DIGITALEUROPE Roundtable Discussion on the Trade Policy Review
On Tuesday 16 March, DIGITALEUROPE organised a closed roundtable to exchange views on the EU Trade Policy Review (TPR), and the future direction and challenges for European trade policymakers and practitioners.
DIGITALEUROPE Director-General Cecilia Bonefeld-Dahl began the event by giving an overview of some of the key milestones defining the current agenda for trade, from a change of US administration, to a new WTO Director-General, to various developments in EU trade, such as the recent EU-China CAI, the EU-UK TCA, and the Trade Policy Review itself. She also drew an important connection between trade policy and other EU priorities, in particular post-Covid recovery and the “Digital Decade” – international trade will be key to achieving the goals of both, particularly with 85% of GDP growth set to take place outside of Europe by 2030. DIGITALEUROPE’s Digital Trade Policy Group Diane Mievis (Samsung) noted the parallels between the spice trade routes that led to such prosperity for Portuguese explorers of the past, comparing these routes to the digital routes of today. She then gave an overview of the association’s trade priorities, namely: defining “Open Strategic Autonomy”, taking the lead on digital trade, policy coherence with other EU priorities, and building a trade ecosystem that delivers. All of these priorities are reflected in the EU’s Trade Policy Review Communication.
In a keynote speech, EU Ambassador to the WTO, Mr Joao Aguiar Machado, noted that 2/3 of EU trade is done on WTO terms, and that the organisation will play a crucial role in ensuring prosperity through openness, sustainability, and assertiveness. The EU must be at the centre of efforts to revitalize and update the WTO, including by reinforcing that role through the G20. For the EU to be more effective, it must become a stronger negotiator and promote discussions on how to integrate new forms of negotiations – including through the vibrant ecosystem of plurilateral agreements – in the WTO architecture. Rules that were designed in the last century must be updated or the WTO’s work will become irrelevant.
Maria-Joao Botelho, Deputy Director-General for European Affairs at the Portuguese Ministry for Foreign Affairs then spoke about the Council Presidency’s priorities for EU trade policy, beginning with the Council reaction to the TPR on 2 March, where a key message was the need to strike a balance between openness, diversification, and sustainability, for example, while avoiding protectionism. The Portuguese Presidency will also work towards relaunching the transatlantic relationship, and bilateral relations with China (navigating the next steps for the Comprehensive Agreement on Investment), India, and African countries in particular. On the autonomous measures side, the International Procurement Instrument will be a key priority.
A discussion with the roundtable participants then brought together insights from the European Parliament, EU Member States, think tanks, and industry representatives. The top line takeaways were:
Trade needs to adapt to new geopolitical realities and challenges, and both the EU and the WTO have to commit to this change, especially with the need to drive recovery through international trade.
The TPR process is all about finding balance, and doesn’t end with this year’s publication. Its key role should be to ensure that our domestic policies work hand in hand with international engagement. For example, the twin digital and green transitions must be enabled by trade policy – but we must also avoid overloading trade policy with different objectives.
“Open strategic autonomy” still needs to be clarified. We need to find agile ways to work with different partners, and a tailored approach is needed – this can be achieved through both bilateral and multilateral agreements, and through autonomous measures.
The question of facilitating data flows will not be easy to solve, but is crucial nonetheless when we consider their role in the digital economy. Gaining agreement among EU Member States is an important first step, while we must also better understand the positions of our trade partners and the nuances in the interaction between privacy and all types of data if we are to strike agreements bilaterally and multilaterally.
In conclusion, Elisa Molino (Apple), Vice-Chair of DIGITALEUROPE’s Digital Trade Policy Group noted upcoming DIGITALEUROPE initiatives that will contribute to the discussion in the EU landscape, including an event series on the transatlantic relationship, position papers and studies on issues related to digital trade (international relations, data flows, and ITA), and a Summer Summit on 17 June which will focus on data and Europe’s Digital Decade, including the international dimension.
Understanding ‘Open Strategic Economy’
A number of participants referred to the global context that Open Strategic Autonomy (OSA) must address, with most global growth set to happen outside of Europe, and an open digital economy (e.g. with data flows, common standards) being key to Europe’s success.
