Last week, the citizens across the European Union voted for a new European Parliament. The European Parliament also has an important voice in trade policy, so in this blog post GED asks the changes in the composition of the EU parliament mean for the EU trade policy.

EU Elections 2019: What changed in the new European Parliament?

The chart below compares the distribution of seats in the European Parliament in the last session to the new configuration. The faint outer pie shows the seats per party for the legislative period 2014-2019, the inner pie shows the distribution of seats for 2019-2024.

European Parliament Website
Source: European Parliament

The most important development after the EU Election is that the centre-right European People’s Party (EPP) and the Socialists and Democrats (S&D) no longer have a majority between them. In the last parliament, they used their majority to advance important legislative projects. The liberal party (ALDE) and the Greens have gained seats on the pro-European side of the parliament, as have the eurosceptics in the ECR, EFDD and ENF. The European Parliament is thus more fragmented. It is has a stronger Eurosceptic voice. Decisions will largely have to made with majorities involving the EPP and the S&D but also either Greens or ALDE or both.

What do these changes mean for Trade Policy?

These changing majorities have of course implications for trade policy. The European Parliament has a strong influence in trade policy, most importantly as it gets to vote on all free trade agreements (FTAs) that the EU concludes.  But it also impacts trade through the work of the trade committee that accompanies current developments in EU trade policy.

Some people have argued that the composition of the new parliament will make it more difficult to pass new trade deals as the eurosceptics tend to be less sympathetic to trade. This, however, is not necessarily the case. First, the eurosceptics are not a monolithic bloc. The different parties actually have a wide range of views on various topics. The British conservatives, for example, who sit with the ECR group, are actually very supportive of trade deals. This applies to other Eurosceptic parties too. The second reason is that often they tend to take part only in the debate, not in the voting.  This might of course change if something is very politicised – as for example TTIP would have been – but is not a constraint for the usual making of trade policy.

Where the new composition of the EP actually has an impact on trade policy, is through the composition of the pro-european bloc. As EPP and S&D no longer hold a majority, they increasingly need to take considerations of the ALDE and the Greens on board. In particular the Green party might raise the importance of some points in trade policy.

For example, the Greens were generally amongst the most sceptical parties in the TTIP discussion. They voiced massive concerns over agricultural practices (genetically modified food, use of hormones in meat production, etc.) in the US which they did not want to see entering the EU following a trade agreement. This will make it more difficult for the EU to strike deals with trading partners that have a strong agricultural sectors. As the US side is currently pushing for agriculture to be included in the EU-US trade talks, this could have strong repercussions.

If the US-EU talks break down, it is likely that President Trump is going to introduce tariffs on EU cars, which would have a strong negative effect on Germany but also other European economies. Nobody would argue in favour of the EU weakening its standards for an EU-US trade agreement. However, in the TTIP debate, some Greens have continued to nurture an irrational fear concerning the content of the trade agreement and US standards. If fake facts and irrational panic became a regular occurrence in EU trade policy, that would not serve the EU’s interest well.

The Greens but also to some degree ALDE are also champions of the “trade and…”-agenda. This strand of policymaking calls for linking trade questions with various other societal concerns that in their view should be addressed through the lever of trade policy. For example, the trade and environment agenda would mean that environmental standards and concerns are embedded in trade agreements and other trade policy developments. Similarly, the same would be done for women empowerment, animal welfare, etc.

The change on trade policy is unlikely to be very large, as the European Commission is already taking a lot of these concerns into account – as they should be doing. However, it is likely that parts of this agenda will be further enhanced. This can be a good thing, if trade actually works as a lever to achieve these important goals. It could also be a bad thing if trade policy doesn’t achieve the desired societal change in the trading partners economies.

Do the results of the EU Elections have an effect of Trade Policy?

The new European Parliament after the EU Elections is still capable of playing a constructive part in using trade policy to enhance the performance of the European economy. There are enough players who recognise the importance of trade for the European business model to support a positive and progressive trade agenda. However, it is important that all players stick to facts rather than creating irrational fear about trade policy developments. The new parliament requires consensus among responsible policymakers and consensus can only work if concerns are being voiced constructively.