases. The EU-Singapore FTA: a timeline The earliest initiatives on bilateral trade talks came from the side of Singapore. As one EU official puts it: Singapore had been knocking on our door for the last ten years 2. But, in 2004, the EU had refused to start negotiating with Singapore on an FTA, in absence of an economic case (Garcia, 2012: 51). In 2007, in the Global Europe momentum, the EU aimed for an interregional FTA with the ASEAN. This framework, however, proved hardly manageable and its negotiations were paused in Subsequently, the negotiations moved to the bilateral level and Singapore was an obvious first choice. The country is the largest trade partner of the EU within ASEAN and already has comprehensive trade agreements with the US, China and Japan. 2 Telephone interview with EU official, January 23 rd 2014.

3 3 The negotiations kicked off with a first round in March 2010 and the main components of the agreement were agreed on by December 2012 and the text got initialled and made available to the public in September Negotiations on investment protection started later and were not completed at that time. The Lisbon Treaty provided the European Commission with a mandate to negotiate on investment, including the - increasingly controversial ISDS mechanism. This chapter will replace 12 existing Bilateral Investment Treaties between Singapore and EU Member States. The final talks on this chapter and its legal scrubbing were concluded in May 2015 (Ministry of Trade and Industry, 2015). However, the Commission s competence on investment policy remains contentious and the ratification of the agreement including a vote in the European Parliament is put on hold for the time being. Commissioner Malmström has confirmed the decision of her predecessor to forward the FTA to the Court of Justice to sort out disagreement over the EU s competence to sign and ratify this FTA (DG Trade, 2015). Political context Singapore: incomplete democracy The city-state of Singapore has a questionable democratic record. The country s one-party rule is sustained by its peculiar electoral system of group constituencies, compelling investment promises in election times, politically motivated libel law suits and complete lack of press freedom. The leading PAP (People Action Party) has been in power since 1959 when Singapore became a self-governing state, leading up to later full independence in Since then the country has become one of the richest countries in the world, characterized by a very open trade policy. This economic advancement remains a powerful legitimizing factor for the current political system. However, the regime does everything in its power to suppress any opposing voices (Freedom House, 2015). To label Singapore is a rigorous task. The country is not on any list of liberal democracies; yet clear of any corruption, its people appear satisfied with their

4 4 government s output (World Justice Project, 2015). The meaning of the concept of an incomplete democracy is work-in-progress. The essential elements in the UN definition, signed by Singapore, are a good starting point for any assessment. Research plan: hypotheses and empirics I put forward some contrasting potential linkages between trade and democracy in the case of the EUSFTA and browse through the available empirical material. The EUSFTA is negotiated and signed, so Singapore s incomplete democracy did not prevent the agreement. But how did the political setting of Singapore come into play, if it did at all? As I aim to establish an even more detailed timeline of the negotiations I will look at the input of stakeholders, both on the European and Singaporean side, and will continue to identify and interview European and Singaporean policy-makers. Moreover, there is the text of the EUSFTA with some particular features: innovative rules of origin, geographical indicators and a chapter on sustainable development. The latter establishes a civil society dialogue, although the text itself uses more vague terminology. The implications of the FTA, to answer the second research question, can range from democracy enhancing to democracy undermining. It can on the one hand be argued that the FTA will engage civil society, increase accountability and transparency of government action, and encourage rule of law. On the other hand, the FTA might undermine any (domestic) democratic efforts as it invigorates current elites and puts decision-making powers in the hands of committees and tribunals. For this part of the research, the agreement needs to be evaluated as it comes into force. I can, however, already categorize expectations from both European and local stakeholders. Moreover, there is the US-Singapore FTA to draw from as certain commitments in this agreement, such as transparency and good governance, for example, can hardly be practiced on a selective basis.

5 5 Broader research: Malaysia and Laos PDR The research goal in my PhD is to map and conceptualize the interaction between the EU s external trade policy and democracy. I aim to develop the appropriate concepts based on three cases: the EUSFTA, the FLEGT 3 initiative in Malaysia and the EU s support for Laos during its accession to the WTO. These three cases provide different kinds of trade relations and different settings of power (a)symmetries. Malaysia s political context is similar to that of Singapore, although opponents to the government here do end up in prison. Anwar Ibrahim is a well-known example. The EU is negotiating both an FTA and a PCA, although the former is in an unofficial pause. In addition, the EU is also around the table with Malaysia on a Voluntary Partnership Agreement (VPA) on the FLEGT initiative. This would establish a legally binding trade agreement on trade in timber including a certification mechanism. The VPA also engages local stakeholders, a potential break with current undemocratic practices. Laos political system is undemocratic and not free in every sense of the word. Even more, the country is found at the end of the Human Development Index. The communist country became a member of the WTO in 2013 and the EU played a (self-proclaimed) significant role to prepare the country for its membership. The EU provided technical assistance and Aid for Trade. The effects aimed for were increased good governance and accountability, and efficient lawmaking. How the EU sees development through trade is surrounded by the (implicit) assumption that good trade practices equal good (political) governance. Through these three cases I aim to substantiate the concepts that encompass the interaction between the EU s external trade relations and democracy. 3 FLEGT: Forest Law Enforcement, Governance and Trade.

6 6 References DG Trade. (2013). The economic impact of the EU-Singapore Free Trade Agreement. Chief Economist Note Special Report. Brussels. DG Trade. (2015). European Commission to request a Court of Justice opinion on the trade deal with Singapore. Brussels. Retrieved from: Freedom House. (2015). Freedom in the World. Retrieved from: Garcia, M. (2012). From bottom of the pyramid to top priority: Explaining Asia in the EU's Free Trade Agreement (FTA) Strategy. Australian and New Zealand Journal of European Studies, 4(1), Maier-Knapp, N. (2014). The European Union as a Normative Actor and its External Relations with Southeast Asia. Journal of Contemporary European Research, 10 (2), Meyer-Resende, M. & Wisniewska, J. (2009). Democracy Revisited. Which Notion of Democracy for the EU s External Relations? Brussels: Office for Promotion of Parliamentary Democracy. Ministry of Trade and Industry. (2015). Singapore and the European Union initial the Investment Protection Chapter. Press Release. Singapore. Retrieved from: Peluso, N.L. & Vandergeest, P. (2001). Genealogies of the Political Forest and Customary Rights in Indonesia, Malaysia and Thailand. The Journal of Asian Studies, 60(3), Quarto, R. (2013). Public Dialogue Forum: Implementing the EU-Singapore FTA. Opportunities for European and Singaporean businesses. [PowerPoint]. Retrieved from: d=102&itemid=55 Reporters without Borders. (2015) World Press Freedom Index. Retrieved from: Slater, D. (2012). Strong State Democratization in Malaysia and Singapore. Journal of Democracy, 23(2), Thompson, M.R. (2000). The survival of Asian values as Zivilisationskritik. Theory and society, 29(5), Wetzel, A., & Orbie, J. (Eds.). (2015). The substance of EU democracy promotion: concepts and cases. Palgrave Macmillan. World Justice Project. (2015). Rule of Law Index Retrieved from:

7 7 Youngs, R. (2001). The European Union and the promotion of democracy: Europe s Mediterranean and Asian politics. Oxford: Oxford University Press.