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Costly deal: CETA to rip 311 million euro hole in the EU budget

15/07/2016

In reply to a parliamentary question by MEP Helmut Scholz (GUE/NGL), EU Trade Commissioner Cecilia Malmström has now confirmed that due to CETA, the EU's own resources budget will be reduced by 311 million euro per year due to the loss of customs revenues from trade with Canada.

Costly deal: CETA to rip 311 million euro hole in the EU budget

Scholz, the GUE/NGL Coordinator on the Parliament's International Trade Committee, made parliamentary inquiries to Commissioner Malmström demanding information on the costs of the respective negotiations over the free trade agreements between the EU and Canada (CETA), and the EU and the USA (TTIP).

He also asked about the expected burden placed by CETA on the own resources budget of the European Union, which draws its resources from tariff revenue and a low proportion of the VAT revenue.

Scholz explains the Commission's response: "The annual volume of trade between the EU and Canada of about 30 billion euros. If CETA is ratified and fully implemented, the European Union will lose customs revenues at the level of 311 million euros annually."

In addition to the EU-Canada trade agreement, the EU Commission is currently negotiating over twenty other agreements on behalf of the governments of the member states as well.

"The volume of trade with the US is around ten times greater, so the loss of revenue from customs duties will amount to at least 3 billion euros per year. Similar negotiations are underway with Japan, MERCOSUR in Latin America, and Southeast Asian countries, among others. Who can answer me on how those losses are to be compensated? Are the member states ready to compensate for this through higher contributions?" Scholz asks.

"If not, many billions will be missing for important projects that were previously funded from our common European Union budget. And this common budget, in view of the increasing demands towards the EU in many areas, is already at the limit.

"So it is - also with regard to the Brexit - high time to reflect on the composition of the EU budget, on the concrete revenue and expenditure planning, and on own resources structures and usage, in an open and honest discussion. This naturally requires customs revenues or real new capital inflows to be addressed, such as from an appropriate use of the revenues from a financial transaction tax, which has been advocated by the European Parliament, but is still not on track."

In the reply given, the EU Commission expressed the expectation that CETA would cause the EU's gross domestic product to increase by 0.01 per cent, which it claims as a justification for the revenue losses and the cost of the negotiations (more than 1 million euros).

"In a variation of 0.01 per cent of GDP, whether CETA has an impact on this is not really measurable. Weather-related events can have a much greater impact on GDP than that," replies Scholz.

This is especially true, since almost one third of the volume of trade between the EU and Canada is currently effectively trade between Canada and Britain.

Scholz calls for a change of course: "For the first 12 rounds of negotiations on TTIP, negotiations had already consumed more than 2.5 million euros, and continue to incur large costs as the 14th round of negotiations ends this week. There are also immense costs of advertising and promotion of this agreement that will in fact be harmful.

"We could better spend this money to promote fair trade relations and agreements on good working and environmental conditions along the global supply chains," he concluded.

Related Parliamentary questions and responses on CETA and TTIP:

Question from Helmut Scholz on costs of CETA

Response from Malmström on behalf of the EU Commission

Question from Helmut Scholz on costs of TTIP negotiations

Response from Malmström on behalf of the EU Commission

Annex

 

GUE/NGL Press Contact:

Nikki Sullings  +32 22 83 27 60 / +32 483 03 55 75

Gay Kavanagh +32 473 84 23 20

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