How should the EU relate to major powers such as the US and China? How does the EU best approach the defence of free trade and an open and a favourable investment climate? To find what our Swedish MEPs in the Trade Committee think, we asked Jörgen Warborn (M, EPP) a few questions.
BusinessEurope has recently published its China Strategy. Do you think the EU needs a similar strategy and if so, what do you think it should contain?
– Of course; the size of the market in China and its rapid growth means it offers numerous opportunities for European businesses. As the EU’s growth has begun to slip compared to, for example, China, the US and India, it’s clear that we need a strategy to increase our competitiveness.
– I also think that China's power ambitions have been underestimated for too long; they use trade, investment and loans as a means of seizing power. They play ugly games on the world market by doping their state-owned companies and forcing their technology on Europe while at the same time denying European companies market access. Europe needs a clearer strategy towards China and also needs to speak out when China goes too far.
– The most important thing from a trade perspective is to achieve equality of market access. We need an ambitious investment agreement with China. China must give the same conditions to European companies in its market as the EU gives to Chinese companies operating here.
What should the EU do to adopt a leadership role in defending and developing the WTO?
– Europe's role in world trade should be to remain relaxed. We should not lower ourselves to the level of the destructive powerplays that other major players are currently pursuing. We should work to take some of the heat out of the debate and try to bring China and the US to the negotiating table. It won't be easy, but it's the only thing that will work in the long run.
– Regarding the World Trade Organization, the major problem is that the dispute resolution body no longer works, because the United States is refusing to appoint new judges. Here, the EU has already shown leadership by initiating a temporary solution that will fulfil the same function. Currently, the EU along with 16 other countries, are participating. While this solution can reduce the number of locked trade conflicts, in the long term it is obviously important to include as many WTO members as possible. As we already see several trade conflicts between the EU and the US, we need to have them at the table.
– The EU also needs to continue to try to negotiate common WTO rules on, for example, e-commerce, where data flows are vitally important for trade to function smoothly. I am responsible for these negotiations for my party group in the European Parliament and I hope for concrete progress at the next Ministerial Conference in Kazakhstan. It is really incredible that in today's digital economy, there are still no common rules for these issues.
How can the implementation of existing trade agreements be improved so that more Member States, more companies and - above all - SMEs can benefit from them?
– The most important thing is to simplify the agreements. They must be straightforward and have clear frameworks that all entrepreneurs can follow. It shouldn’t have to be that you need an army of expensive lawyers to start exporting. In practice, most small businesses are locked out. I work a lot to raise the perspective of small businesses in trade policy and legislate on their needs, not just those of big companies. I also want us to include dedicated small business chapters in every new agreement that we sign, as well as in existing ones when we revise them. One thing that is particularly complicated for many small businesses is the rules of origin, where duties are calculated on input goods from countries that sit outside the free trade agreements. Here, I am working for the Commission to develop a functional and user-friendly web tool that can save time, effort and money for European exporters and importers. They have promised me that it will arrive this year.
With which countries would you prefer to prioritise new trade agreements?
– The most important thing right now is to come up with as comprehensive a trade agreement as possible with the UK, so that there is minimum impact on existing trade relations. In the slightly longer term, I think the ambition must also be to bring the EU and the US closer together in trade policy. There is no trade agreement with as much significance as one that would fully open the US market to European companies. I will also be pushing for free trade agreements with Mercosur, Australia and New Zealand.
It is becoming increasingly common for trade agreements to be seen as appropriate instruments to drive changes in areas that do not directly affect trade, such as human rights, climate and animal husbandry. Others believe that the trade agreements should be kept as ‘clean’ as possible and only include paragraphs that deal directly with trade. What is your opinion?
– This is a difficult balancing act. On the one hand, trade is the most important force for creating prosperity, one that gives us opportunities to improve people's living conditions and resources to prioritise the fight against climate change. Opening up trade relationships can be the first step in this.
– On one hand, the right requirements in a trade agreement can act as an incentive for the counterpart to put in an extra exchange on important issues. On the other, however, it can also create barriers that prevent trade from happening in the first place. This makes it difficult to give a definitive ‘yes or no’ answer on the issue of adding additional requirements to the agreements. They must be assessed on a case-by-case basis.
– I think that discussions on trade should primarily be about trade. However, at the same time, our trade policy must be a responsible one. Ultimately, trade should benefit people, and companies' commitment is very important; they, after all, are the end users. If trade policy can bring a positive impact in areas other than growth and prosperity, then of course that’s a good thing; however, we cannot expect that we can use trade to solve each and every problem. We need to manage our expectations.
Regarding the ratification process of free trade agreements, do you believe that an individual Member State, or a region of a country, should have the power to block a trade agreement? Or do you think it is sufficient for the Council and the European Parliament to decide on new free trade agreements? Why do you favour that approach?
– I think trade policy should be an exclusive EU competence where we make majority decisions. This is the case in the free trade agreements, but not in the investment agreements. This is precisely the decision-making process that has historically caused major issues on investment agreements. For example, a Belgian regional parliament has been able to veto agreements covering the whole EU, despite the fact that in practice, everyone else supported the agreement. I don't think that's reasonable.
Do you see any risk that the EU's work on, for example, the European Green Deal and industrial strategy could spill over into trade policy? If so, how should the EU deal with this?
– Undoubtedly there will be proposals from these aspects that affect trade policy. In the Green Deal, there are discussions on a border adjustment mechanism that would impose tariffs on goods produced outside the EU with worse climatic conditions than is the law here. The aim is to even out competition conditions between the EU and those countries that do not prioritise climate action, thus avoiding carbon leakage from the EU. Such a mechanism will be complicated and controversial and will, in all likelihood, create tension in trade policy. If there is a such a proposal, it is vital that it is designed with the utmost care to avoid it being perceived as a protectionist intervention.Frihandel