Populist gains to complicate Europe's free trade ambitions

Tue May 13, 2014 9:23am EDT

* Eurosceptic parties unify against EU's trade agenda

* Trade central to EU's global influence, economic growth

* U.S. trade deal main focus of populist opposition

By Robin Emmott

BRUSSELS, May 13 (Reuters) - Growing support for far-right parties has dominated the run-up to next week's European Parliament elections but a lesser noticed theme is lurking: that protest parties on both right and left will try to scupper EU free trade talks.

With parliament determined to exercise new powers after May 22-25 elections and opinion polls showing almost a third of the chamber's seats will go to anti-EU groups on the right and left, there is scope for disruption.

One of the likely targets is the EU-U.S. free trade deal, known as TTIP.

"There is an unholy alliance between the right and the left on free trade," said Mats Persson, director of the Open Europe think tank. "The centre of gravity in the next European Parliament will be in a more protectionist direction."

Populists are unlikely to be able to block trade deals outright but passing them is likely to be a lot trickier and will depend on centrist parties forming a grand coalition.

Marine Le Pen, the leader of the French far-right National Front, is expected to win the elections in France and plans to form a bloc with support from like-minded parties in the Netherlands, Austria, Italy, Belgium, Sweden and Lithuania.

In an interview with Reuters this week, she said one of her goals would be to unite with parties on the left to block the trade deal and other agreements the EU is negotiating.

"Take the transatlantic trade deal: parts of the left are against it, the Eurosceptics are against it - it will be very tight," she said. "Will (the European Commission) risk seeing a project as important as that being rejected, or will they put it on the back-burner?"

The Transatlantic Trade and Investment Partnership, or TTIP, is perhaps the most ambitious trade negotiation ever, accounting for a third of global trade. Clinching it is critical to the EU's plans to recover from economic crisis. It would also set global standards for business, giving the United States and Europe an edge over China.

Yet it is just one of around 80 such deals the EU wants to negotiate in the coming years, adding up to 2 percent to output, or 275 billion euros ($378 billion) a year. Achieving that will be harder if the far-right and far-left make common cause.

From the National Front on the right to Germany's Die Linke on the far left, populist parties say deals such as the TTIP are being negotiated in secret and pander to big companies fixated on maximising profit over protecting individuals' rights.

To them, the globalisation inherent in such agreements is damaging to the environment and ignores the people.

"They are going to replace our original products with American brands. We'll have Burgundy made in the USA," said Florian Philippot, vice president of the National Front.

FORCING A CENTRIST COALITION

If there were doubts in the past about parliament's influence, that changed two years ago when lawmakers rejected a global copyright deal that had taken almost four years to negotiate. They celebrated the once-unthinkable victory by brandishing yellow signs saying "Hello Democracy".

Concerns about globalisation are prevalent not just among far-right and far-left groups but shared by the Greens, a mainstream force in European politics, and small parties in Germany, Europe's trade champion.

So great are concerns about the potential for a united front against the TTIP that U.S. officials are paying close attention to fringe parties from minor EU countries and the likelihood they will sign up to a protectionist agenda.

"I am going to be on the front foot in the parliament ... saying that these narratives are just not based on fact," Anthony Gardner, the U.S. ambassador to the European Union, said during a briefing last month.

Polls indicate populist parties opposed to free trade could win about 30 percent of the 751 seats in parliament, up from 21 percent in the outgoing parliament, according to Open Europe.

Centrist parties are still expected to control 70 percent of the legislature, but only with the support of the Greens.

"The fundamental impact on traditional parties will be to force them to govern together," said Jose Ignacio Torreblanca, a senior analyst at the European Council on Foreign Relations.

"A coalition between the People's Party and the Socialists is the only one that will hold," he said.

FREE TRADE, BUT NOT THANKS TO THE EU

Precisely because trade is an area where the EU has power, it is an issue nationalists can rally around, even if they hail from trading countries such as Britain and the Netherlands.

"I do not believe that the EU should be negotiating trade for us under any circumstances," said Nigel Farage, the leader of the UK Independence Party (UKIP) that is forecast to win the most British votes in the European elections.

"We will not be seeking to block the EU-U.S. trade deal, but neither will we support it," he told Reuters.

Geert Wilders' Dutch Party for Freedom (PVV) praises free trade in its 2012 manifesto but also says no policy areas should belong to the European Parliament. On that basis it could abstain or vote against the EU's free-trade pacts.

In the past, radical parties have been too divided to have an impact or have failed to turn up to meetings and votes.

But if they do well in next week's elections and manage to form a strong group, there is likely to be renewed energy from both flanks.

Forming a group requires a minimum of 25 members from seven EU states. It brings advantages including access to large EU grants to hire staff and the right to sit on policy committees.

Chairing a committee is more difficult, needing 40 to 50 seats, and even more for influential committees, but it is possible that a far-left bloc could achieve that threshold. (Additional reporting by Luke Baker and John O'Donnell in Brussels, Fiona Ortiz in Madrid, Thomas Escritt in Amsterdam and Mark John in Paris. Editing by Mike Peacock)