Regarding China, the review drily notes that some of the world’s largest trading economies keep claiming derogatory status under WTO rules: obviously, that applies first to China. Arguing from GDP per capita and actual share of world trade, the review does not ask China to give up its developing economy status (something that simply cannot be forced under existing WTO conditions), but to renounce the exemptions that this status allows. Implicitly, other emerging economies, as they cross these thresholds, would also be required to move in this direction - but in the near future, this is about China and China only. Here, one might add, the requests for structural changes to the Chinese economy will inevitably reappear.
Renouncing no goals, but setting realist priorities and tools
To sum up immediate impressions: as is often the case with Commission documents, there are too many simultaneous goals. Happily, these goals are listed in a certain order, which places the reform of WTO at the top of the Commission’s new trade agenda. In terms of ways and means, priorities do stand out: coordinating with the United States, challenging the challenger that is China, and also putting the emphasis for future trade deals with Europe’s neighborhood, including a large accent on Africa, are notable. The absence of almost any mention of Asia, the world’s fastest growing region, and the total lack of mention of ASEAN are surprising. Yet RCEP, a low cost trade agreement that clearly aims to target more exports to third countries, is a problem to the European economy, while the better quality CPTPP or TPP-11 opens again the issue of American - or even Chinese - participation. Instead, India stands out: indeed, reaching more agreement and integration with India is a strategic goal.
The Chinese challenge comes out almost on every page. The offensive goals towards China seem more limited than previously. Rather than reciprocity, the review stresses verifying commitments including for the "work towards ratification" of the EU-China CAI. Other defensive measures aim to limit the "negative spillovers" from China's "state-capitalism". Gaining market access remains as an offensive goal. An overriding positive ambition reappears on WTO reform - which China must go along with. Or, between the lines, the EU could also move "plurilaterally". Or even, should reform be blocked, the EU might acknowledge that WTO is sidelined.
The 2021 Trade Policy Review comes out as a careful and guarded document, but it includes a push for realist and defense-based instruments alongside with "openness and engagement". In a way, this is a welcome change from political hype. The review, by contrast, is more about the toolbox, and about coordination and consultation to achieve policy goals. Let us hope that more tools are found, and that they prove effective.
Copyright : Francisco Seco / POOL / AFP