Dangerous liaisons or avenues to greater influence in the global arena? EU trade policies towards the east and the west of the world

Speakers: Peresso Elena, Howitt Richard, Dupont Cédric
Moderator: Hofmann Stéphanie

On Tuesday 8th of July, at the premises of Science14 Atrium in Brussels, PubAffairs Bruxelles hosted a debate concerning EU trade policies towards the east and the west of the world. The debate was moderated by Stéphanie Hofmann, Associate Professor of Political Science and Deputy Director, Centre for Conflict, Development and Peacebuilding of the Graduate Institute, Geneva, while the discussants were Ms Elena Peresso, Member of Cabinet of Commissioner for Trade, Mr Richard Howitt, MEP and S&D Spokesperson on Foreign Affairs and Mr Cédric Dupont, Professor of Political Science and Director of the Executive Education at the Graduate Institute, Geneva.

In the first part of the debate, Ms Hofmann introduced the speakers and the main topics which the debate will have touched upon. She then asked a yes/no question to the public, which was also to be put at the end of the debate to the audience, namely: “Can trade policy reinforce the EU influence in world affairs?”. She then gave the floor to the discussants who could proceed to give their preliminary statements.

Mr Howitt started his speech by affirming that he believed that the EU should use trade policy as a tool in order to further its political and economic goals towards the international arena. He added that the enhanced role of trade policy has originated from the fact that the European economy is both still suffering from the global economic downturn and struggling to find valuable means to create stable and enduring growth. Given this scenario, in Mr Howitt’s opinion, the European Union will have little chance to influence the global political arena, if it is perceived as economically weak. In addition, he stated that a number of failures within the WTO have increased the use of bilateral trade agreements which the EU is also putting into force.

Mr Howitt continued by remarking that the interrelations between the political and the economic dynamics, as well as the trade-off which can emerge from these complementary interests, often tend to make more complicated both the assessment of the situation and the definition of the strategies to put into action, as in the case of Ukraine. He finally stated that since the establishment of the External Action Service the European Union has attempted to make more consistent its trade and external policies, although the institutional coordination is still in progress and the EU political conditionality often encounters various obstacles, especially when economic stakes are high.

Mr Dupont started his contribution by stating that historically the EU has rarely been able to raise its influence on a global scale with the tool of trade policy, whereas the future of EU trade policies could be different as the interrelation between trade and investments has become more evident and decision makers are increasingly aware of this fact. Nevertheless, Mr Dupont expressed his scepticism about the fact that in the near future the EU will be able to radically improve its weight over global economic affairs due both to the lack of coordination on monetary issues in international financial institutions such as the IMF, as well as due to disagreements between the Parliament, the Commission and the Council. As far as the issue of dangers and opportunities of trade was concerned, Mr Dupont outlined the differences between the three main groups of trade partners which the EU is currently aiming to conclude agreements with, namely North America, some important emerging economies such as China, Brazil and India and the EU neighbourhood countries.

Regarding the first group, Mr Dupont asserted that, although the shared common values are of high importance and have been helpful for trade and investment integration, the TTIP negotiations are highlighting not only the differences between the US and Europe in conceiving the role of the state in several crucial areas, but also a certain fatigue in finding a common vision on the way to proceed towards market liberalisation. With regards to emerging economies, Mr Dupont noted the positive impact of the EU towards market liberalisation, although the EU had to adopt a more realistic approach to human and labour rights. With regards to the EU neighbourhood, Mr Dupont affirmed that the danger of spill-over effects between trade and security, especially for the eastern dimensions is still present.

Ms Peresso started by affirming that the European Union has exercised influence globally towards trade policies. She pointed out the difference between trade and development policies by mentioning the enfranchising power of trade relations in general and trade agreements in particular. In her opinion, the creation of the optimal conditions for business to flow between operators of very different sizes through simple and very complex value chains is an important part of the EU external action. Ms Peresso recognised the fact that there has been a degree of criticism for having tabled and concluded several bilateral agreement negotiations, nevertheless, she also pointed out that attributing this trend exclusively to the last legislative term would be a misperception as long as some agreements, such as the one with Colombia and Peru, were concluded thanks to the work of the former European Commission.

Concerning the issue of inter-institutional coordination within the EU, Ms Peresso emphasised the fruitful cooperation between the Commission and the Parliament even before the Lisbon treaty entered into force. She finally acknowledged the importance of political will while taking strategic and prompt decisions by bringing to the spotlight the case of the Ukrainian crisis which has induced the EU to speed up its decision making process in order to grant a regime of autonomous trade preferences.

One of the main points of discussion consisted of the issue of trade-offs between the set of values of the European Union and the interests at stake in trade relations negotiations. Mr Howitt indicated the “human rights clause” as a significant example of trade-off in the development of international rules concerning trade and human rights. Mr Howitt while acknowledging the importance of this aspect of trade relations, underlined the difficulties in enacting sanctions in case of rules breaching. Nonetheless, he insisted on the fact that the EU should continue to follow up its good intentions. Mr Dupont took the chance of elaborating on this issue by recalling the decade-old debate on the so-called “normative power”of the EU and on how it should have been conveyed. On this last matter, Mr Dupont pointed out that the debate has shifted from idealistic to a more realistic perspective, especially after the crisis and as the recent evolutions of EU-China relations indicate. Ms Peresso affirmed that from an institutional point of view it would be impossible not to be faced with trade-offs of every sort and that they vary depending on the actor and the issue concerned, nevertheless, she reminded the audience that the main aim of trade policy is trying to maximise the benefits both for economic actors and workers.

The final part of the debate and the Q&A session also covered the following issues: the negotiations of the TTIP and the issue of transparency, the European Commission past trade strategy, the issue of corporate social responsibility, the link between trade and foreign policy aims, the issue of regulatory convergence, the interrelations between trade and human rights and the role of the WTO.

Questioned for the second time, the audience replied that they would have liked to see the EU’s impact constrained normatively.

Do you want to go further into the issues discussed in our debate? Check our list of selected sources which we have provided for you

Trade, Growth and World Affairs, European Commission

Trade, Growth and Development, European Commission

The EU position in World Trade, European Commission

Graduate Institute, Geneva, Publications

Trade Unions & Employment Rights, Richard Howitt MEP

Direct from Davos, Focal Point, Project Syndicate

World Trade Review, Cambridge Journals on line

Trade and Development, OECD