European Commissioner Cecilia Malmström will today (14 October) present the new forward-looking trade and investment strategy – turning its focus to Asia, EURACTIV has learned.
This new approach which responds in part to the growing number of global trade deals, such as the Trans-Pacific Partnership (TPP), includes opening negotiations with Australia and New Zealand, but also upgrading deals with TPP countries with which the EU has already signed FTAs (free trade agreements), such as Mexico and Chile.
“We need to take advantage of the areas that are growing,” said Luisa Santos, head of international trade at BusinessEurope. “It’s not a case of ‘going after’ TTP countries. It’s the fact that aside from these countries, there aren’t many other options. “
Trade analysts realise that there is not much that can be done with emerging markets, like Brazil, Russia, India and China (BRICs). Brazil’s plunging economy, combined with a massive corruption scandal at oil giant Petrobras and other state-run companies, have paralysed the country, while EU talks with MERCOSUR are not moving forward.
Meanwhile, negotiations with India are blocked by a trade row over an EU ban of 700 Indian pharmaceutical products. Talks continue with China on an investment treaty, but an FTA is far from being on the horizon.
“These are the natural consequences of not having any other options. If we want to promote a forward-looking trade agenda, then we need to go to countries with which we are not currently discussing or negotiating,” added Santos.
These include other ASEAN countries (Association of Southeast Asian Nations), which seems a definite priority when it comes to Asia. The EU has over the summer concluded talks with Vietnam, and it is also in discussions with Malaysia. Myanmar is no longer a stumbling block, experts say. “There is no reason why we can’t pursue negotiations with all the islands,” Santos added, including Indonesia.
Taiwan and Hong Kong will also feature in the strategy, a source said, as Brussels is expected to propose launching negotiation for a bilateral investment treaty.
“We don’t need an investment treaty with Hong Kong. It is a way to push the Chinese into a corner,” explained one leading expert.
The Commission’s strategy will also call for an upgrade of its current FTAs with Mexico and Chile in order to include also a regulatory chapter and transform agreements into fully-fledged new generation trade deals.
With TPP, the United States is clearly securing preferential market access in a region that the Asian Development Bank thinks will produce more than half of the world’s output by 2050. China responded with its own regional trade integration initiative, RCEP (Regional Comprehensive Economic Partnership), covering East and South East Asia, and potentially India. Beyond TTIP, the EU is well aware that it needs to secure its place in Asia, in order to be part of these new trade clubs.
The EU executive, however, is also conscious that it needs to regain the trust of the people. To do so it will try to provide a broader narrative for the future trade and investment policy, putting social development and environmental protection at the centre of any deal.
New narrative: Trade for all
Burned by TTIP critics and protests across Europe, the last one attracting 150,000-250,000 people at the weekend in Berlin, Malmström will insist on the ‘trade for all’ aspects of the new strategy.
As she said in September, speaking at Columbia University in New York, trade like any other international policy should put principles into practice.
“Trade will always be fundamentally an economic policy. But it is not an island. The choices we make about trade must reflect our values. This is not just an abstract wish. Over the last two years the public debate around trade policy has intensified – and not just in Europe. Much of the concern is essentially a call to greater responsibility,” she said in New York.
The focus on responsibility means effective, transparent and based on EU values, said an official who preferred not to be named.
People are concerned about the potential impact of trade policy on their daily lives. They want reassurance about the preservation of their standard of life as well as that of people abroad and the environment. They want to see trade benefit every constituency, the source insisted.
“Policy-makers in democratic systems have to listen to that debate, understand it and respond to it,” Malmström said in September.
It seems she has listened and now is pushing forward an agenda that will maintain a close link with civil society, but at the same time take into account geopolitical realities, as well as economic ones.