Trade off
These are anxious times for the EU’s free traders. With the enthusiastic backing of France and its allies, Brussels is seeking to build up the union’s geopolitical power in the pursuit of “strategic autonomy,” hardening trade defences and intervening ever more deeply in key industrial sectors, writes Sam Fleming.
Context: Next month the European Commission will propose an economic security strategy aimed at further protecting the EU’s interests, in response to US pressure for a tougher approach to China in particular.
This sits uncomfortably with EU governments that like to proclaim their enthusiasm for an open, rules-based global trading system. They aren’t alone: In a new policy paper, lobby group BusinessEurope makes the corporate case for the EU to stay in touch with its liberal roots.
There cannot be strategic autonomy without openness, according to the paper. Trade agreements with New Zealand, Chile, Mexico and Mercosur should therefore be brought into force during the lifespan of the current commission, it says, calling for accelerated talks with Australia, India and Indonesia.
It strikes a notably sceptical note when assessing two key policy innovations likely to feature in the commission’s strategy paper: the possible creation of new powers to impose EU-wide export controls on key technologies, coupled with tighter scrutiny of outbound investment flows.
BusinessEurope says that, on principle, it does not support limitations on outbound investments, arguing these should only be used in “exceptional cases” to address serious security concerns.
Export controls, meanwhile, should only be imposed on a case-by-case basis in consultation with the private sector and in co-ordination with key international allies.
Businesses are not the only questioning voices. With EU trade ministers due to meet tomorrow, more “liberal-minded” member states are worried the EU is creating too many trade barriers, said one EU diplomat.
There is, accordingly, little chance of capitals reaching a quick consensus on the contentious topic of investment controls. When it comes to the commission’s wider economic security proposals, “the strongest proponents of a more liberal market economy are a bit concerned about what this will entail in terms of obstacles to trade,” the diplomat added.
The G7 must accept that it cannot run the world, writes Martin Wolf, even if it is still the world’s most powerful and cohesive economic bloc and produces all leading reserve currencies.