Sunday

14th Aug 2022

Opinion

EU needs to 'toughen up' on trade

  • It shouldn't be the case that EU public procurement is open to Chinese businesses, for example, but in China the EU companies cannot participate in procurements on the same terms (Photo: A bloke called Jerm)

The European Union needs to step up its game to support the interests of EU businesses, to counteract the increasingly agressive China and the at times more self-centred United States.

We must reach a situation where EU's trade and economic interests are placed at the heart of our foreign and security policy objectives.

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It's important to note that our common market is in itself a powerful tool that can be used to achieve EU's foreign and security policy goals.

Despite its size and wealth in the global context, the EU has not managed to play itself out as a strong global power. In order for the EU businesses to compete on a greater equal footing with companies from other countries the EU has to toughen up, reach a coherent foreign policy, harmonise its various foreign policy instruments and have stronger rules.

Currently, the EU is not ready to effectively face the significant changes in the world.

May it be a more forceful and aggressive China, Russia that raises security concerns or the increasingly isolationist United States. For instance, negotiations with China to open the Chinese market for European investments have been very slow.

And this example is only one of many where the EU has failed to use political power to achieve its economic goals and strengthen the position of its businesses.

To achieve its objectives, the EU must take use of all its foreign policy instruments.

This includes classical diplomacy, development cooperation, foreign trade and military capabilities. Clear support for multilateralism and for ensuring full respect of the international law worldwide is also crucial.

However, the perceptions and moods are changing as the new European Commission takes office.

For instance, the new high representative/vice-president for foreign affairs and security policy, Josep Borrell, stated during his hearing in the European Parliament that in addition to soft power, the EU must show some more assertiveness in its foreign policy.

The new European Commission president, Ursula von der Leyen, has also stated that the EU must become a stronger geopolitical player in order to better represent its interests in the world.

In order to make this happen we need a more effective and coherent EU foreign policy.

China: 17+1?

For instance, member states have different positions towards China - on which some countries are economically dependent.

Let's look at the 17+1 format. It includes China together with 17 less-wealthy European countries - both EU and non-EU countries. This format is a clear example where it is not possible to talk about a coherent EU policy towards China.

Another practical and significant step would be to ensure reciprocity in the access to public procurement.

The EU should treat third-country businesses the same way as the EU businesses are treated in that country. It shouldn't be the case that EU public procurement is open to Chinese businesses, for example, but in China the EU companies cannot participate in procurements on the same terms.

The takeover of EU companies by non-EU companies must also be taken more seriously. Here too, stricter rules are needed so that competition and security interests are not undermined.

Negotiation and conclusion of free trade agreements on behalf of the EU as a whole is an important added value that the EU brings to the economies of its member states.

It is clear that no individual member state can achieve the same results by itself.

Thus, the EU recently reached the largest ever free trade deal with Japan and in June it reached a political agreement for trade agreement with South America's Mercosur after 20 years of negotiations.

The seven-year negotiations with Canada were also successfully concluded. The only setback from recent years is in relations with the United States.

After Trump came to power, talks have not yet even started, even though the US and the EU together account for more than half of the world economy, and thus the EU-US free trade agreement would affect global trade trends. However, this is crucial to secure Europe's economic and commercial interests worldwide.

In conclusion, the key to the EU's global success lies in if and how many European countries are prepared to work more closely together in foreign policy and international trade and whether these countries realise that Europe can only be a serious global player alongside China, the US and Russia, if there is adequate cooperation between European countries.

Author bio

Urmas Paet was formerly foreign minister of Estonia, and is now an MEP on the European Parliament's foreign affairs, security and defence, committees, and a substitute on the international trade committee.

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

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