If the furore around Golfgate had any upside it was that it underlined how fortunate Ireland was to hold the powerful Trade portfolio of the European Commission.
One of former Commissioner Hogan’s last significant acts was to fast track a planned comprehensive review of the EU’s trade policy in view of the disruptive effects of the pandemic. For an open trading economy like Ireland, the stakes are high.
It has been five years since the previous EU Commissioner for Trade, Cecilia Malmstrom, outlined her ‘Trade for All’ strategy. Since then the stable and predictable environment required for international trade to prosper has been seriously undermined. Now the EU is promoting what it calls ‘Open Strategic Autonomy’.
Geopolitical tensions between the US and China have escalated sharply, resulting in the paralysis of the World Trade Organization’s highest dispute settlement body, the Appellate Body. Reaching the end of the Brexit transition period without an agreement on the future trading relationship is an ever-present risk.
The EU’s dependence on a very limited number of trading partners for pharmaceutical supplies has raised concerns about our ability to respond effectively to the virus. And whilst the economic impacts of this crisis are not yet fully understood, the forecasts make for grim reading.
Finally, the determination of the President of the Commission, Ursula von der Leyen to prioritise the European Green Deal will certainly influence the policy review.
Speaking at a webinar I organised on Tuesday, the Director General of DG Trade Sabine Weyand said that, “integration in global markets drives innovation and competitiveness and we will only achieve the objectives of the Green Deal if we use open markets to ensure an efficient allocation of scarce natural resources.”
This is the context for the European Commission’s Trade Policy Review. We now have the opportunity to address potential weaknesses, reflect on what it is that we want to achieve with our trade policy and outline Ireland’s priorities in this regard.Ireland’s export-driven economy has benefitted hugely from our membership of the European Union and its commitment to free and fair trade.
Trade is now more important than ever. As a generator of wealth, it holds the potential to contribute significantly to our economic recovery post-COVID.
Following the global financial crisis of 2008 the re-balancing of our economy away from non-tradable sectors such as construction and back towards the tradable sector played a significant role in Ireland’s recovery.
The chart below demonstrates the net export contribution to national income growth and in turn to job creation from 2011. I remain convinced that trade will once again provide a means for us to emerge from this ongoing crisis.
With this in mind, it is critically important that the European Union continues to champion a return to open and rules-based trade upon which traders - and the downstream industries they support - can rely.
Upon assuming her role as President of the European Commission, Ursula von der Leyen pledged to lead a “geopolitical Commission”. This includes a more assertive trade and investment policy.
The EU has announced initiatives on Foreign Investment Screening, protection against foreign subsidies, an action plan on critical raw materials, anti-dumping policies and a new Industrial Policy. In addition, a new Trade Enforcement Officer has been appointed to make sure that other countries implement what they have agreed.
Taken separately, each of these initiatives have merit. However, taken together, being mutually reinforcing, they tend to steer the EU towards a protectionist course that may not benefit Ireland and other open economies.
Whilst I fully agree that the EU should work to identify and address areas of weakness in our existing trade and investment policy, we should not focus exclusively on this angle. We must also continue to develop our positive and outward-looking agenda.
Ireland therefore needs to engage fully with the trade policy review and push the European Union to maintain its open trading agenda, galvanize the multilateral trade system and forge strong relations with bilateral trading partners.
The Trade Policy Review is a crucial opportunity therefore to take the widest possible perspective on all of these initiatives to see how they will interact and to see how they can help the Irish and EU economies to recover.
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