EEA EFTA, EU trade policies, Latest news, Perspectives, Turkey & Med, Ukraine, Russia & CIS

Perspectives: Ukraine and the renewal of EU trade and neighbourhood policy

The desire of an invaded Ukraine to join the EU has reawakened debate on an enlargement process that was largely stuck. The varied global responses to Russia’s aggression demand a similar reconsideration of the EU’s trade narrative.

The pandemic was perhaps just the prelude. Just as the world started to contemplate life beyond lockdowns and perhaps some sort of return to normality, Russia’s invasion of Ukraine suggests a more lasting change to the global order.

Russia’s suggestion that they can be part of the solution to an impending global food crisis that they initiated changes international relations to blackmail, in line with what has already been seen for energy supplies. The concerns over China as a dominant goods producer must be amplified many times when it seems that they are on the same side as Russia and could behave in the same way.

Under such circumstances, trade policy must be affected. The countries most opposed to Russia’s actions and thus placing sanctions delineate clearer than before the EU’s economic allies, stretching from the US to Japan, South Korea and Singapore. The phrase ‘friend-shoring’ has been used in the US with reference to these countries, but its meaning is yet to be defined.

Regionally, Ukraine, Georgia and Moldova are more than ever looking west to the EU for inspiration, while Russia is looking east towards China. This puts EU neighbourhood relations back in the spotlight.

There is also a question of whether potential security allies such as India or south American countries should be tempted with economic preference to strengthen ties.

Events, and the need to respond to them, have been too quick for a significant debate about how this affects EU trade policy. That debate has to happen now.

A policy that had become increasingly about autonomy in regulation and transactional in its trade relationships has to be considered anew in relation to values and allies. This might not be a comfortable experience.

Barriers between the EU and Europe exposed by Ukraine

Accession of new member states to the EU has been a low priority for some years, with a widespread if unspoken belief among many members that expansion will lead to more trouble than the benefits gained.

The ideals that drove a European integration project seemed largely in the past, replaced by the process of accession and membership, until an invaded country demonstrated that there was also a modern relevance to the 1950s vision – one that should not be forgotten.

Trade integration had similarly been assumed largely complete, notwithstanding often difficult relationships with neighbours. The general assumption was of the EU as regional hegemon which others must follow, on the basis of largely cursory consultation. That is not a particularly attractive vision to those others.

The Ukraine crisis provides the opportunity for the EU to show a regional vision inclusive of non-members, with at the very least far more suggestion of shared values and endeavour for the good of the continent, and a welcoming approach to new members.

The recurrent suggestions most associated with France of core EU and outer layers however show the hurdles however, in particular the underlying fear that some Member States would not actually welcome membership for Ukraine for many years to come.

Before it left the EU it was after all the UK that provided the greatest support for the bloc’s expansion. After the UK’s departure, it is unclear who really advocates for an open approach to neighbours in the EU.

If the crisis solidarity shown to Ukraine is to have any longer lasting impact, this needs to change.

A vision for the WTO, and for allies

The EU has been on relative policy shift from seeking trade liberalising deals to ‘autonomy’. This is in line with global trends –  and the EU can be seen as the least disruptive of the trade superpowers.

There is certainly something in the idea of the EU being the best of the trade superpowers as regards preserving global institutions and rules, as opposed to the United States continuing to prevent the functioning of the appellate body at the WTO in Geneva, and China failing to take any leadership role in the multilateral trading system. Such respect for rules should be a given – but given global trends for the EU to restate this fact and seek constructive engagement has value in itself.

But where a renewed programme from Brussels is most obviously needed is with allies. Beyond concluding some outstanding free trade agreements, this surely has to mean extending the logic of the Trade and Technology Council consultations with the US to new subjects and to new partners.

The ‘open strategic autonomy’ agenda may be conceived as being a response to risks posed by China, all the more understandable after Russia’s actions, but there has been little attempt to consult for example on the EU’s new Carbon Border Adjustment Measure or on other sustainability measures such as corporate due diligence.

More broadly, it is still not clear that there is an EU vision for the world of trade to come, which may yet hamper the idea of making progress in closing FTAs under the coming trade-friendly Council presidencies of the Czech Republic and Sweden.

There is also the question of how to handle relations with countries such as India that have concerns about China, but do not share the same views as to EU action – notably sanctions – towards Russia. There is a suggestion that the EU and US should be providing trade incentives. The issue at the very least needs serious discussion in the new context.

The longer the EU goes without starting to debate how the crisis must lead to adaptation in regional or global trade policy, the more it will seem like a missed opportunity. For it is often from a time of crisis that the most far-sighted visions come. Just ask the founders of the European integration project.

 

 David Henig runs the column ‘Perspectives’ on the politics of global trade for Borderlex. He is also a UK director at the think tank ECIPE.

Leave a Comment

Your email address will not be published. Required fields are marked *

*

This site uses Akismet to reduce spam. Learn how your comment data is processed.