Tuesday

11th May 2021

Column

Why is new EU trade policy using WTO as a figleaf?

I consider a market the mirror of the morals of a society.

A productive market encourages workers and entrepreneurs to find innovative ways to express these ideals and to fulfil them.

Read and decide

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  • The new trade strategy of the European Commission is a sterile vision of neoliberalism shrouded in a green haze

Prosperity is about building a better society, preserving freedom to shape your future. A good market is constructed inside-out, from deep morals and identity, over entrepreneurship and guiding policies, to external trade.

The new trade strategy of the European Commission, however, continues to be outside-in. It is a sterile vision of neoliberalism shrouded in a green haze.

The strategy is crafted to defend world trade, rather than the European market. Europe would benefit from an open and fair economic order, but the European Union just represents 15 percent of the global economy.

Its influence is limited, especially as China and the US will not join efforts to salvage institutions like the World Trade Organization, and a whole host of developing countries balks at deep liberalisation.

The European Commission clings to the World Trade Organization like a piece driftwood from a foregone age of globalisation.

But the shipwrecked tries to rescue the driftwood. Meanwhile, other major economies retrench deeper and deeper into economic nationalism. It is not always nationalism of the harsh protectionist kind.

But if China on the one hand proclaims itself the standard bearer of free trade, Chinese officials continue to make plans for independent innovation, self-reliant industrial supply chains, and supporting national champions.

The same goes for the United States. The Biden administration champions open trade and buy-America simultaneously.

While world trade has grown throughout history, this was not a steady process. Periods of opening alternate with periods of closing and this is beyond the control of individual economies.

Economies can act cautiously, but they must act, and never allow the national economic interest of others to interfere with fundamental choices at home.

The European Commission keeps referring to the World Trade Organization to explain that it cannot fully tie internal standards to external trade. Saving the WTO has become a pretext for a standstill.

If various treaties state that the European institutions ought to defend core values, the European Commission has failed to use its competence in trade to that end.

Instead of using its market as a lever for change, it has accepted local European producers to be exposed to fierce competition from countries that do not even want to consider some of our core values.

The countries that enlarged their share in European imports the most, were dictatorships, heavy CO2-emitters, and lax in terms of labour standards. The new trade strategy hardly addresses this.

Competition from forced labour

Human rights and labour standards are mentioned in the strategy, but without much appetite to get tough on them.

Advanced trade agreements could include some social and human rights provisions, but the readiness to enforce them is modest and its unlikely that such advanced trade agreements will be signed with the most important trade partners anyhow.

While producers in Europe need to live up to demanding labour standards, the European Commission does not make the slightest move to protect them against competition from countries that use forced labour on a massive scale.

Another example is climate change mitigation. The strategy is replete with references to the green deal, but only makes one reference to the key instrument to make it possible: carbon border-adjustment.

This tool has by now been entirely diluted to a modest emission rights scheme that will apply to only a few sectors. The Commission suggests that carbon border adjustments be implemented slowly, so that production chains can adjust.

But if they are implemented too slow, the investment needed for Europe's green new deal will continue to go elsewhere.

Some might still retort that trade should just be kept free and that Europe requires economic realism, not ideals. But how can we speak about free trade, when governments in key partner countries manipulate trade?

The only possible vision of economic realism, is a vision that protect European producers against such manipulation, that truly supports the green new deal and works towards open strategic autonomy.

Strategic autonomy is hardly mentioned in the trade strategy.

A senior Commission trade official recently even interpreted open strategic autonomy as the diversification of dependency. Can you get more deceptive?

Author bio

Jonathan Holslag teaches international politics at the Free University of Brussels.

Disclaimer

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

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