AFET

Once bitten, twice shy: now that the war in Ukraine has made Europe painfully aware of its reliance on Russia for energy, the EU is keen not to fall into the same trap twice. With the continent still depending on third states such as China for raw materials and technologies, how can the EU increase…

Committee on Foreign Affairs

Once bitten, twice shy: now that the war in Ukraine has made Europe painfully aware of its reliance on Russia for energy, the EU is keen not to fall into the same trap twice. With the continent still depending on third states such as China for raw materials and technologies, how can the EU increase its strategic autonomy and stay true to its values?

By Felix Crawford (NL)

The story of Jonathan

Imagine a fantasy world. In this world, there is a guy named Jonathan. Jonathan is a prisoner of the state, though he has not been charged with anything as of yet. Jonathan is awaiting trial. Whilst awaiting trial, Jonathan is forced to work for his government. He has to work long shifts peeling garlic, day in and day out. This garlic is sold for a huge profit, and Jonathan gets paid exactly nothing. The garlic burns his skin and weakens his fingernails. He gets sores all over his hands. There is nothing he can do but wait for the trial to commence.

Unfortunately this fantasy world is very similar to a real-world issue the EU is facing right now. Select countries take advantage of the prison system they have put in place, and force their prisoners to work long and demanding jobs for free. One of the more notorious cases of prison labour is found in China. Not only Jonathan, but thousands of others like him are forced to work, with big industries depending on, and demanding, their free labour. 

Introduction 

Situations such as Jonathan’s are not uncommon in today’s day and age. Many of the EU’s trading partners have different policies than those of the EU. This can be in regards to, amongst others, the treatment of their civilians and their stance on international conflicts. The EU has legislation protecting foreign worker’s rights, but cannot curb other nations’ beliefs regarding international conflict. When global relations shift, the EU can be left stranded without vital resources. This has happened with Russian oil because of the Ukraine war. The EU is now forced to look for oil and gas elsewhere. Rapid increases of gas and oil prices are a valuable reminder of the EU’s dependence on external nations.

It is not possible for the EU to become entirely self-sufficient, nor would that be favourable for its international relations. Trade is one of the primary ways to foster international cooperation and understanding, and therefore invaluable to the EU. Furthermore, the EU does not have the raw materials to make it completely self-sufficient. Because of this, it is not a viable solution to stop trading completely; though raw materials are definitely available, and technology can be made, this does not account for all EU needs. Trading deals are however quite complex. The EU has no say in the foreign policy of external nations. Direct hostility has historically not worked out well, yet nations can easily ignore purely diplomatic agreements. A connected concept that has gained popularity amongst EU politicians is the idea of strategic autonomy, or being able to act independently regardless of circumstances.

It has been established that the EU relies heavily on imports from other nations. EU demand even seems to be rising. Unfortunately, not all nations the EU trades with hold the same humanitarian, ecological and political values as the EU. This can lead to trade conflicts or even trade wars. Disagreements between the EU and other international traders such as the US stress the EU’s economy and have large consequences for its civilians. Given the volatility of international relations, how can the EU safeguard its trade whilst protecting the workers involved?

Keywords 

  • Strategic Autonomy is defined by the European External Action Service (EEAS) as the capacity to act autonomously in any circumstance and with partners necessary wherever possible1. In other words: to count in the world and be able to make its own choices. Strategic autonomy is not about self-sufficiency but about reducing external dependencies.
  • The International Trade Law of the United Nations, detailing various agreements Member States have come to as well as various ways economic growth can be stimulated through fair, environmentally friendly and globally applicable measures.
  • The Human Rights Clause of the EU is a clause that has been added to nearly all bilateral trade agreements the EU has made since the 1980s, stating that the EU can terminate any agreements when there is sufficient proof of the violation of human rights. 
  • Raw Materials are those materials that can be taken directly from the land or water. Since 2001 the EU has had a large trade deficit in raw materials, with a net loss of €35.5 billion in 2021.  

 1Definition originally used by the European Council in their November 2016 conclusions

Key Actors and Stakeholders 

  • In Europe, the most highly affected non-governmental group is that of small, medium and large businesses. These businesses rely strongly on the stability of the market, and might have to shift their entire business model if trade with a specific country is reduced or terminated.
  • The World Trade Organisation (WTO), being one of the largest international platforms for global trade arrangements, has many treaties that the EU (or individual Member States) have signed. Various arrangements made here are very relevant towards what the EU can and cannot do to control their global trade networks.
  • The Directorate-General on Trade (TRADE) of the EU is the main body in charge of the EU’s trade policy. Alongside the EU’s own trading policies, this body is also strongly involved in international cooperation; they hold seats in the WTO and have many individualised trade agreements with non-EU countries.
  • The European External Action Service (EEAS) is the EU’s diplomatic service. It works under the European Commission as the primary organ responsible for international diplomatic action, and is also involved in military endeavours. The EEAS has many tasks related to foreign policy and affairs, and is an invaluable tool in negotiations with partners.
  • The Group of Twenty (G20) comprises the 20 most relevant countries in global economics. These include amongst others China, The US, India, Canada, Russia and Germany. One of their main focusses is their Finance Track, in which the finance ministers of each country convene to make international agreements on trade. 

What has already been done? 

