The changes in the global economy over the past 30 years have presented new challenges for the EU. These include, notably, China's economic rise and its challenge to the United States as a superpower, as well as the transition to a digital and green economy. In this new analysis for SIEPS, Christoph Herrmann, Professor of European and International Economic Law at the University of Passau, examines how the EU has reshaped its trade policy in light of the new geo-economic situation.
After a brief historical overview of the development of trade policy since 1989, he describes how the European Union has adjusted its trade policy strategy in recent years and examines some of the key instruments that align with the ambition of achieving ‘open strategic autonomy’. Examples include:
Changes to trade defence instruments
Tightened export controls
A new framework for reviewing foreign direct investments
Protection against economic coercion by third countries (still being negotiated)
The author then discusses the legal issues raised by the EU's response, both in relation to its own legal order and the framework of the World Trade Organization. He argues that the Union's actions are realistic, understandable, and perhaps necessary, but problematic in terms of the division of competence between the EU and the Member States. Furthermore, in relation to international law, these actions increasingly operate in a legal grey area.
Finally, the author suggests that trade policy alone is insufficient for the EU to successfully pursue a foreign policy aligned with its interests and values – additional, non-trade measures are needed. The EU also requires a genuinely common foreign policy rooted in its primary law. Until that becomes a reality, the EU will have a weak voice as a geo-economic actor.