Bringing a gun to trade negotiations
Euractiv | 2 June 2022
Bringing a gun to trade negotiations
By János Ammann
The chair of the European Parliament’s trade committee Bernd Lange argues that the EU needs more defensive instruments to safeguard its trade interests in an environment where multilateral trade rules are not respected.
It’s a sunny Wednesday morning, and Bernd Lange is in just as sunny a mood when he welcomes EURACTIV to his office. First elected to the European Parliament in 2009, he has been around for a while, as evidenced by his nice corner office from which he has a lovely view over the Brussels European quarter.
However, during his time in office, the trade landscape has shifted fundamentally.
Lost respect for trade rules
“Ten years ago, our principal approach was to open markets, trying to reduce tariffs and non-tariff barriers, thinking that everybody respects global rules, be it WTO rules or bilateral ones. This is not the case anymore,” Lange said.
“We see trade used as a weapon, which is what China is doing against Lithuania. We see trade used as a managed tool, like in the US, and we see a lot of protective measures, particularly regarding the pandemic.”
These developments are why the EU has been focusing on getting more bilateral trade deals done and why the trading bloc is building up its own defensive capacities.
“We need more defensive instruments to protect our economic and political interests,” Lange said, referring to the public procurement instrument and the trade enforcement regulation that give the EU more power to strike back at unfair trade practices unilaterally.
The gun on the table
Asked whether the EU would not itself undermine the multilateral trade order by applying all these unilateral measures, Lange argued that the purpose of the instruments was to defend the trade rules.
“Sometimes you have to put a gun on the table, even when you know that you might not use it,” he said.
Potentially the most powerful gun among the new defensive instruments is the anti-coercion instrument that the EU Commission proposed in December 2021.
The instrument should make it easier for the EU to take a wide range of coercive measures if a country tries to use economic measures to pressure another country to do its bidding. China’s trade blockade against Lithuania is the most recent example of this.
Bernd Lange is the Parliament’s rapporteur on this file, tasked with finding a common position of Parliament to then negotiate with EU member states. And in Parliament, the support for the anti-coercion tool is strong, he said.
“The only point where we will see some discussion is whether we should establish a new agency to deal with this anti-coercion instrument,” he said. In his opinion, however, this is not necessary. “I think this is the duty of the Commission,” Lange argued.
Who can pull the trigger?
However, the discussions could get more intense once the negotiations with the EU member states start.
“Some Scandinavian countries are quite reluctant,” Lange told EURACTIV, saying that the main point of discussion was who could decide to take coercive measures.
He deemed it unlikely that the decision power would rest solely on the EU Commission, but he also opposed a decision mechanism that would require the unanimous agreement of the EU member states.
“I can guarantee that I will never accept this,” Lange said.
New trade deals on the horizon
One of the reasons for Lange’s sunny mood on this Wednesday morning might have been the prospect of the Czech presidency of the EU Council that will begin in July.
While the French presidency in the first half of 2022 focused very much on the EU’s assertiveness in its trade policy, the Czechs will likey push for even more free trade agreements.
“I’m quite optimistic that we can conclude the agreement with Chile quite soon, possibly under the Czech presidency, and New Zealand as well,” he told EURACTIV.
Until the end of his third term in the European Parliament, Lange wants to not only equip the EU’s trade policy with stronger guns but also wants to conclude several bilateral free trade agreements.
“My goal is to have Mexico, Chile, Australia, and New Zealand ratified in this legislative term.”