Trump Offers the EU Opportunities in Trade, If It Stays True to Its Values
In a previous post, I argued that the new US administration's decisions create opportunities for Europe, especially in trade. However, for the EU to capitalize, it must adhere to its core values of democracy and the rule of law. This is both morally right and beneficial for the EU as it now looks to become the only major trading power upholding these principles.
Imposing high tariffs on imports from one’s closest trading partners and allies looks tough. In the short run, tariffs or their threat may prompt trading partners such as Canada and Mexico to concede to US demands (if they manage to figure out what these demands are), especially since they depend more on exports to the US than the US depends on imports from them. However, in the medium to long term, beggar-thy-neighbour policies—those that may benefit the US while disadvantaging its partners—undermine the US’ own standing on the global stage. The US will be considered untrustworthy, and its (former) allies will do everything in their power to hedge against the risk of being ‘Zelenskyed’, as a Canadian commentator recently put it in reference to how the Trump administration has treated Canada in recent weeks.
Picking up the Pieces
It is remarkable to witness the world's sole superpower dismantling the post-World War II order it established. This development offers the EU opportunities to pick up (some of) the pieces. As it stands, the European Union looks to become the only major trading power that remains committed to democracy and the rule of law. The EU’s commitment to the rule of law establishes it as a dependable trading partner in a global environment where such reliability is increasingly rare. As other trading powers are hedging against the United States, they may seek deeper trade relations with the European Union. This offers opportunities for the EU to double down on its agenda of concluding free trade agreements. The agreement with Mercosur is a first such opportunity. Perhaps an agreement with India can be reached. Also in related areas can the EU’s position be strengthened as a result of US acts of self-harm. Could the euro become a reserve currency as trust in the dollar wanes due to irresponsible US trade and fiscal policy?
The Rule of Law and Democracy as the EU’s Trump Cards
For the EU to seize the moment, it is important that it stay true to its founding values. The rule of law and democracy, mentioned earlier, are the EU’s trump cards (pun intended). Together, they ensure that the EU is indeed a reliable partner in an increasingly low-trust international environment. This holds true for the rule of law, which implies the possibility of independent courts reviewing EU actions, but it is also true for democracy. A democratic system of government requires EU policy-makers to keep in mind the interests of citizens as they develop trade policy. It requires them to make the case for trade: why it is important; why it is worth preserving. In the EU’s multilevel system of governance, this is a responsibility not only of the EU institutions, but also—and arguably primarily—of Member State governments. More generally, a commitment to democracy goes hand in hand with a commitment to the rule of law. Democratic governance presupposes strong institutions that do not depend on the whims of any given man. A government of laws, not of men, as a US founding father once put it.
As the EU makes trade policy, it is important that it strictly observe its own decision-making procedures, that it strictly observe international law, and that, more generally, it act in accordance with its founding values, which include democracy and the rule of law. This means, for example, that the EU takes care to not unnecessarily replace legally binding international agreements with ‘non-binding instruments’ that can be approved without European Parliament consent. It implies, also, that the EU continues to adhere to its own better regulation agenda, which requires the European Commission to undertake impact assessments before it proposes legislation or starts negotiations towards a free trade agreement. It also means that both the Court of Justice and the European Parliament, and national parliaments, take seriously their responsibility of exercising oversight over how the European Commission wields its newfound powers to take unilateral (retaliatory) trade measures.
The Anti-Coercion Instrument is worth mentioning (once again) in this regard: it is for the Council to determine, by qualified majority, the existence of economic coercion. And it is for the Commission to take measures after the Council has made that determination. Ordinarily, it must do so after obtaining the approval of a qualified majority of Member States, but in cases of urgency the Commission can take measures alone. As I have argued elsewhere, this type of emergency provision is what opened the door for successive US presidents to centralize decision-making and to side-line other institutions such as Congress and the federal courts. It is crucial for the European Union to avoid making similar mistakes as it embarks on this new era.
