The geopolitical developments, conflicts and crises of recent years pose new challenges for EU trade policy. In a recent policy brief published by the Foundation for Progressive Studies (FEPS), Werner Raza, Director of the Austrian Research Foundation for International Development (ÖFSE), and Bernhard Tröster, Senior Researcher at ÖFSE, address the question of how EU trade policy should be shaped against the backdrop of current developments. The policy brief ‘Moving beyond Neoliberalism in EU Trade Policy’ and its presentation were supported by AK EUROPA and other organisations. The topic was discussed during a roundtable discussion in November, attended by MEPs Kathleen von Brempt, Evelyn Regner and Brando Benifei, among others.

 

Trade policy as a central component of EU economic policy

 

The authors state that the EU’s trade policy began with the 1957 Treaty of Rome and has steadily grown in scope and significance. In 2000, competition became the EU's overarching economic policy objective with the Lisbon Strategy.  In subsequent years, trade policy paradigms increasingly shaped policy areas and sectors, including public procurement and public services such as health, education, postal services, energy, transport and water. The agreements with Canada (CETA) and the United States (TTIP) - the latter was never concluded - also contained investment chapters that granted investors the right to sue before international arbitration tribunals if governments allegedly violated their property rights. In addition, chapters on ‘regulatory cooperation’ were included with the aim of harmonising different regulatory standards that were considered barriers to trade. These included food safety standards, pharmaceutical production standards, regulations for the service sector, risk assessments and approval procedures. Following the 2008 financial crisis and eurozone turmoil, the EU tightened austerity measures and further intensified its expansionary trade policy to boost export surpluses.

 

Trade policy at the centre of the debate

 

Raza and Tröster also point out that the dominance of competition orientation and the focus on foreign trade generate different levels of concern. Depending on the sector, social position, qualifications or region, there will be winners and losers. Throughout the 2000s, trade policy increasingly became the focus of public debate. Civil society organisations continue to target the challenge the prevailing economic model, specifically targeting excessive market liberalisation and competition orientation. Finally, since 2020, a series of initiatives to promote social and environmental standards have been launched at EU level, such as the Corporate Sustainability Due Diligence Directive and the Forced Labour Regulation. However, these initiatives have recently come under considerable pressure again and have been partially undermined.

 

Geopolitical shifts challenge EU trade policy

 

In recent years, EU trade policy has increasingly been caught up in the maelstrom of geopolitical events and crises. The Covid pandemic highlighted the fragility of global supply chains, while the war in Ukraine exposed Europe's dependence on imported energy and raw materials. At the same time, global competition has intensified, particularly due to China's rise as a major industrial and technological competitor. Most recently, Trump administration's trade policies and the ensuing tariff war have dramatically highlighted the EU's security vulnerabilities. Trade policy is therefore no longer just about market access or efficiency, but increasingly about power, risk and security.

 

Against this backdrop, the authors ask to what extent an export-oriented growth model still makes sense, given that it leads to the European economy becoming heavily dependent on international developments. Can the EU rely on foreign demand while global markets are decoupling and geopolitical tensions are rising? How can trade policy contribute to economic resilience, social cohesion and sustainability?

 

A contemporary trade policy addressing emerging challenges

 

Raza and Tröster recommend shifting the focus inward, not following isolation, but following resilience. The EU should move towards an economic policy strategy based more strongly on domestic investment and growth. ‘Defensive regionalism’ could lessen external dependencies, encourage green and digital transformation, and build international partnerships. Reducing excessive dependencies, diversifying supply chains and building strategic capacities in the immediate vicinity are part of the overall picture. Strategic investments and closer coordination between trade and industrial policy are necessary to manage the green and digital transition. Selective protection of the EU economy from unfair competition must be tied to clear conditions.

 

At the same time, a more resilient EU trade strategy cannot ignore its global responsibilities. Social and environmental standards must be implemented in a fair and cooperative manner, which is why supporting trading partners is recommended rather than imposing conditions. Raza and Tröster also consider it a key question whether the EU views trade as a zero-sum game or as an area for cooperation. In a world marked by rivalry and uncertainty, focusing solely on competitiveness risks fuelling conflict and inequality. According to their perspective, an optimal strategy would integrate openness with resilience while aligning economic objectives with social and environmental responsibilities. Eventually, this new strategic direction for trade policy should also be aligned with the EU's general economic policy approach.

 

Trade policy in the interests of workers

 

For years, the Chamber of Labour has been making it clear that, in the context of EU trade policy, social and ecological progress can only be achieved through bold climate and sustainability agreements that prioritise social and environmental goals and focus on regional economic cycles. A modern trade policy should include enforceable sustainability standards, no special corporate rights, transparent and democratic negotiations with unions and NGOs, respect for national parliaments, and binding adoption of ILO core labour standards. Trade in products that fail to meet EU food standards, as well as the continued liberalisation of public services, should be discontinued. These steps are in line with the recommendations made by Raza and Tröster, which also provide guidance for future trade policy that focuses on the interests of workers, especially in times of geopolitical upheaval.

Further reading:

Werner Raza, Bernhard Tröster: Moving beyond Neoliberalism in EU Trade Policy

Foundation for European Progressive Studies: Moving beyond Neoliberalism in EU Trade Policy

ÖFSE: Moving Beyond Neoliberalism in EU Trade Policy: Why a New Approach Is Needed

Werner Raza: Inklusiver Regionalismus: Ein neuer Ansatz für die EU-Handelspolitik (only German)

AK EUROPA: Flood of parcels and dangerous products from online retailers. A visit to Liège Cargo Airport

AK EUROPA: Study on the EU Corporate Sustainability Due Diligence Directive: CSDDD as an opportunity to enforce human rights while strengthening the economy