Launch of the EU Strategic Toolbox Talks

EU Deputy Director General for Trade Maria Martin-Prat kicked off the Sovereign Europe Project’s new series of events, the EU Strategic Toolbox Talks, on Sept. 7, 2022 with a keynote address on EU trade policy in times of increasing geopolitical tensions. Our colleague, Cora Jungbluth chaired the event.

The question of how to deal with international economic relations has recently become the focus of public and political debate. This is due in particular to the increasing systemic rivalry with China and Russia’s war against Ukraine.

These developments have changed the perspective on globalization and made it clearer than ever that it not only contributes to increasing prosperity, but also creates critical dependencies that can be exploited politically.

Germany’s dependence on Russian gas is just one painful example. Dealing with economic interdependencies in general and critical dependencies arising from them in particular is therefore a key challenge for the EU in the coming years. This topic is also the focus of the Bertelsmann Stiftung’s new project “Sovereign Europe – Strategic Management of Global Interdependence”.

In order to address this broad topic in a targeted way and to engage with key target groups and the interested public, our project has launched the EU Strategic Toolbox Talks.

There, we want to address the tools and instruments that the EU already has, is currently developing, or perhaps should have in the future in order to be able to deal more strategically with its external economic relations.

In her keynote, Maria Martin-Prat explained that trade is increasingly used as a weapon and that the international order is in a transition from a rules-based to a power-based order. The EU therefore pursues a three-pronged trade strategy of openness, assertiveness and sustainability.

  • 1. Openness:

Trade remains the key to economic growth, which is increasingly taking place outside the EU: by 2024, 80 percent of global growth will take place in other parts of the world. The EU must therefore continue to focus on cooperation and exchange with key economic partners. Its goal remains the most stable and predictable possible framework for trade and a multilateral rules-based international order, even if multilateral solutions are difficult to implement at the present time.

Therefore, at the same time, a bilateral agenda, for example in the form of free trade agreements, is necessary to implement geopolitical goals and counter the influence of other states in regions such as Latin America or the EU’s immediate neighborhood.

In the future, it will be important to adopt a flexible approach in order to better take into consideration the situation in the partner countries. One instrument for this is the Trade and Technology Council, which the EU has now set up not only with the USA but also with India, and which offers low-threshold space for exchange and cooperation.

  • 2. Assertiveness:

The EU has already made great efforts to adapt its toolbox to better deal with the changing external environment and resulting distortions of competition by third countries. Examples include the yet-to-be-introduced anti-coercion instrument, which is essentially designed to protect the EU and its member states from coercion by third countries, and the newly introduced investment screening procedure, which is designed to protect key companies and technologies.

  • 3. Sustainability:

Sustainability is an integral part of the EU’s values. The EU therefore aims to include sustainability chapters in its free trade agreements. The most ambitious of this kind to date is contained in the recently concluded agreement with New Zealand.

The agreement on sustainable fisheries concluded at the last ministerial conference of the World Trade Organization (WTO) is also, from the EU’s perspective, an important partial success on the road to greater sustainability in international trade.

In her conclusion, Maria Martin-Prat once again made clear that trade policy is part of a broader geopolitical strategy, which, however, must not lose sight of the economic benefits of external economic relations. Therefore, it is important for the EU to remain economically open without being too vulnerable to critical dependencies.

In addition, the EU must also do its homework and work on its economic strength, for example, investing massively in green and digital transformation and strengthening the common market, the EU’s most important asset. EU trade policy will not work if the EU is not economically strong enough to enforce it.

About the author

Cora Jungbluth is a senior expert in the Europe’s Future Program at the Bertelsmann Stiftung. Her research focus is foreign direct investment and international trade (especially the role of emerging economies).