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The next decade of EU trade policy: confronting global challenges?

Research report

Written by Dirk Willem te Velde

Research report

In January, the European Commission (EC) launched a new proposed trade strategy - ‘Trade, Growth and Development: Tailoring trade and investment policy for those countries most in need’. It is the first on the topic since 2002, and is intended to set out a direction of travel for the next decade.

This report brings together 18 essays from the world’s leading trade and development experts to discuss the main issues covered.

The communication (a) reviews changes in the world (‘the great reshuffle’), (b) summarises what the EU has achieved over the past decade in terms of trade and investment policy with respect to developing countries, and (c) lays out an agenda to 2020 or so, for the EU itself and within the multilateral context. There is also a short section on what developing countries must do.

In response, the EU Council issued its Conclusions on 16 March, stating that the Council is committed to:

  • Promoting a multilateral agenda for trade and development (e.g. pursuing the Doha Round and the LDC package);
  • Promoting market access for developing countries (e.g. the Generalised System of Preferences (GSP), Economic Partnership Agreements (EPAs));
  • Working towards sustainable development through a green economy (e.g. liberalisation of green goods and services, financing and public–private partnerships); and
  • Developing more focused, targeted and coordinated Aid for Trade (AfT).

The essays are divided into four separate groups:

  1. General views on the EC Communication on Trade, Growth and Development;
  2. Trade-related instruments to support trade, investment and growth;
  3. Other instruments to support trade, investment and growth; and
  4. Regional views on the EC Communication.

These essays suggest there is much to celebrate in the EU documents, for example:

  • The identification of a number of global challenges, called a ‘reshuffle’;
  • The recognition of some major dilemmas, such as (1) whether and how to differentiate in a heterogeneous world, and (2) whether to use trade and investment policy to address climate change and other environmental problems; and
  • The formulation of good solutions such as targeted AfT and some other possible offers in the Communication, but which are narrowed down significantly in the Council Conclusions.

However, these essays also flag up a series of major concerns, including:

  • There is a major concern that the EU is moving towards protectionism
  • There is no clear strategy behind the EU’s approach towards differentiation, which is currently applied largely on an ad hoc basis
  • The Communication neglects the importance of non-trade policies for developing country growth and fails in its duty to promote Policy Coherence for Development (PCD)
  • The EU is taking the wrong approach to the role of trade in tackling global problems
  • Trade policy has little meaning without being embedded in and linked to policies for growth.