The new EU Trade Strategy: Green and Assertive?

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In mid-February 2021, EU Trade Commissioner Valdis Dombrovskis presented the European Commissions new trade strategy, which places a stronger focus on environmental and climate protection as well as the assertion of the EUs own interests. The BDI warns against overloading the trade agenda with too high expectations and creating additional trade barriers.

According to Commission Vice President and Trade Commissioner Valdis Dombrovskis, the EU’s new trade strategy should above all ensure an open, sustainable and assertive EU foreign trade policy.

By focusing on six priorities - including reform of the World Trade Organisation (WTO) - the Commission highlights their aim to support the recovery of the European economy after the pandemic and the digital and green transformation. In addition, it is vital to advance the creation of fair and sustainable global rules for world trade. In doing so, the EU wants to expand its options for asserting interests and rights internationally - if necessary, also through autonomous action and new instruments (e.g., against market-distorting subsidies or coercive measures by third countries).

“The EU must proceed with a sense of proportion in implementing the trade strategy and must not overreach when it comes to requirements in trade agreements and due diligence obligations for the European economy. Taking responsibility and strengthening Europe in the international competition between locations are not opposites, but rather two sides of the same coin,” emphasises Wolfgang Niedermark, member of the BDI Executive Board.

Opportunities and Risks

The BDI supports the European Commission’s goals of strengthening the EU’s role in the world and working even more emphatically for modern and sustainable competitive conditions. Nevertheless, the BDI finds that the presented strategy – due to self-imposed political expectations – could be overloaded and could thus fail. Particularly in the area of sustainable development, the focus should be on joint agreements with trading partners and not on protectionism and the threat and creation of additional trade barriers. The BDI also sees great opportunities for its own companies on the global markets in climate protection and sustainability.

Relations with economic and political powerhouses (the U.S. and China) are of particular importance for German industry. Here, it is important to agree on viable long-term rules for trade and to avoid escalating conflicts. The BDI therefore welcomes the fact that the EU is presenting a comprehensive proposal for the reformation of the World Trade Organisation (WTO). In addition, the EU must position itself competitively (for example, by strengthening the internal market and innovative capacity) and enforce market economy principles (for example, through international rules for state-owned enterprises and limits on industrial subsidies). The BDI calls for a clearer regional focus on the markets of Asia and the Americas, for example by providing clearer political support for the negotiation and implementation of bilateral agreements with the countries of Southeast Asia and Mercosur. Overall, one central pillar of trade policy is not given enough focus in the strategy paper presented by the Trade Commissioner – market access.

The BDI would like to see the new German government advocate for a liberal trade and investment policy. European trade policy must keep an eye on economic, ecological and social sustainability in equal measure and, keeping this in mind, enter into solution-oriented partnerships at the global level. Only an economically successful Europe capable of action will be able to exert effective influence on global climate and environmental protection standards, for example through new free trade agreements.