Strengthen the EU as Global Player

The political pressure to shape globalisation has never been greater. Global value chains are indispensable for global prosperity. At the same time, the actors in the global system competition are playing harder and harder when it comes to access to markets and geo-economic influence. The trade conflicts between the EU and the US have been a wake-up call for some, and the end of the Trump era is far from over. The US continues to work hard to expand its global trade relations. The same goes for the United Kingdom, which since Brexit has emerged as an independent player on the arena of world trade. As the strongest non-Western trading power, China is expanding its influence. With the “Regional Comprehensive Economic Partnership” - RCEP for short - the Asian economic powers joined forces at the beginning of January 2022 to form the largest free trade zone in the world. This confronts the West with a powerful adversary. The fact that China is increasingly translating its economic strength into political influence all the way to Europe is demonstrated by the superpower's transnational Belt and Road Initiative.

Europe's future depends on its unity

If Europe wants to successfully assert its own interests in global system competition in multilateral forums and free trade agreements, then this will only be possible - if at all - through a united front. The Treaty of Lisbon has endowed the EU with central competences for more than a decade, for example in trade and investment policy. With the European bundling of negotiating power, Europe is at all able to bring weight to bear in international negotiations. Without a strong voice, Europe will find it difficult to position itself vis-à-vis global negotiating partners such as the USA or China. And indeed, since 2009, the EU has succeeded in concluding a number of trade agreements, for example with Korea, Vietnam or Japan.

But ten years after Lisbon, European trade policy is in crisis. At the latest since the failure of the agreement with the USA (TTIP), progress in opening foreign markets has been slow. The trade agreement with Canada (CETA) was signed in 2016 but has so far only been applied provisionally. This is also because Germany has still not ratified the agreement. The agreement with the Latin American countries (Mercosur) is still waiting to be signed after two decades of negotiations. The negotiations for an investment agreement with China (CAI), which began in 2013, were concluded, but for political reasons the agreement was not signed.

The reasons for the pause for breath in European trade policy are as complex and diverse as the globalised economy. One is the important trade-off between climate, social and trade policy priorities. But Europe's declining relative bargaining power and conflicting interests of different sectors as well as differences between member states also make it difficult to move forward on trade policy issues. And this at a time when decisive and swift action is more necessary than ever.

Europe – Still a Shaping Power for Globalisation?

A paralysis of Europe's power to shape foreign trade policy would jeopardise Europe's ability to participate in shaping globalisation in the future. The new German government should significantly strengthen the EU as a global shaping power during the current legislative period. In the course of the 2020s, the EU must position itself as a value-oriented leading power in global system competition. Before the end of the decade, it will be decided whether the community of states can assume an independent role in globalisation at all. If it fails to do so, Europe and its values will fall behind in the race for economic policy alliances, lose importance as a negotiating partner at the international level and, in the worst case, be squeezed between the big players, the USA and China.

• The new German government's policy must therefore be geared towards strengthening the European Union's trade policy clout: European trade policy must be the exclusive preserve of the EU. The ratification of trade and investment agreements should be done by European legislators alone. The competence of the EU is founded in the European Treaties, confirmed by rulings of the European Court of Justice and granted to the European Commission for each individual agreement with the negotiating mandates of the member states. Individual member states or individual regions may neither delay nor block agreements in the future.
• In order to overcome interests of single nations, it is also important that national governments are willing to put regional or national interests second in crucial issues of pan-European importance. An open discussion of the increasingly harsh global environment - the rise of China, the conflict between the great powers of the USA and China, the tendency to decouple the world economy, Europe's declining international influence - could help to increase this willingness.
• Open markets are the basis for economic performance in Germany. Without the exchange of goods and capital, no production is possible and neither socio-political nor ecological goals can be achieved. Increasingly, however, progress in trade policy is failing due to too many areas of regulation. The opening of foreign markets must therefore remain the central goal of foreign trade policy. This does not mean the unconditional subordination of other policy goals to economic interests. Transparency, opportunities for civil society to participate and clear sanction mechanisms are indispensable elements of a modern trade policy. However, the EU's trade policy can only be successful if its primary goal remains the rapid and extensive opening of foreign markets. It must do an even better job of reconciling social, ecological and economic requirements.
• As the largest EU member state, Germany has a decisive influence on the EU's trade policy. In order to make full use of this influence, European policy coordination within the federal government must be organised as effectively as possible. In the case of issues of foreign trade importance, the state secretaries and ministers concerned must be involved at an early stage so that a common line of the federal government can be found on important issues right at the beginning of negotiations in the Council.

Internationally active companies from Germany remain dependent on free market access and openness to investment. Even if global systemic competition makes the opening of foreign markets politically more and more difficult: the goal of German industry is and remains the opening of foreign markets for trade and investment. This goal can only be achieved if the EU can assert itself as a shaping power in globalisation - before the end of the decade that has begun. The new German government must pull out all the stops to achieve this.