Italy Picks Another Fight With EU, Targeting Canada Deal

(Bloomberg) -- Italy is refusing to ratify a European Union free-trade accord with Canada, the bloc’s most ambitious commercial deal to date, as the populist government aims to upend decades of consensus in Brussels.

After less than two weeks in office, the hard-line interior minister, Matteo Salvini, has already sparked a diplomatic incident with France over immigration. Now his party colleague, Agriculture Minister Gian Marco Centinaio, is stirring up opposition to the signature achievement of EU trade policy.

“We will not ratify the free-trade treaty with Canada,” Centinaio said in an interview with La Stampa newspaper published Thursday. “Doubts about this deal are common among many of my European colleagues.”

The Italians are rubbing salt in the wounds of a European elite that’s been thrown off balance by U.S. President Donald Trump’s attacks at the G-7 meeting in Canada and is trying to contain the rise of populists across the bloc.

While Italy’s stance won’t affect the terms of trade with Canada in the short term -- the pact came into effect last year and member states have years to complete the ratification process -- it adds fuel to the backlash against globalization that has roiled politics around the world in recent years.

Canadian Foreign Minister Chrystia Freeland downplayed the current Italian government’s refusal to ratify the agreement, pointing out that it is already in effect provisionally.

“I’m confident we will have full ratification in the end,” she told reporters in Washington.

‘Mutually Beneficial’

In Brussels, European Commission spokesman Margaritis Schinas told reporters on Thursday: “The commission is working closely with all the member states to ensure that our trade policies are mutually beneficial.”

Schinas, addressing what he called a “hypothetical question,” said the leaders of the full EU would have to decide on a course of action if a member state does not ratify the deal.

Salvini, leader of the anti-immigrant League, once boasted that Italians must not be “slaves” of the EU in Brussels. “The interest of Italians comes first,” he said in a February interview.

Boost Spending

The League is taking the fight to Brussels on immigration and trade as Finance Minister Giovanni Tria seeks to reassure investors that Italy’s euro membership isn’t in jeopardy. EU budget watchdogs are waiting for the new government’s budget plans to be released in September to see how it intends to square plans for tax cuts and new benefit spending with the bloc’s deficit restrictions.

Tria on Wednesday canceled a meeting with French Finance Minister Bruno Le Maire after France labeled Italy “cynical and irresponsible” for refusing to allow a rescue ship crammed with migrants to dock in Sicily. Prime Minister Giuseppe Conte will meet President Emmanuel Macron tomorrow after the French leader sent a conciliatory message to officials in Rome.

In a telephone call on Wednesday night “Macron made it clear right away that the seriously offensive remarks about Italy and Italians made in recent days didn’t come from him,” Conte said in a post on Facebook. “I took note of his words and I therefore confirmed my wish to meet him tomorrow for a working lunch at the Elysée.”

In the interview published Thursday, Italy’s agriculture chief Centinaio complained that the EU-Canada deal protects only a small part of Italy’s PDO (protected designations of origin) and PGI products (protected geographical indications) -- often vital to any nation’s agriculture sector.

No Deadline to Ratify

The free-trade agreement between the EU and Canada took five years to negotiate, entered into force provisionally in September 2017 and is the bloc’s first such deal with a fellow member of the Group of Seven nations. The accord was nearly scuttled by a Belgian region earlier in the European approval process.

To take effect definitively, the agreement will need to be ratified at national level in the EU by all member countries -- a process that can take years and has no deadline. Meanwhile, the pact will remain in effect.

Known as the Comprehensive Economic and Trade Agreement, the deal ended 98 percent of tariffs on goods at the outset and will eliminate 99 percent after seven years (each side plans to dismantle all industrial tariffs and more than 90 percent of agricultural duties). Markets for services and public procurement are also being opened.

--With assistance from Jonathan Stearns and Reade Pickert.

To contact the reporter on this story: Kevin Costelloe in Rome at kcostelloe@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Ben Sills, Jones Hayden

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