The EU is very aware of its position in international trade. There are many examples where the EU has implemented safeguards regarding its trade in their relatively new Trade Policy. These safeguards fall into two primary categories: the protection of human rights, and the protection of EU interests. Regarding human rights, the EU (and especially the European Parliament) have consistently included the human rights clause in their legislation and trade agreements. Whenever a trade partner violates the human rights of its workers, the EU can abandon the agreement. This is very rarely done, but rather serves as a tool to promote better working conditions and international dialogue. 

Regarding the protection of EU values and interests, the European Commission has heightened their vigilance regarding who they trade with, and what their agreements state. They are aware of the fact that trade is increasingly being instrumentalized by certain third countries as a way to influence the political decisions of the European Union and its Member States, and have responded through various different measures. Amongst others they are focussing more on the functioning of the European Single Market, and the evaluation of supply chains. Though these endeavours are helpful, it is quite difficult to balance this protectionism with the economic impact of trade; about 15 percent of the EU’s economy is reliant on international trade. 

Third-party countries’ trade policies heavily influence EU trade as well. China for example collaborates closely with the EU regarding  mutual trade policies. The Chinese government has released many policies on EU cooperation, generally proclaiming their willingness to further EU-China relations. In response to EU concerns about Chinese investments, China has indicated plans to reciprocate businesses in the future. It has however been consistently growing its international trade, limiting European trade opportunities. Furthermore, Chinese workplaces often do not adhere to EU policies on human rights. The EU furthermore has concerns about certain Chinese policies and business customs such as, but not limited to: 

  • a lack of transparency, 
  • Industrial policies and non-tariff measures that discriminate against foreign companies, 
  • strong government intervention in the economy and no meaningful distinction between public and private enterprise,
  • poor enforcement of intellectual property rights.

What are the key challenges? 

Execution of the Human Rights Clause (HRC)

Though the EU has implemented the HRC in virtually all recent trade agreements, it has never fully used the mechanisms described in the clause. The EU has the right to terminate an agreement when there is enough evidence of the violation of human rights, but refrains from using this mechanism. It prefers to use the clause as leverage in international political debate. Many parties however, believe that this negates the role of the HRC. There have been efforts to reinforce worker protection in treaties further, but this has met resistance from Member States.

Dissonance Between Member States and the EU as a Whole

The EU as a whole has a clearly defined policy towards international trade. Individual Member States however, do not always completely agree with, or adhere to, EU guidelines. This can be due to high national protectionism or different values.  EU Member States have different views on strategic autonomy and differences in national policies, which weakens the EU’s political force. Alignment could be improved considerably. Though there are ways to penalise Member States, they are often difficult to implement or unsuited for the circumstance. 

EU Trade Deficit and Consequent Leverage from Third Countries

Because of the steep trade deficit the EU faces, as well as the fact that the EU lacks the raw materials to sustain itself completely, it relies on third countries for raw materials, as well as for important technology, such as 5G and microchips. The EU can choose which countries it wants to trade with, but is ultimately bound by supply constraints and the rising demand of its citizens. This means that trade partners hold a certain amount of leverage over the EU, as their materials are vital to support the EU. Sometimes countries use this economic power to coerce the EU and influence EU decisions.

Shifting Values and Policies of Trade Partners

Another challenge when managing global trade is the political shifts of trade partners. Policies, values and governments are ever changing, and it can be difficult to respond quickly to changes from partners. With EU decision making being relatively slow, reacting to these shifts is often up to individual Member States before the EU changes its policy. This means that stances towards partners can be fractured amongst Member States, challenging the authority and guidelines of the EU.

What now? 

Trade is always a complex matter. The EU is committed to promoting human rights and protecting its citizens and interests, but has to work with a trade deficit of billions of euros. It relies heavily on import from non-EU countries, giving those countries leverage over the EU. Though the EU has legislation and treaties in place, as well as various platforms that allow for discussion with third-party states, there is no way to force other countries to adhere to EU guidelines or policies. There is a need for further policy, as well as a response to third countries shifting values or policies. 

Furthermore, it is vital that trade remains stable between the EU and externally affected countries. Business owners and national economies should be prioritised, as these are at risk when changing trade policy. The balance between market protectionism and economic benefits is complicated to maintain, and should be carefully considered when making policy. The complexity of this situation raises a few primary questions:

  • How should the EU approach the implementation of human rights in their policies and treaties, and should these be prioritised over international relations or economic benefits?
  • What can the EU do to ensure its safety and protection on the international market?
  • Should the EU establish further treaties or shared policies with countries that do not completely adhere to EU policy?
  • Which regions or countries should the EU focus its trade policy on?
  • How can the EU ensure that businesses and national trading endeavours are minimally disturbed by new policies?

Further Research 

Introductory Clauses to the resolution

  1. Alarmed by the increased instrumentalization of trade by certain third countries as a way to influence the political decisions of the European Union and its Member States,
  2. Realising that the EU’s reluctance to implement the Human Rights Clause is linked to promoting political dialogue,
  3. Affirming the need for consistency between trade partners regarding the implementation of the Human Rights Clause,
  4. Aware the EU faces a large trade deficit and many external dependencies,
  5. Recognising that business owners and national economies are put at risk when drastically and immediately shifting trade policies,
  6. Reaffirming the previously established trade policy of the European Council;