Internal EU politics, Latest news

Dombrovskis nomination to trade post signals continuity, priority to US and China relations

Valdis Dombrovskis will not take over the European Commission’s trade portfolio as a novice. But his tasks will be challenging.

The former Latvian prime minister served as vice-president of the European Commission during the last political term in 2016, overseeing financial, Euro zone issues as well as investment. In this role he was involved in shaping investment chapters of trade agreements, running a High Level Economic and Trade Dialogue with China and overseeing the ongoing EU-China investment agreement negotiations.

Dombrovskis stayed on under the von der Leyen Commission. One of his remits before his nomination to the full trade portfolio today in Brussels was “ensuring a level playing field in trade and economic relations with international partners” – essentially code language for ‘China’.

Now the Latvian commissioner will also have to deal with another major economic power with which the EU has slid into a state of permanent trade policy crisis: the United States.

“We are in turbulent waters as regards global trade,” Dombrovskis told a Bloomberg television channel, citing relations with the US, relations with China and reform of the World Trade Organization as the top three issues he will want to deal with.

“We will continue to advance the different trade agreements in which we are in different stages of negotiating. We will continue to work on an investment agreement with China,” Dombrovskis said.

The Latvian’s first comments on trade policy only minutes into his new role referred to the transatlantic agenda as Brussels moved to set its recent lobster-for-lighter deal with the US into law. “This is a balanced and reciprocal agreement for both sides: a true win-win outcome + an important step towards improving #Transatlantic relations,” the new EU trade chief tweeted.

“As regards our negotiations with the US, we are currently discussing a few mini-deals and in a sense the good news is that we are avoiding further escalation of trade conflicts,” said Dombrovskis on TV.

More of the same

Will Dombrovski’s position or personality  make a difference? “I hardly think personality or match weight actually matters,” quipped Hosuk Lee-Makiyama, a director at the European Centre for International Political Economy.

To Brussels business insiders, Dombrovski’s nomination is a reassuring signal coming out of the European Commission. “It is a good choice to ensure continuity in the EU’s trade agenda,” Luisa Santos, head of international relations at BusinessEurope, told Borderlex.

“Giving the trade portfolio to a vice-president is also showing the importance of this file for the EU. It reinforces the political weight of the trade commissioner vis-à-vis our trading partners,” said Santos.

The coordinator for trade at the European People’s Party in the European Parliament Christophe Hansen is also pleased. “Allocation of @Trade_EU to portfolio of Executive VP @VDombrovskis  shows mounting  importance of Trade in recovery strategy: #Trade has a major role to play as catalyst for economic recovery & diversification of supply chains,” Hansen tweeted.

The international trade committee’s chair Bernd Lange for his part was relieved that the nomination procedure has proceeded swiftly so far: “Good that the calls for a swift nomination have been heeded,” Lange tweeted.

The right clout for a China deal?

To many the choice of Dombrovskis signals a very Berlin-friendly trade policy course: a pragmatic pro-trade and pro trade agreement agenda that is amendable to making ‘deals’ with the likes of the US. Perhaps not entirely by coincidence Dombrovski’s remarks on the current strategy vis-à-vis the US echo those made by Germany’s economics minister Peter Altmaier to the European Parliament last week.

“Dombrovskis certainly has the clout and experience – as well as the persistence and determination – required to clinch the so-far elusive investment deal with Beijing,” reckons Shada Islam, CEO of New Horizons, a Brussels-based advisory firm.

Ms Islam believes Dombrovskis is well respected by Chinese policymakers. “If he can get that deal done this year – or at least secure a sign from Beijing at the upcoming online EU-China high-level meeting that it is speeding up the hitherto slow negotiating process – he will make a brilliant entry on the global stage as Europe’s trade pointman.”

But will the new trade chief in Brussels be able to navigate the rough waters of domestic European trade politics? Among other this involves cultivating the art of cajoling MEPs whose priorities tend to lie with labour and human rights, climate change – and defending domestic farming interests.

Dombrovskis will be put to the test on these matters at the latest when new trade agreements – such as those with the South American bloc Mercosur and with Mexico – are sent to the legislative body for ratification in the coming months.

The Latvian will also be put to the test on the post-Brexit trade agreement with the United Kingdom.

But first he will need to clear the hurdle of a hearing in the European Parliament in the coming weeks – a date has yet to be announced.

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