Multilateral liberalisation of trade should be the centre of European trade strategy, argues Patrick Messerlin – professor of economics, Sciences Po – in a new paper for the European Centre for International Political Economy. The recent shift in European trade policy to negotiate bilateral agreements is taking Europe into dangerous waters, he believes.
Messerlin claims that the bilateral trade agreements considered by the EU are generally characterised by high tariff and non-tariff barriers in goods, and by restrictive regulations in services and investment.
Instead, he believes that the EU should stick to multilateral liberalisation within the WTO – although he warns that it should not agree to a deal in which industrial tariffs are above 15%. Such a target would eliminate the tariff peaks that constitute the main obstacle faced by European exporters and increase their certainty of access to emerging markets.
Studying nine major emerging economies, the paper highlights the changes in protection associated with this 15% target for industrial goods, including average bound tariffs ranging from 6.7 to 14.7%, with only a tiny proportion of bound tariffs higher than 30%, and none more than 50%.
On the other hand, Messlerin suggests that the Union’s position in WTO agricultural negotiations should be rebalanced, namely with more extensive cuts in high tariffs and smaller cuts in low tariffs – thereby delivering more economic gains to European consumers and the vast majority of EU farm and food producers than the current proposal.
Regarding its position towards the WTO in general, Messerlin concludes that the EU should position itself as a WTO member with a long term view of the world trade regime. He insists that assuming responsibility for the future relevance of the global trading system is a sign of leadership.
Finally, Messerlin suggests that the Union should promote a series of future WTO rounds of liberalisation, aimed at a slow but perennial reduction of protectionism, rather than increasing its use of bilateral agreements, which he fears could trigger a world-wide race to bilaterals with the US and other large emerging countries.