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EU parliament and trade after the elections: less ‘green’, more open to deals?

The European Parliament elections closed on Sunday evening with one major result: a centre that is holding amidst a predicted far right surge. In the area of trade policy MEPs might well become more open to deal making, but the EU’s overall direction of travel will be harder to read with a self-eclipsed France. By Rob Francis and Iana Dreyer.

The centre-right group European Peoples’ Party gained significantly more seats thanks to gains in countries such as Germany, Poland and Spain and will thus remain the largest group in parliament.

According to provisional results announced last night, the self-declared “party of free and fair trade” increased their number of seats from 176 to 191 seats. The centre-left Socialists and Democrats came home in second place with 135 seats.

The big losers are the centrist Renew Europe group who have 19 fewer parliamentarians. and the Greens, who lost 19 seats, the latter among others victims of an anti ‘EU Green Deal’ backlash.

Some national parties still need to decide in which political group they want to participate. Meetings will take place between now and early July, by when the final composition of the parliament will be complete.

The new parliament will take its seat for the first time on 16 July.

The win for the EPP makes it almost certain that the next commission president will come from the same political group.

The EPP’s main candidate for the presidency is the incumbent Ursula von der Leyen. The former German defence minister first needs to be approved by EU member states and survive a subsequent vote in parliament.

There will be a solid pro-EU majority in parliament. Its three biggest representatives, the EPP, S&D, and Renew make up 409 seats in a parliament that needs 361 votes to achieve a majority.

This centre will require much internal discipline and cooperation with other groups such as the right-wing ECR – of which Italy’s Fratelli d’Italia is a member – or the shrunken Greens to obtain a majority.

Post ‘Green Deal’ environment

The results of the votes in the EU’s 27 member states indicate that, for trade policy at least, one can expect more continuity than a major rupture with recent practice – although probably less emphasis on Green Deal related issues.

A key question will be how the EU will move forward with new legislation that has created much friction with its trading partners such as the carbon border measure and the deforestation regulation.

Perhaps quite symbolically, two of the outgoing parliament’s most influential members on trade – the chair of the international trade committee, Bernd Lange, and the EPP’s trade coordinator Jörgen Warborn – were both re-elected.

A common thread running through many of the manifestos has been the emphasis on “reciprocity” or “mirror measures”.

This principle requires producers of agri-food products in third countries to abide by the same production rules as EU producers when exporting to the bloc.

Even the pro-trade EPP backs such a principle, saying that “a new smart trade policy” should be “based on the principle of reciprocity, especially to safeguard the interests of our farmers and fishers”.

The eclipse of the Greens could herald a more conducive environment for deal-making at a time when the EU will seek to diversify away its trade relationships from China and potentially a United States run by Donald Trump – depending how far the centrist coalition is ready to compromise on sustainability issues.

In an interview with Borderlex, Bernd Lange, who will seek t yet again to be chair of the trade committee, has indicated that the EU should be ready to change legislation such as the one on deforestation if it proves impossible to implement.

Free trade accords on the table include the one with Mercosur, and ongoing negotiations with India, Indonesia and other ASEAN members, as well as Australia. Most are wary of mirror clauses or sustainability-related sanctions.

The EPP surge will not necessarily make the parliament more amicable towards China.

Its manifesto warns of the trade deficit with Beijing totalling €390 billion in 2022 and says the EU’s de-risking strategy “must advance further”.

The EPP wants to “intensify” the EU’s trade relations with Latin America and the Indo-Pacific region “with new smart and fair trade agreements”, its manifesto indicates.

The S&D also wants “comprehensive trade and investment agreements”.

True to its tradition, the S&D emphasis is on ensuring that such pacts include “binding social (e.g. [International Labour Organization] core labour standards, governance conventions), human rights and environmental standards for the protection of workers and the environment as well as specific complaint, review and follow-up mechanisms, which we will implement jointly and on an equal footing with our trading partners”.

French eclipse

Following his party’s heavy defeat in the elections, with the far right Rassemblement National scoring a record high result, French president Emmanuel Macron dissolved his country’s parliament and called for elections scheduled for 30 June, with a second round on 7 July.

In the short term it is not clear if the French situation will affect the commission’s decision on slap duties on Chinese electric vehicles. An announcement of the preliminary results of its anti-subsidy investigation is due this week followed by provisional duties on 4 July.

France has been the major backer of the high-profile commission investigation. In contrast, much criticism of it has come from Germany. With the Germans sending a strong EPP contingent, could the calculus in the commission president’s office change?

Macron has been a major proponent of a new direction in EU trade policy towards green conditionality, more ‘strategic autonomy’ and greater ‘economic security’.

With Paris weaker in the EU game going forward – the Rassemblement National acting likely alone on the sidelines in parliament and possibly a lame-duck government sitting in Paris – the EU’s geopolitical and related trade policy direction may well become less easy to read. The French eclipse could also herald stasis and paralysis in key EU policy areas, not least trade.

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