Monday

27th Mar 2023

Opinion

The EU and WTO: rethinking trade matters

  • Although the EU is now the most important trading partner for over 70 countries around the world, by 2024 about 85 percent of the world's GDP is expected to be generated outside the EU (Photo: A bloke called Jerm)

The Covid-19 pandemic has added a massive shock to global markets that were already strained by trade tensions. Going forward, we must contend with a trade landscape where business face significant uncertainty, and governments are looking to minimise the economic fall-out on citizens.

An effective and successful EU trade policy should support trade, investment and jobs creation. It should drive sustainable growth, competitiveness and decent jobs, and support successful agriculture and better consumer choice both abroad and in Europe.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Positive economic development needs a strong combination of different policies. Trade policy is only one part of the solution. It cannot resolve social inequality, but it can support the right kind of development.

This is why rethinking trade matters. This is why the EU must differentiate between temporary and Covid-19-related action from permanent changes before making any final decisions based on the new EU trade policy strategy.

In recent months, after decades of positive development, globalisation took a step back amid growing tensions between superpowers like the US and China, and the increased pressure from more assertive protectionism, regionalism and nationalism.

In this context, global markets risk moving towards trade blocs, creating new challenges for the global economy, for global value chains – and for Europe as well.

Fortunately, the digital and green economy is setting a new tone. Massive stimulus packages are supporting its rapid development in many countries.

However, since the digital and climate-neutral economy does not recognise national borders, there is no time to waste to shape new modern global rules.

An open economy, free trade and fair competition can only work well from a European perspective if they are based on predictable, modern global rules and bilateral trade deals. In a sustainable global economy, we should no longer favour any free riders who benefit from illegal state aid, carbon leakage, corruption, human rights or labour abuses, or other action against international standards.

The EU must work for a rules-based, open economy, free trade and fair competition. It must improve market access and ensure a level playing field from a European perspective. It must open new markets for European goods and services in third countries. But it must also create more of a level playing field for Europeans both in third markets and within the EU's internal market.

Europeans have better opportunities to trade, invest and join public procurement procedures in third countries, when mutually imported goods and services from third countries respect EU internal market standards.

Two challenges

The EU must now focus on two issues. Firstly, the modernisation of the World Trade Organisation (WTO) and multilateral trade agenda should remain at the core of the EU action since over 60 percent of EU external trade is based on general WTO rules.

The modern WTO agenda will cover issues related to traditional and digital trade as well as sustainability, the climate and labour in order to ensure a level playing field. If the 164 WTO members can agree on a reform of the organisation and its agenda, the whole global economy will benefit.

Secondly, the smart use of bilateral EU free trade agreements (FTAs) can improve market access and ensure a level playing field for EU actors. Modern EU FTAs should always reflect European values and international standards. They must support our interests, from trade to digitalisation and sustainability, so as to change the global business environment, including value chains.

For example, the EU must assess its economic dependence on the rest of the world and how EU trade and industrial policies with EU FTAs can support companies by providing solid and fair business conditions for exports, imports and investments. The diversification of supply chains may be an important step towards strengthening the EU's resilience.

With 46 FTAs with 78 countries, the EU has the world's largest network of trade agreements. It is strategically important that the EU continues to strengthen this unique EU FTA network by updating old deals and signing new ones.

We should not be naïve.

Although the EU is now the most important trading partner for over 70 countries around the world, by 2024 about 85 percent of the world's GDP is expected to be generated outside the EU.

At present, the EU may have the strongest negotiating power, but the situation may change. This is why the EU must smartly use offensive and defensive trade policy in a way that supports European interests in the short and long term.

Last but not least, the EU and its 27 member states must improve stakeholder engagement and cooperation in trade policy from preparation to enforcement, as that will surely help to better anticipate and deal with the upcoming changes on the ground, from geopolitics to human rights, and from the climate to high-tech tools like artificial intelligence.

Author bio

Timo Vuori is a member of the employers' group and rapporteur of the European Economic and Social Committee, and chief executive of Finland's International Chamber of Commerce.

Disclaimer

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

EU Commission 'failed' on assessing Mercosur trade deal

The EU Ombudsman Emily O'Reilly said the European Commission was guilty of "maladministration" by failing to make a timely assessment of any environmental impact from the EU-Mercosur trade deal before finalising negotiations in 2019.

Biden's 'democracy summit' poses questions for EU identity

From the perspective of international relations, the EU is a rare bird indeed. Theoretically speaking it cannot even exist. The charter of the United Nations, which underlies the current system of global governance, distinguishes between states and organisations of states.

EU's new critical raw materials act could be a recipe for conflict

Solar panels, wind-turbines, electric vehicle batteries and other green technologies require minerals including aluminium, cobalt and lithium — which are mined in some of the most conflict-riven nations on earth, such as the Democratic Republic of Congo, Guinea, and Kazakhstan.

Editorial

Okay, alright, AI might be useful after all

Large Language Models could give the powers trained data-journalists wield, to regular boring journalists like me — who don't know how to use Python. And that makes me tremendously excited, to be honest.

How much can we trust Russian opinion polls on the war?

The lack of Russian opposition to the Russo-Ukrainian War is puzzling. The war is going nowhere, Russian casualties are staggering, the economy is in trouble, and living standards are declining, and yet polls indicate that most Russians support the war.

Latest News

  1. Biden's 'democracy summit' poses questions for EU identity
  2. Finnish elections and Hungary's Nato vote in focus This WEEK
  3. EU's new critical raw materials act could be a recipe for conflict
  4. Okay, alright, AI might be useful after all
  5. Von der Leyen pledges to help return Ukrainian children
  6. EU leaders agree 1m artillery shells for Ukraine
  7. Polish abortion rights activist vows to appeal case
  8. How German business interests have shaped EU climate agenda

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  2. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  3. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  4. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality
  5. Promote UkraineInvitation to the National Demonstration in solidarity with Ukraine on 25.02.2023
  6. Azerbaijan Embassy9th Southern Gas Corridor Advisory Council Ministerial Meeting and 1st Green Energy Advisory Council Ministerial Meeting

Join EUobserver

Support quality EU news

Join us