There is no doubt that trade policy must strike a balance between a number of different priorities: the push for sustainability (trade policy cannot exist unless it is green), the need for diverse and resilient supply chains, and a commitment to openness over protectionism, including by rectifying distortions in the global market. Europe must work to ensure market access for its companies, including by being assertive when it comes to unfair trade practices. Our trade policy needs to address the challenges of today, such as industrial change and the consequences of the Covid pandemic, for example a lack of resilience in supply chains.
To achieve this balancing act, the EU must look to working with all of its trade partners – including China, for example, where moves such as the EU-China CAI are key to achieving a global level playing field. Regulatory cooperation with like-minded partners will also be key. Autonomous measures such as the International Procurement Instrument have a role to play, but we must also not overload trade policy, and must also be careful not to impose too much burden on SMEs. Moreover, the EU should look at how autonomous measures can be translated to the multilateral level, e.g. on subsidies.
One understanding that could provide useful guidance on “striking the balance” is the recent position published by Germany, Denmark, Finland, and Estonia.
The Multilateral System
Participants were clear that the WTO has a very important role to play in the global recovery – not least for the EU, which does 2/3 of its trade on WTO terms, including with its two biggest trade partners (US and China). There is now a golden opportunity to reform and strengthen the WTO with the new Administration in the US, but this process will not be without challenges and it is clear that the EU and the US do not “see eye to eye” on everything.
Of course, the WTO is driven by its members, and the EU is a key player that must make sure that it pursues its priorities via multilateral forums. A consensus-based approach will be necessary, as the WTO is strongly committed to involving all members – and this is not just on principle, but also a practical point: without buy-in from all members, new initiatives cannot move forward. To lead on these initiatives, the EU must become a better negotiator, and no member can pick and choose which WTO rules it follows.
This is not to say that plurilateral agreements do not have a role to play – and indeed, they are often the most vibrant areas of international cooperation, be it at the WTO or the G20. However, if plurilaterals are eventually to become multilateralised, the interests of all potential signatories must be considered throughout.
Looking ahead, the WTO must evolve, both in terms of its existing rules (which must be updated to reflect the realities of the 21st century economy) and potential areas for new disciplines. Sustainability will be especially important here, and new proposals will be forthcoming in this area in the coming months, with a view to the Ministerial Conference scheduled for December 2021.
Data flows and privacy
With more than 60% of the global GDP coming from digital, data flows are essential to deliver both goods and services, and to make sure both consumers and businesses can benefit from digital transformation. Participants were in agreement about the importance of the WTO eCommerce negotiations in this regard, and that the EU will need to engage wholeheartedly in the discussions in Geneva.
The continuing tensions between the need for language on data flows and ensuring regulatory autonomy on privacy and data protection must be resolved, and the EU must not be complacent – it cannot merely rely on the GDPR to evade this conversation. In essence, GDPR provisions such as adequacy decisions could be seen as a strength, and a means for the EU to take the lead on this topic and drive global standards – all in all, the perceived conflict could be transformed into an advantage for the EU as a trade power. Not only could it use trade to “export” standards, but also to unlock the economic potential of industrial data, for example.
If the EU can resolve its internal differences on this question – including among Member States – it can set the agenda on the eCommerce negotiations, instead of following the lead of frontrunners such as Australia, Singapore and increasingly, the UK. With 85 countries on board with the talks, we are now approaching a time when these issues will finally be discussed – there will be conflicts, but how fundamental they will be should be a foregone conclusion. Certainly, China (where data “belongs to the state”) and the EU are still strongly opposed. The EU can better navigate this situation by realizing that a “one size fits all” approach does not work on data flows.
The transatlantic agenda
Many participants pointed towards the potential in a relaunched EU-US trade and economic partnership, not least through the proposed Trade and Technology Council.
As a first step, the EU and US need to set the scene by developing an understanding of shared priorities, including at the WTO. The suspension of Airbus/Boeing tariffs is a clear step in the right direction, and there appears to be convergence around other issues such as antitrust and AI/emerging technology. Defining standards together will be key, and only through transatlantic cooperation can the EU and US ensure they are both rule makers on digital trade. It will be key to agree on how to work together regarding China.