Debate: Need to complete new trade agreements for sustainable growth, competitiveness and the EU’s strategic autonomy
Date: WEDNESDAY, 4 OCTOBER 2023
Speaker: Kadri Simson
Language: EN

The EU is navigating an increasingly challenging international environment. We face growing geopolitical tensions as a result of strategic competition between the United States and China, the war in Ukraine and the crisis of multilateralism. We are confronted with a flurry of economic challenges such as inflation, supply chain disruptions, weaponisation of dependencies and the risk of subsidiaries. Finally, we experience the immediate need to confront climate change and support other sustainability objectives in the areas of labour, environment and development. The risk of fragmentation is very real and its economic consequences would be dire. Thankfully, we do not have to and should not passively accept this risk. We can minimise it. This challenging environment requires a comprehensive and proactive response involving a broad range of policy tools. Trade policy is one of the key contributors to achieving sustainable growth, competitiveness and open strategic autonomy. And this is because trade policy and, in particular, our free trade agreements make us stronger. From an economic perspective, they make us more dynamic, more competitive and more resilient. FTAs make our economy more dynamic by connecting us to other growth regions, encouraging innovation and helping create and sustain high-quality jobs. EU exports now support 38 million jobs, up by 11 million jobs from 2010. FTAs make our economy more competitive by securing the imports we need at competitive prices, while at the same time creating export opportunities which allow us and our businesses to grow and help increase efficiency through economies of scale. Also, FTAs make our economy more resilient. They contribute to the diversification of our sources of imports and export. For example, finalising our ongoing FTA negotiations would have more than compensated for the market losses we experienced as a result of Russia’s illegal invasion of Ukraine. From a geopolitical perspective, trade agreements cement our partnerships and alliances in these difficult times of growing geopolitical tensions. They help us build trust and understanding with others and deepen political relations with a vast array of partners ranging from like-minded advanced economies to emerging ones. Finally, from a sustainability perspective, our FTAs provide a platform for cooperation on advancing sustainability objectives and raising sustainability standards together with our partners globally. To that end, our FTAs include chapters on trade and sustainable development, with a broad set of binding commitments grounded in the international framework and in international labour, environment and climate standards. The EU already has one of the greatest networks of FTAs globally. But we cannot sit on our hands as the context in which we operate evolves and our trade partners continue to deepen their trade ties. This is why we must maintain a very active FTA agenda. Our competitiveness, our economic security and our ability to effect change towards a more sustainable future depends on it. The importance of continuing to drive open and fair trade was emphasised by President von der Leyen in the State of the European Union speech just a few weeks ago. Indeed, advancing on our trade agreements is a key part of our de-risking strategy and of our efforts to make it easier to do business. Smart trade delivers good jobs and prosperity. In recent years, we have achieved much progress, but more remains to be done. We have now reached a stage where we have several agreements already negotiated and awaiting signature and ratification. Our credibility as an economic partner and geopolitical actor depends on our ability to do so. At the same time, we have several negotiations underway with a vast array of partners, including advanced economies as well as massive emerging markets. While each of these negotiations has its particularities and requires understanding and flexibility, they all form part of a broader engagement effort that we, as the European Union, need to make to achieve our objectives in today’s world. What this means practically is first ratifying those agreements we have already negotiated. Ensuring the conclusion of the FTA with New Zealand in order to let the agreement enter into force as early as possible in 2024. Advancing rapidly towards the signature and conclusion of the recently finalised agreements with Chile and Kenya. Second, it means advancing with our negotiating agenda. To finalise as quickly as possible the agreements with Australia, Mexico, Mercosur, India and Indonesia. We have also recently relaunched negotiations with Thailand. Finally, we should not forget that our FTAs are just one of the tools at our disposal to deepen relations with third countries. Our trade continues to be primarily based on WTO tariffs and WTO rules. We must continue to invest in supporting and reforming the rules-based multilateral trading system, which is the guarantor of stability and predictability in international trade and sets the guardrails against protectionism. We will also continue to maintain sustainability considerations in the WTO. At the other end of the spectrum, we continue to develop various flexible approaches to deepening cooperation with third countries in areas of mutual interest. The EU, together with Ecuador, Kenya and New Zealand, launched the Trade Ministers Coalition for Climate to enhance high-level dialogue on the trade and climate nexus. It is here that initiatives such as the trade and technology councils with the United States and India or the Critical Raw Materials Club come in. This is also why we are developing digital trade agreements and raw material partnerships. These should be two complementary tracks of a both active and flexible trade policy. We should work together to make sure that it delivers.