EU trade policy: challenges and opportunities

Abstract

Trade has become a much higher profile policy area for the European Union following the decision by the Trump Administration to pursue a more protectionist trade policy and US questioning of multilateral cooperation and the WTO, and the rising concern in the EU regarding the competitive implications of China’s industrial policies. Designing appropriate responses to trade tensions will be one of the challenges confronting the new Commission. Responding to protectionism abroad with protectionism at home is not the answer; maintaining an open policy stance is important for economic growth prospects. As the world’s largest trading power, the EU should ramp up efforts to revitalize the WTO and deepen trade cooperation with like-minded countries to discipline the use of globally welfare-reducing trade and investment policies. Further improving transparency and monitoring the implementation of trade policy is needed to address legitimacy concerns and ensure the political sustainability of the EU’s trade strategy.