For @AIGemea #GlobalTradeSeries 2020 I had the pleasure of talking to @ignaciobercero & @elvirefabry abt the EU’s trade strategy amid US-Chinese tensions, Covid19, & how the EU can avoid the lure of protectionism & build domestic support for trade.
Key points below.
THREAD
/1
In response to Covid: “reshoring is unlikely to go very far in the EU”, said Ignacio.
EU too dependent on exports & it’s difficult to localize value chains. But there will be more talk abt strategic stockpiles, diversification of value chains (e.g w Africa) and subsidies.
/2
Ignacio also offered 3 scenarios the EU shd prepare for in light of US-Chinese trade tensions:
1) decoupling,
2) exclusionary trade alliances, tho no decoupling
3) a push for WTO reform.
The EU prefers option 3, obvs.
/3
But what should the EU do?
Ignacio:
-Engage, engage, engage w the WTO
-Build alliances with like-minded countries
-Deliver on bilateral FTAs
-Promote regulatory cooperation & don’t rely too much on the Brussels effect (h/t @anubradford).
...
/4
Digital and climate are areas where the EU could lead the way, said Elvire and Ignacio.
En plus:
-Develop WTO-compatible trade defense instruments, such as:
oReciprocity in public procurement
oStrengthening investment screening
/5
On US & Chinese trade assertiveness on trade:
The EU will have to manage the tension between its desire to promote open, rules-based multilateral trade, and the need to protect its interests.
EU needs strong trade defense instruments, but it also needs to back WTO reform.
/6
“WTO reform is not just about a level playing field with China. But also about meeting SDGs.” The EU should push for stronger trade rules on sustainability.
And as Elvire mentions, the window of opportunity of the “Brussels effect” may not last forever.
/7
And so the EU should move to update global trade rules now.
Aside from the WTO route, the Franco-Dutch non-paper on #sustainability & #trade is a way to leverage EU market power to promote sustainability goals.
@SigridKaag
@JBLemoyne
/8
Domestic politics play a role in this too. Publics see sustainability and trade as incompatible.
Parliaments are sceptical abt trade liberalisaton: see NL & #CETA, FR & #TTIP.
The Franco-Dutch paper is a welcome response.
/9
@EmmanuelMacron wants a “European trade policy that protects without protectionism”.
This applies sustainability, but also to digital trade and fair taxation.
Key element is that the EU and national govts should make the public case for trade better.
/10
Ignacio: “50% of #TTIP time was spent on explaining to publics.”
These public discussions need to happen early on. Continuous engagement is necessary, not just when an FTA has been negotiated. And it’s not just a matter for the Commission, but also for the member-states.
/11
Ultimately, Q for @DGtrade and MS is "Can Europe offer a Third Way on trade betw the US and China?"
Is the EU dependent on what Washington and Beijing do, or can the EU be the shaper of its trade destiny, with global rules and norms being protected? That's the challenge.
/12
So much more in this rich conversation with @ignaciobercero and @elvirefabry. A great backgrounder for the EU's #tradepolicyreview
Do have a listen:
aig.co.uk/util/insight-p…
@WeyandSabine
@rupertschlegelm
@achrafboualiD66
@PhilHoganEU
/end
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