How trade policy could better facilitate the transition towards a greener, fairer and more responsible economy ?
At a time when Europe is building its recovery plan and shaping its future, trade policy must contribute to setting up a coordinated European recovery that ensures a socially fair and environmentally responsible transition. As an undeniable economic instrument and diplomatic lever, the European Union’s trade policy faces many challenges. It must demonstrate that it is protecting its businesses and citizens against distortions of competition and contributing to our objectives of digital sovereignty and the fight against climate change. So, how should and can trade policy promote fair international competition that defends a green and responsible economy?
In an interconnected world, Europe must defend and contribute to the setting up of a regulated, fair, and sustainable world trade. As part of the Trade Policy Review, the European Commission promotes “an open strategic autonomy”. But which actual tools should we create or strengthen to meet the challenges that lie before us? European openness refers to the fact that one in seven jobs depends on our exports. Our internal market – which is undoubtedly attractive – must continue to attract investors who can promote a virtuous and job-creating economic recovery. At the same time, pursuing our strategic autonomy means putting an end to naïve Europe to build a Union that regains control over its future.
From Chinese overcapacity to investment control, Europe must defend its interests more vigorously by making good use of its trade defence instruments alongside new, adequate legal tools that allow it to level the playing field with countries that care little for the rules.
Therefore, instruments such as reciprocity in our public procurement must finally be introduced!
We are now experiencing a context of confrontation and tension, with third States taking unilateral and illegal measures that go against the rules defined within the multilateral framework. Of course, the EU must contribute to an ambitious World Trade Organisation (WTO) reform, more particularly in the field of industrial subsidies or the unblocking of the Appellate Body for the settlement of disputes. Although defending multilateralism is crucial, let us not place all our hopes in the multilateral system alone, let us strengthen certain areas of cooperation: let us take action on all fronts, both multilateral and bilateral.
Defending our interests can only be achieved through coordinated action and greater European unity in trade matters. That is why ambitious proposals concerning the regulation on the application of trade rules, for which I am the rapporteur, have been put on the table by the European Parliament. To ensure efficiency and coherence when we are under attack, we must be able to defend ourselves and have bargaining chips. Deterrence or protection does not mean protectionism! Some Member States still have too many reservations: not being able to take measures in all the areas under discussion is inconceivable, and not being able to react immediately is even more so! The Council must take steps towards the strong and united stance of the European Parliament; we must all go in the same direction: that of defending our European interests.
President Von Der Leyen’s letter of intent refers to an “instrument to deter and counteract coercive actions by third countries”, good news that reflects the Parliament’s ambition and desire for all our partners to adhere to the rules they have set themselves.
Supporting the European economic activity and especially our SMEs is essential. And strengthening instruments such as those abovementioned will help us to contribute effectively to the fight against all forms of unfair competition. Unfair competition goes beyond the social and fiscal level and affects the environment. I welcome the proposal for a carbon border adjustment mechanism. The European Union remains a normative power, and through the adoption of ambitious directives and regulations, we are setting high standards. Those wishing to gain access to our internal market must comply with our rules and quality standards; it is a matter of fairness but also of consumer protection. This “carbon mechanism” aims at reducing the differences across climate ambitions. As from the beginning of 2021, we need an ambitious proposal in line with WTO rules.
The COVID crisis has reaffirmed one conviction: we must diversify our supply sources. We cannot depend on a single player, and the European industrial policy will also have to do its part in fostering an “open strategic autonomy”.
Value chains have become far too complex and long. A holistic reflection must be undertaken to enhance their resilience. The negotiations on the duty of diligence will contribute to ensuring responsible value chains.
Finally, I would like to stress a key point: concluding trade agreements is one thing, but ensuring their proper implementation is quite another! On this last point, the European Union has ample room for improvement. All the opportunities offered by our free trade agreements do not always become reality; worse yet, the respect of reciprocal commitments is not guaranteed. Europe now has a Chief Trade Enforcement Officer. Without sufficient and effective human, financial and legal means, enforcement of trade agreements will not be effective! No barriers to market entry when they do not need to be, more controls to ensure the conformity and traceability of products entering our market; it is by working on such developments that we will also contribute to restoring the confidence of our companies and our citizens in our trade policy: a policy that will play its full role in building a green, fair and responsible economic recovery!
Find out more about this op-ed here