EU Trade Policy: business opportunities and way forward

Open, sustainable and assertive. These are the three keywords of the new EU Trade Policy that the Executive Vice-President and Trade Commissioner, Valdis Dombrovskis, outlined in his speech at the opening of the EU Industry Days on 26 February.

The Industry Days are at their 4th edition and aim to gather policymakers, industry representatives and stakeholders to reflect together on the challenges ahead and the best practices put forward by the European business community. During this 4-day celebration at the end of February, the EU Executive Agency for Small and Medium-sized Enterprises (EASME) showcased 31 projects funded by the European Commission which targeted the digitalization, climate-neutrality and competitiveness of the post-COVID European economy.

EU trade policy tailored to the EU’s twin transition

It is in this context that Executive VP Dombrovskis, in his opening speech, addressed the participants of the first day with an explicit reference to open trade, sustainable growth and assertive leadership. The way forward for the EU in the post-COVID era is marked by a renewed stimulus to the green and digital transitions in order to build a competitive advantage for European companies on global markets. EU trade policy plays a pivotal role in leveraging on the EU leadership in green technologies, but at the backbone of the strengthened trade policy is the industrial policy. The acknowledgement of the twin transition also in the EU’s external trade policy once again highlights the opportunities for innovative European companies to take a leading role not only on the European, but also the global stage.

European exports count for 35 million jobs and a 12% wage premium due to trade-induced competitiveness. However, the EU Industrial Strategy, which has been put forward one year ago, needs to be updated to take into account the reality of the post-COVID world. To do so, what is required is the reestablishment of the fully functioning Single Market and the recovery of national economies through the NextGenerationEU package, which is financed by the EU budget and which the Member States should use not only to build back from the crisis, but also to invest in the long-term competitiveness of the industry. The NextGenerationEU package provides tangible funding opportunities for sustainable and digital projects through the Recovery and Resilience Facility.

The twin transition of digital and sustainable policies, and the acceleration of the transformation and recovery, is achieved by delivering on the European Green Deal. The fostered digitalization of the economy will trigger further structural changes and increase productivity and trade. The business opportunities unleashed by the twin transition will touch upon different sectors of the economy, including the transport and logistical sectors.

Automotive sector and SMEs as case examples

For example, the automotive value chain is indeed one of the main sectors where the adoption of new technologies, combined with the use of specific raw materials to be imported through trade, can provide a tangible benefit to our industry. The production of batteries and semi-conductors is just an example of how this uptake could be capitalized on for our economy, and they denote a sector where the EU can easily boost its strategic capacity through public and private partnership. As such, EU trade policy will present the European automotive sector with a crucial boost to ensure its global competitiveness.

Therefore, the European Union needs to remove the barriers to the uptake of the new technologies, especially for SMEs. Likewise, a lack of digital skills is to be addressed, in order to further upskill our workforce and increase our trade surplus. A greater role for the EU sustainability agenda and support for the Paris Climate ambitions is therefore envisaged for the next years. Learn more about our sustainability sector here.

Open strategic autonomy at global level

However, the EU efforts in increasing the sustainability of the industry and avoiding carbon leakage may not be sufficient if they do not take place in a framework of concertation and close cooperation with other global actors. To do so, the EU is ready to take the lead and be recognized a benchmark of the economic benefit of sustainable policies applied to the industrial system.

It is for this reason that the EU trade policy must work in synergy with other key players, including industrial policy. The assertive approach of the EU trade policy will help protect the European businesses against the abuse and the unfair trading practices of those countries that will not abide by the sustainable vows. Concretely, new legislative proposals on the screening of foreign subsidies in the Single Market will aim to support European companies. Additionally, a new anti-coercion instrument is in the making, which will enable the EU to act fast when its openness is abused.

Open strategic autonomy is the key concept to lead the way forward for the EU, which can be achieved through a close cooperation between trade and industry, a liberalization of trade in environmental goods and services, a boost to e-commerce and, last but not least, an increased green and digital transformations of our economy.

You might also be interested in:

Digital tax: insights into the latest global and EU developments