What trade policy does the EU need for the years to come? A seemingly straightforward question, but one that is increasingly difficult to give an equally straightforward answer to. Common rules that facilitate the necessary flows of modern trade – goods, services, people, capital, data, innovation, and investment – would be one answer. Transparent and predictable rules that allow companies all over the world to export, import, and invest would be another.
Because without trade with other countries, our economies simply stop. Historically, global trade has lifted many countries and millions of people out of poverty and is today widely recognized as being key for the achievement of the sustainable development goals. In European countries, trade is necessary for jobs and prosperity. In the absence of trade with other countries, the EU would have been poorer. A strong and ambitious free trade agenda for the EU should be the obvious way forward.
But with the EU in the process of developing a trade strategy for the future, there are multiple challenges. An ambitious trade policy must address them, while resisting the renewed pressure of protectionism arising from the coronavirus crisis.
A key challenge is that global trade is in transformation. Trends that we have seen in recent decades – digitalization, servicification, global value chains – have become ubiquitous. They have transformed how we produce, trade and consume. Business models and accelerating technological development challenge regulatory frameworks, which in some cases have been around for a couple of decades. This is why it is increasingly urgent to update the rules. We need trade rules suited to the future.
Another challenge is to fully grasp that it is companies that trade, not countries. It is companies that use free trade agreements, that follow rules of origin requirements, that deal with customs formalities, and that are affected by trade disputes. This is why a future trade policy should focus on creating the necessary conditions for businesses to trade across borders.
A third challenge is that trade policy is itself in a state of change. It is extending into a growing number of areas, which is in part due to contemporary trade being so much more than goods being loaded onto ships. Furthermore, security issues and geopolitics are increasingly intertwined with trade issues. Sometimes this reinforces trade, but more and more often businesses are hit by short-term decisions taken in the heat of trade disputes. This is why an offensive agenda is needed for how the world looks today.
So, what kind of trade policy is needed for the future? An ambitious European trade strategy for free and sustainable trade, that does not avoid challenges and that gives businesses – those who actually do trade – the right environment in an increasingly complex world. This agenda shows the way forward.