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How can the EU fix global trade?

Four people on stage (photo).

The single market of the EU is often hailed as the number one success story of European integration, and it is one of the reasons why the EU is seen as a law-making machine. Single market laws are partly focused on competition law, which sets out to ban state aid and other interventionist practices in order to create a level playing field among the EU’s businesses. But when these businesses enter the global market, they have to compete with subsidised businesses from China and the US. Is the EU overregulating European business? Can that be a disadvantage in a global market? And do we have fair competition conditions in the world? What is the state of the World Trade Organisation (WTO) and how well can global trade function if we do not have strong multilateralism? These questions were at the heart of the seminar that the Centre for European Studies held at the EU Day Lund 2021.

The panel consisted of Cecilia Malmström, former European Commissioner for Trade; Anna Stel­linger, Deputy Director-General at the Confederation of Swedish Enterprise, Head of International and EU Affairs; and Joakim Gullstrand, Professor of Economics at Lund University. Jörgen Hettne, Professor of Law and the Director of the Centre for European Studies at Lund University moderated the panel discussion.

The discussion painted a picture of a global trade regime that has become highly politicised, as what was traditionally trade is now also about security and geopolitics.

- Trade is not really about trade anymore, said Anna Stellinger, who went on to talk about how trade started appearing in tabloid magazines as three things happened: Trump entered US government, China rose to become the challenger it is today, and the UK voted to leave the European Union. The outcome, according to Stellinger, is that the EU’s trade agenda is about a lot of things, but not necessarily so much trade anymore.

Joakim Gullstrand favoured a similar understanding of today’s big problems of trade.

- We can divide them into long-term and short-term issues. One of the most pressing short-term issues is that of high energy dependence. The EU cannot switch over to quick fixes like fossil fuels that are unsustainable in the long-run, which instead leaves the continent dependent on autocratic nations.

One of the proposed solutions to this kind of dependence is that of strategic autonomy; a concept that in trade refers to the non-dependence on other countries for resources and products.

On this, the panel seemed to be in agreement: strategic autonomy is a problematic concept.

- We should not fall into the autonomy trap, Cecilia Malmström comments. While reducing the strategic dependence on China is a good thing, the EU would have to do it in a clever way that also simultaneously builds up other partnerships.

- Autonomy is problematic. Even strategic autonomy is problematic. And even if we put the word “open” in front of it it, is still problematic, argued Stellinger. The heart of global trade is the flow of input and output crossing borders. The concept of strategic autonomy is divisive, both internally and externally, as it leaves the EU’s allies unsure of where the EU stands.

Gullstrand noted that there is something useful in the discussion, and that the concept of strategic autonomy is a bit of a misnomer.

- I would like to use the word resilience instead, said Gullstrand, explaining that the issue is more about establishing strategic products that the EU can ascertain the supply of when needed. This goes back to questions about for instance food supply and food security. This need not be through the EU producing the product themselves, rather, it can be about branching out in terms of suppliers.

The problem underlying the global trade regime of today is the stalemates and lack of agreement in the World Trade Organisation (WTO).  

- The world is in desperate need of international cooperation, and the international organisations are weaker than ever, or for a very long time, argued Malmström. For her, the solution is multilateralism through the WTO.

- While it may not function properly today, we must not forget that the WTO historically has brought countries out of poverty through international trade.


Read more about the event here.