The EU is at a crossroads, having suffered a sharp economic and social hit in recent months. The European Commission predicts a drop in EU GDP of 7.5 per cent in 2020. However, even in 2019, there were signs of underlying frailty in the EU economy.
Despite this, the EU has ambitious plans for its future, aiming to go green, digital and high-tech. But the global challenges remain the same: third countries taking advantage of the EU’s open borders and markets whilst refusing to share the same high ambition to decarbonise by 2050. EU trade policy is thus under pressure. It must evolve to meet rising competition abroad, while giving the space for EU companies to survive, thrive and go green.
This recession will have severe effects on global supply chains, especially if countries around the world seek to dump products on world markets to make up for a loss of local demand.
Three trends look set to be reinforced by the global economic and health crisis:
1. Trade friction and distortions of the global marketplace are rising more strongly than ever. Is this a permanent change?
2. Europe now has ambitious plans for its future recovery and its climate policy. But if these goals are at odds with the global economic and trade reality, how can they be reconciled?
3. Marginalisation of multilateral (trade) action: will global trade become nationalised, with more and more countries turning inwards and imposing protectionist measures? How can international organisations stay relevant in an increasingly regionalised and polarised world?
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