The end of naivety : assertiveness and new instruments in EU trade and investment policy

Abstract

For decades the European Union (EU) was a pillar of free trade liberalization in the world. It pursued a liberal free trade agenda predicated on achieving true freedom of movement within its internal market and using access to its market as both carrot and stick for the rest of the world. EU commercial policy was guided by a liberal ideology rooted in a strong belief that the opening of markets around the world was essential for prosperity, democracy and peace – in addition to being a goal in itself. As one of the world’s three largest traders, the EU has long been a central player in the World Trade Organization (WTO) regime and one of its most ardent defenders. When the first cracks appeared in political support for globalisation in the late 1990s, the EU doubled down its efforts to open markets and bring emerging economies such as China into the multilateral fold. Indeed, exporting its regulatory model by building capacity and increasing membership of the WTO and other international organisations became one of the EU’s main instruments in its attempt to ‘manage’ globalisation. After the 2008 financial crisis, with the multilateral system and, more broadly, the liberal international economic order increasingly challenged, the EU continued to carry the torch of liberal globalisation and to try to lead by example, even in the face of growing unilateral protectionist actions by its largest trade partners.