In an interview with Borderlex, the Swedish Confederation of Enterprise’s director of interntional and EU affairs Anna Stellinger says that current EU trade actions could determine how our societies work in the long term. Immediate action is needed to keep essential trade flows going.
Q: How is Swedish business coping with the fallout from the COVID-19 pandemic?
The coronavirus outbreak is placing unprecedented pressure on the EU and international trade. Everybody’s top priority must be to stop its spread. Countries are acting decisively to limit the spread of the virus.
However, this crisis is not limited to people; coronavirus poses an increasing threat to the economy, jobs and trade. The situation is all more concerning as it is impossible to predict how much damage this pandemic will cause.
What is clear is that the current circumstances dictate that acting ‘alone’ is not a good way of putting European countries in a strong position. This makes the European Union even more important than it has been at any time since its inception.
The actions we now take – or do not take –will determine how our societies will look for future generations.
While it may seem tempting to erect barriers for people and goods across borders, ultimately these will not act as barriers to viruses. This is why it is worrying to see how quickly the protectionist reflex emerges in times of crisis.
Europe is now being hit by nationalistic, short-term, counterproductive and potentially unlawful measures. We must keep heads cool and ensure we make full use all the tools that are available to us.
We need to use national tools to provide companies with the correct conditions at home. We need European tools to ensure that the European single market – absolutely crucial to our exports, imports and our competitiveness – is not undermined. And we need global tools to remove unnecessary costs and unwanted barriers to importing the goods that we need in the current crisis.
Q: What worries you most at the moment?
Although various national actions to rescue companies and jobs have already been taken– for instance introducing short-term work, improving corporate liquidity, reviewing rules for paying VAT and employer contributions etc. – it is a concern that more forceful and essential European and global solutions have not yet been proposed.
Already, in all countries and in all types of business, we have seen hundreds of thousands of job losses. All trade flows are affected, although the movement of people and goods have been hit first.
Supply chains are breaking down and components are not reaching industries. In many cases, this is stopping production completely. Export bans inside and outside the EU are compounding this problem.
This is a shortage of containers is becoming a noticeable barrier to export.
Delays at national borders in the EU are causing disruptions and preventing products reaching their destination on time.
Limits to personal mobility is making it harder to move key competences across borders.
The EU’s own export restrictions on medical protective equipment run the risk of encouraging other countries to do the same. This would make it increasingly difficult to procure health care equipment providers for the EU.
Q: The Commission has mandated a system of Green Lanes, circulated guidelines authorising workers in critical professions to cross borders unhindered and is planning to waive duties on medical equipment. Is this not enough?
These are very valuable things to do. Swedish Enterprise welcomes those measures and we are glad to see that the “green lanes” initiative has resulted in a somewhat improved situation at intra-EU borders. The Commission’s new guidelines for mobility for workers is also a step in the right direction but those guidelines need to be followed through by member states – something I hope the Commission will monitor vigorously.
But we also need to see more forceful measures to help companies – regardless of the sector – that still produce today continue to do so and to sustain jobs. So far the focus has rightly been on transport services, medical and food supplies. But measures to keep supply chains open and production alive need to be much broader.
Q: So what remains to be done?
We need to consider all possible actions and use all available instruments. The goal should be to lay the foundations for the best possible conditions post-Corona that keeps as many companies – and jobs – viable. We have no time to wait. This is what I propose:
1. Make essential input goods duty free across industries. With many European countries closed down, input goods will be missing for those industries still producing. At the same time, other countries are opening up again, for example China. Unilaterally removing import duties on components that companies in the EU need could simplify access to input goods for companies.
2. Temporarily remove various trade defence instruments such as anti-dumping or other protective measures on those raw materials and inputs that companies struggle to access. Given the urgency of the situation this should be a priority for the EU.
3. Identify “key competences” at the EU level and restore mobility for people that qualify, as is currently done at national level. Not only are key competencies needed at the national level, they are also needed in other “systems”, such as within companies and value chains.
4. Remove EU import duties on essential medical equipment. There is no reason to wait; tariffs are not high and there would be limited impact on EU “domestic” producers.
5. Remove import duties on essential medical equipment at global level. The EU should be pushing for a removal of all such tariffs at multilateral level.
6. Prepare for the inevitability of an increasingly digital world. This should be obvious; the digitisation of production and trade has been obvious for years. In recent weeks and months, countries and businesses have been adapting to digital working methods. This development gives even more leverage in data flow negotiations – both within the WTO and in more ambitious free trade agreements.
7. Reinforce the EU single market. Trade should be frictionless, whether between Paris and Toulouse or Paris and Lisbon. The case for the free movement of people, goods, services and capital should also be self-evident. This makes it vital that the current obstacles introduced by national governments are not allowed to fragment the single market in the face of the inevitable calls for greater “self-sufficiency” following the crisis.
These are only a few actions that the EU should be putting on the table now. There is no time to lose.