Some very Italian midsummer night’s questions on CETA
Giovanni Caccavello // 6 September 2018
With the Italian Parliament still deep into its summer break, several important political and economic questions are gripping the minds of many voters. Leaving aside the central debate on Italy’s weak finances, some of these queries regard CETA: When will the Italian Parliament ratify the free-trade agreement with Canada? What is the real position of the Italian executive on free-trade agreements? Why, for example, does the government want to reject the deal if, on the other hand, it has recently backed JEFTA?
As of today, the government has not planned to schedule a vote on CETA. Thus, when the two Chambers of the Italian Parliament will re-open on 11 September, no discussion is likely to be held. Rather, as the long ratification process of the EU-South Korea FTA reminds us, the Italian government may well decide to postpone the vote for years. As an example, the EU-South Korea FTA was signed on 15 October 2009 and it has been provisionally applied since 1 July 2011. However, due to the mixed nature of the treaty, the ratification process was completed only in late 2015 and the deal was fully ratified in December 2015. Notwithstanding the benefits that Italian firms and consumers has obtained from this FTA (according to the Italian Ministry of Economic Development, Italy’s exports to South Korea increased by around 63% between 2010 and 2016), Italy was one of the last EU Member States to ratify the deal with South Korea, voting on and ratifying it only in spring 2015.
The deal with Canada is likely to go through a similarly long ratification process. In fact, whilst the previous coalition government, led by Mr Gentiloni, opened a parliamentary debate on CETA immediately after its provisional application, on 27 September 2017 the Italian Senate approved a proposal, put forward by MP Loredana De Pretis (at the time, Group Leader of the so-called “Mixed Group”), which called for a postponed vote. The motion, accepted by all the opposition parties and the government, adjourned the assembly sine die.
Following the latest General election, which occurred on 4 March 2018, Italy is now led by an anti-establishment coalition government. Mr Di Maio (leader of the 5 Stars Movement – M5S) and Mr Salvini (leader of the League) are both extremely sceptical of freer trade and globalisation. Both think that CETA, like almost every other free-trade agreement, is bad for Italy. They believe, for example, that CETA will put at risk the so-called “Made in Italy”, will lead to an uncontrolled invasion of Canadian GMOs, hormone-treated meat and glyphosate products (e.g. wheat), and will destroy Italian jobs. It is for all these reasons that, within the government manifesto, we can find a statement declaring the opposition of the executive to CETA, TTIP and all those free-trade agreements that do not protect Italian rights and Italian interests. Put simply: the M5S-League government opposes any kind of free-trade agreement.
In light of this, it is clear why, over the last two months, several members of the executive have been very vocal against CETA. On 14 June, Mr Centinaio, the agriculture minister, argued that the government would ask the Italian Parliament not to ratify the treaty. On 13 July, during a speech at the national assembly of Coldiretti, Italy’s largest agriculture association, Mr Di Maio explained that the government will always support Italian farmers and, if necessary, it will not ratify CETA. Mr Di Maio spoke also in favour of tariffs and advanced the idea that Italian products are losing international market access due to freer-trade and globalisation. Mr Di Maio is wrong and the recent government U-turn on JEFTA demonstrates the weakness of his protectionist arguments. According to the MIT Observatory of Economic Complexity and the World Bank, over the last 30 years the value of Italian exports to the world increased more than fivefold, from $90 billion to around $500 billion dollars. The so-called “Made in Italy” is gaining momentum also thanks to free-trade agreements.
Moreover, contrary to both the government rhetoric and anti-trade lobbies’ claims, Italy seems to be one of the biggest winners in the FTA with Canada, so far. Recent data from the Toronto Office of the Italian Trade Agency (a governmental agency that supports the business development of Italian companies abroad and promotes the attraction of foreign investment in Italy) show that Italian exports to Canada grew by almost 12% between early 2017 and early 2018. Of the top ten exporting countries to Canada only France performed better. Just as a reminder, CETA entered into force provisionally on 21 September 2017.
Graph 1: Top 10 exporting countries to Canada – Data elaborated by the Toronto Office of the Italian Trade Agency
Thus, whilst Italian politics is on holiday and the government is delaying any further parliamentary discussion on CETA, it is key that pro-trade politicians, associations and civil society groups put forward the beneficial case for CETA. It is time to debunk and stop false and scaremongering stories about the dangers of free-trade agreements, and to take on spurious arguments about protectionism head on. As we all know, freer trade increases prosperity for Italians – and Europeans – by allowing consumers to buy more, better-quality products at lower costs. Freer trade drives economic growth, enhanced efficiency, increased innovation, and the greater fairness that accompanies a rules-based system. These benefits increase as overall trade – exports and imports – increases. In other words, Italian voters deserve good, positive and data-driven answers to their midsummer night’s questions on CETA.
EPICENTER publications and contributions from our member think tanks are designed to promote the discussion of economic issues and the role of markets in solving economic and social problems. As with all EPICENTER publications, the views expressed here are those of the author and not EPICENTER or its member think tanks (which have no corporate view).