Few thoughts on the EU Trade Policy Day

Thursday, November 29, 2018 - 12:22

I was dragging my feet yesterday, heading for the EU Trade Policy Day. It is a large annual event organised by the European Commission to discuss where the EU trade policy is at, and where it is heading. Why dragging my feet? Because the way the event was framed didn’t seem to leave room to question mainstream economic beliefs – participants were supposed to discuss how to tackle the threats to open trade and respond to anti-globalisation. But nothing was said about reforming the way we trade or addressing people’s concerns regarding the impacts of trade liberalisation. There were no NGO or trade union representatives on the panels; and our publications about gender and trade were swiftly discarded – only DG Trade documents were allowed for display. Bad start…

But after the first plenary, the debate shifted significantly towards sustainability, inequality, climate, transparency, and the need to consult (not just inform) civil society organisations. The fact that international trade is not only having positive, but also detrimental effects on people and planet was repeatedly raised. There were numerous references to losers and winners.  

During the course of the day, it became evident that there are deep contradictions between the trade policy and other EU political objectives, and that the EU trade policy needs to change in order to be consistent with climate, environment and social objectives. The faith of this Commission in the growth mantra was questioned in view of its incompatibility with planetary boundaries. Does economic growth really drive development? Are we measuring the right things, or only the easiest to measure?

Questions were raised about the greenhouse gas emissions caused by international trade, and the compatibility of the global value chains model promoted by the EU trade policy with the objective to consume and produce sustainably, which may involve local sourcing for certain products. Is international trade a good thing in all sectors, or should certain sectors not be included in trade agreements? How to ensure that we don’t import products that contribute to deforestation? How to deal with the shrinking tax base for governments – a side effect of trade and finance globalisation, translating in a reduced capacity to carry redistributive policies. While trade agreements were initially supposed to ensure an equal treatment between national and foreign economic actors, the broader context now means that they paradoxically aggravate inequality between local economic actors and large transnational companies able to shift profits in countries where they pay low or no tax.

Many questions were left unanswered, but the fact that they were raised in this official meeting bringing together hundreds of diverse interest groups is a reason for hope!

I had the chance to discuss at lunch time with the representative of an industry association –anxiety is high, with Chinese metal coming to Europe without serious quality checks nor rules ensuring that the production process respects environmental standards equivalent to those imposed on European producers. “Is that level playing field?”, asked my interlocutor?

A final panel was supposed to discuss how to rebuke critics of free trade, but ended up talking about how to close the trust gap between decision-makers and citizens: People paid a price for Europe’s good economic indicators, and they don’t feel represented. “Trade gains are relatively low”, said one of the experts. The EU was asked to objectively communicate not only about international trade’s benefits, but also about its negative impacts and limitations. A case in point: The Commission released yesterday an in-depth study about the effects of EU exports on job creation. However, there is not a word about the jobs and livelihoods destroyed by those very policies. Is that partial data able to inform policy making and debates with citizens? “When officials say that international trade is the best tool to deliver growth, jobs and development, it’s silly”, said one of the panellists. “It’s a tool among many others”. Overselling trade liberalisation outcomes is generating expectations that can’t be met, and it backfires.

Slow progress on tax justice, responsible business conduct, social rights and redistributive policies contrasts starkly with the rapid pace to conclude as many free trade agreements as possible before the term of this Commission. The best way for people to support multilateralism and regulated international trade is by speaking truth, but also by designing a different trade and investment policy. There is a mid-way between protectionism and insufficiently regulated global trade! We need a long-term vision for trade, that goes much beyond the inclusion of a sustainable development chapter in free trade agreements.