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27/09/2016

Commission to reframe ‘geopolitical’ trade strategy

Trade & Society

Commission to reframe ‘geopolitical’ trade strategy

Cecilia Malmström

[Flickr/Johannes Jansson]

A new EU trade strategy will be launched later this year responding to the growing number of global trade deals under discussion, and their increasingly high profile and political nature, Trade Commissioner Cecilia Malmström said on Monday (23 March).

EU officials stated that the issue will be discussed by trade ministers from member states meeting informally in the Latvian capital Riga Thursday and Friday (26th-27th March).

Malmström told a seminar organised by the European Policy Centre that the changing world economy, a proliferation of bilateral free trade agreements, and their increasing politicisation, all called for a new trade strategy.

“The TTIP debate has brought old concerns about trade to the surface and raised new ones too. Some fear that trade may threaten public services like health and education. Others are worried that it will undermine regulation to protect people and the environment. And these concerns are accompanied by a sense that trade policymaking is too remote from the people,” the Swedish Commissioner stated.

The new approach will be set out in a formal Commission communication to be published this autumn, which is designed to last for the next five years.

Human rights to play a greater role in trade policy

The communication will be drafted after consultation with member states, MEPs and other trade stakeholders and will take account of “the current global and EU economic context”, according to officials.

Malmström said that “strengthening people’s trust in trade policy” would be a key part of the new strategy, adding: “In TTIP, we’ve gone a long way to address this issue. But can we make our negotiations on sensitive issues even more transparent?”

The new policy will also deal more comprehensively with underlying political values affecting trade policy, she commented, referring to labour, human rights and environmental protections.

Another factor under consideration will be the extent to which the various bilateral deals under discussion at the moment, such as TTIP and parallel US talks involving Asian countries, the Trans-Pacific Partnership, might eventually be brought back within the ambit of the World Trade Organisation, the Geneva-based body that arbitrates global trade.

The so-called Doha development round of talks – a WTO-based negotiation attempting to update global rules – foundered several years ago. But there are tentative attempts under way to resuscitate the talks, which will be discussed at a WTO ministerial meeting scheduled to take place in Nairobi, Kenya this December.

“How can we bring the opening agreed bilaterally back to the multilateral system? How can we make sure that the whole web of bilateral deals are properly implemented? And how do we make sure that we don’t lose out when others negotiate free trade deals?’ Malmström asked.

New strategy to reflect shifting geopolitical landscape

Trade has become more foreign policy oriented and more “geostrategic”, the Commissioner said, adding: “That will certainly be reflected in the strategy, not to build counter-blocs, but in order to see how we can unite against certain values, to build alliances.”

The geopolitical nature of any upheaval of trade rules will be keenly watched by the US and China, both currently under the focus of EU trade negotiations.

The EU executive is currently considering China’s market economy status (MES) within the WTO. China was categorised as a non-market economy when it was admitted to WTO membership in 2001.

The issue is up for review in 2016, however, with some legal sources suggesting that China should automatically receive MES next year. Malmström disclosed that the executive was taking advice on the issue from its own lawyers and from external counsel. An update on progress on the issue is expected by the summer.

Read >> “Beijing calls for new ‘Silk Road’ between China and Europe”

Meanwhile, the US and EU are attempting to agree on TTIP before the end of the year, against a backdrop of increasing geopolitical uncertainty.

“The United States remains committed to a comprehensive and ambitious [TTIP] agreement, not only for its beneficial economic impact, but also for important geostrategic reasons,” US Ambassador Anthony Gardner said in a speech to the AmCham EU Transatlantic Conference last week (19 March).

“If the United States and Europe want to strengthen their respective economic power and extend their strategic influence during uncertain times, we must lead together. If we fail, other countries who do not share our values and whose weight in the international trading system is growing fast will set the agenda themselves,” Gardner stated.

Background

Negotiations between the United States and the European Union on the Transatlantic Trade and Investment Partnership began in July 2013.

If the treaty is signed, it will affect almost 40% of world GDP. The transatlantic market is already the most important in the world, with €2 billion of goods and services exchanged every day.

The deal could save companies millions of euros and create hundreds of thousands of new jobs on both sides of the Atlantic. The average European household could save €545 per year and European GDP could increase by nearly 0.5%, according to official estimates.

Brussels and Washington want to conclude the ambitious negotiations and seal the deal by the end of 2015.

>> Read our LinksDossier: TTIP for dummies

Timeline

  • 26th-27th March: Informal meeting of EU trade ministers in Riga, Latvia
  • Autumn 2015: EU to publish communication setting out new five-year trade strategy
  • 15th-18th December 2015: 10th Ministerial Conference be held in Nairobi, Kenya