Commission outlines ‘greener’ and more assertive trade policy

European Commission executive vice-president, Valdis Dombrovskis, said that the new trade strategy shows "our willingness to take a tougher approach".

A tougher approach with partners and more focus on climate and labour rights will be key pillars of the new EU trade policy outlined by the European Commission on Thursday (18 February). 

The Commission’s executive vice-president responsible for trade, Valdis Dombrovskis, said that the three key words of the new approach will be “open, sustainable and assertive”.

He explained that any future deal will include the Paris climate commitments as an “essential element”. 

The EU’s approach could include liberalisation of trade in certain green goods and services, or agreements to reduce fossil fuel subsidies.

Moreover, the Commission is discussing with Brazil “additional commitments” on climate and deforestation in order to facilitate successful ratification of the EU-Mercosur deal, the largest trade agreement the EU has concluded with Brazil, Argentina, Uruguay and Paraguay.

The promotion of sustainable trade practices will also imply “stepping up our support for labour rights”, including the development of rules to combat forced labour.

‘Tougher’ stance

As previously announced, the EU’s trade chief said the Commission will prepare an instrument to protect the bloc from potential coercive actions of third countries. And it will explore the possibility of an EU strategy for export credits to counter the support given by other partners, including the possibility of an EU export credit facility.

Dombrovskis announces new defense instrument against trade ‘bullies’

The European Commission’s executive vice-president, Valdis Dombrovskis, told the European Parliament on Friday (2 October) that he will put forward a new mechanism to protect the EU from the coercive manoeuvres of trade partners like US and China.

The EU executive is also working on a legal instrument to address distortions caused by foreign subsidies on the EU’s internal market.

These new instruments will come on top of the proposals adopted last year to bolster its trade toolbox, including a new chief trade enforcement officer to ensure third countries respect their commitments and an upgraded of the EU enforcement regulation. 

“This shows our willingness to take a tougher approach. We will follow through”, Dombrovskis said. 

The new strategy came against the backdrop of the difficult relationship over the past years with the US and China, Europe’s largest trading partners. 

The arrival of Joe Biden to the White House and the conclusion of the new investment deal with China are seen as opportunities to improve the relationship with Washington and Beijing.

Europe has ongoing tariff disputes with the US on steel and aluminium, and as a result of the Airbus-Boeing subsidies row. 

As regards China, the Europeans have long complained about the unbalanced economic relationship and unfair practices, including the forced transfer of technology or industrial subsidies.

“The bottom line is simple: whatever challenges the EU and US face, there is no stronger values-based alliance in the world,” Dombrovskis said.

“On China, the EU goal is to restructure our partnership to be reciprocal, balanced and fair,” he added.

The Commission vice-president said the EU has signalled its willingness to the US to address the tariff dispute and to reform the World Trade Organisation, another top priority in the years to come. 

He expected to discuss these issues as soon as the new US trade representative is confirmed. 

In the case of China, he said the investment agreement “is not a panacea” to address the challenges posed by the country. For that reason, the EU will work with “like-minded partners” like the US to tackle concerns related to human rights and forced labour in the country.

'Still much work to do' with China after investment deal, says Commission

Despite a recent investment agreement reached with Beijing, there is still “much work to do” to rebalance the EU-China trade and overall economic relations, the European Commission said on Friday (29 January).

WTO reform

The EU also wants to prioritise the reform of the World Trade Organisation, as part of its support for a strengthened multilateralism. 

Dombrovskis admitted that the organisation suffers from “substantial problems” to negotiate new multilateral agreements, to monitor trade deals or to settle disputes. 

But he said that now there is a “new momentum” to improve the WTO, following the election of Ngozi Okonjo-Iweala as its new director-general and the new US administration’s commitment to multilateralism.

Okonjo-Iweala elected as the first female WTO chief

The World Trade Organisation appointed Ngozi Okonjo-Iweala as its new director-general on Monday (15 February). The WTO’s first female chief and the first one to come from the African continent takes the reins at a time when the organisation needs to reform to respond to growing global challenges and trade tensions.

One of the issues the EU wants to prioritise is to unblock the nomination of the new judges of the WTO’s Appellate Body and restart this key piece of the organisation’s dispute settlement mechanism.

The US blocked the appointment of new judges as Washington considered that the body outreached its authority with its rulings. 

In a gesture towards the US, Dombrovskis said that “we share some of this criticism”, and considered feasible the appointment of new members as an “early deliverable”.

The EU has 46 trade deals signed with 78 partners across the world and, according to the Commission, 35 million EU jobs depend on trade.

[Edited by Zoran Radosavljevic]

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