In tougher trading world, EU braces for future conflicts By Reuters

Several senior State Department officials leave posts: officials

© Reuters. FILE PHOTO: Press conference on the impact of trade agreements on agriculture at the headquarters of the European Commission, in Brussels.

By Philip Blenkinsop BRUSSELS (Reuters) – Toughened by the pain of Brexit, clashes with the Trump presidency and a new realism about China, a bruised European Union must establish a future trade policy designed to help it negotiate with its partners next week. . does not trust. Applying global standards and ensuring equitable market access will be the cornerstones of a new strategy to be unveiled by the European Commission, strikingly harsher in tone than the ‘Trade for all’ mantra of the last reform in 2015 As the coordinator of the 27 EU countries, the Commission wants trade to support a green and digital recovery, while emphasizing increased resistance to a future pandemic and fair play, the so-called demand for “equal conditions “which became the bone of contention in his post-Brexit talks with Britain. “We are strengthening our set of tools to be able to react in case third countries do not comply with the rules, so we are better equipped to protect ourselves,” Trade Commissioner Valdis Dombrovskis said at a seminar last week. Dombrovskis did not name the third countries and neither will the review, but few doubt that China and the United States are the center of attention. Law enforcement momentum was already picking up in 2019 when the EU first declared China a “systemic rival” and when the Trump administration crippled the World Trade Organization’s Appellate Body, removing the final arbiter. of world trade. “Trump’s unilateral action is what caused the EU to respond by strengthening its ability to act, not outside the WTO, but in a more swift and vigorous way,” said Andre Sapir, principal investigator of the Bruegel think tank, based in Brussels. EU enforcement regulation is a result. With its entry into force in weeks, it will allow the bloc to retaliate if a third country blocks dispute resolution, for example by appealing a ruling by a WTO panel to its nonexistent Appellate Body. The EU has agreed to an interim appeals system with trading partners, including China, but not the United States. Conceived in the face of Trump’s business tactics, the system could spell conflict with Joe Biden‘s new US administration. The international procurement instrument, which is likely to be agreed this year, is one more piece in the EU arsenal. It could penalize business partners that don’t open government tenders as much as the European Union does. It’s designed to push China toward reciprocity, but it could also pose a challenge to Biden’s new “Buy American Goods” order. The legislation was first introduced in 2012, but the EU countries blocked it. However, Germany and others have now changed their minds. ALSO MORE DIFFICULT WITH PARTNERS With a new chief enforcement officer, the European Union will also raise disputes with its free trade partners to ensure that agreements are fully adhered to, not only on market access, but also covering “sustainable issues.” “such as labor rights and environmental policy. The bloc kicked off 2021 with an arbitration panel that ruled in its favor over a dispute with South Korea, which the European Union said had failed to honor commitments on labor rights in a trade agreement that took effect a decade ago. It looks like the way of things to come, with another panel ruling related to Ukraine’s timber exports and another due to poultry exports to southern Africa. The EU’s deals with Britain on trade and China on investment, both reached in late December, are models of how to strike deals with partners that are not really trusted, both full of sections on how to resolve disputes. The European Union wants to promote its values, insisting, for example, that all free trade partners sign the Paris agreement on climate change. It remains to be seen if the app has strength. Critics say that while disputes over market access may result in sanctions, enforcement of environmental or labor standards, as in the Korea and China agreements, comes in the form of a panel finding that is more a shameful exercise. The EU’s new arsenal may never be used, particularly against potential new US allies, and serve more to increase leverage in trade-related discussions. “The EU has preferred the diplomatic route,” said Guillaume Van der Loo, a researcher at the EPC think tanks and the Egmont Institute. “Will he use his bazookas now? I think only as a last resort. He will seek other avenues first.”