The European Commission’s proposals, unveiled on Wednesday 27 May, refine the concepts around which the Union’s future trade strategy are expected to be structured - open strategic autonomy, sustainability, reciprocity - and the ambition to dictate to the EU’s economic partners, both bilaterally and internationally, its new rules of the game.
In recent weeks, the European institutions, the Union’s chancelleries, and stakeholders have started a debate on the priorities that will underpin the new European trade policy strategy (see EUROPE 12471/7, 12480/14, 12476/14).
Firstly, because the health crisis has taught the EU to be cautious in terms of trade dependence (see EUROPE 12455/22). It has therefore outlined its concept of “open strategic autonomy”, in the name of which it now intends to build resilience for certain key products such as pharmaceuticals and other critical raw materials. This will involve, on the one hand, diversifying global supply chains and, on the other hand, repatriating some production, an ambition the Commission plans to translate into a new ‘Action Plan on Critical Raw Materials’. Its new Strategic Investment Facility will support investments to strengthen these strategic European value chains.
The EU is indicating that autonomy does not mean protectionism or mercantilism by adding the idea of “openness” to the concept. The EU will continue to advocate free trade at the World Trade Organization (WTO), but it intends to lead the reform process to “shape the new system of global economic governance”, as stated in its communication of 27 May.
It will champion the idea of ‘environmental dumping’: European trade policy, in line with the Green Deal, will have to commit itself more radically to a sustainable transition. European value chains will be subject to due diligence, while ensuring a level playing field for its producers. This initiative will be served by various instruments, including a border carbon adjustment mechanism, to prevent carbon leakage to countries with more lax environmental policies (see EUROPE 12439/14).
The EU will also strengthen its arsenal to combat “unfair and abusive” practices at both the WTO and at home. Some avenues have already been explored, such as its investment screening mechanism, to protect strategic European assets from foreign predators (see EUROPE 12468/16, 12461/6). Other avenues are having trouble coming to fruition: in its communication, the Commission hopes for a “rapid agreement” between the institutions on its proposal for an international investment procurement instrument (see EUROPE 12386/10). Still others are at a standstill: as part of its review of its competition rules, the Commission will publish a White Paper on foreign investment in the EU in June 2020, in which it will detail its concerns about foreign State-led investment.
These factors will be reflected in the Union’s new trade policy, the review of which has been moved forward to the last 4 months of 2020, according to its new work programme. (Original version in French by Hermine Donceel)