EU trade policy latest: green industrial plan, South America negotiations and migration push

Tue 7 Feb 2023
Posted by: Phillip Adnett
Trade News

EU flag unveiled

There’s more to EU trade policy than current wrangling over the Northern Ireland Protocol and Brexit.

Since the start of 2023, the trade bloc has launched a range of trade initiatives covering issues such as the environment, digital services and migration.

Here, the IOE&IT Daily Update rounds up the latest developments from the European trade policy world, including the green industrial plan, Asian agreements and progress on EU-South American trade talks.

Green Industrial Plan

The EU has set out its Green Deal Industrial Plan to “enhance the competitiveness of Europe’s net-zero industry and support the fast transition to climate neutrality”.

European Commission (EC) president Ursula von der Leyen also wants the EU to counter massive green subsidies by the US and China.

Reuters reports the key components of the deal include a loosening of the state subsidies regime, boosting the EU’s trade network and faster permits for clean tech companies.

EU-Mercosur trade deal

Argentinian president Alberto Fernández says he expects the EU-Mercosur trade deal to be agreed soon during German chancellor Olaf Scholz’s visit to Buenos Aires.

Mercosur is a common market consisting of Argentina, Brazil, Paraguay, Uruguay and Venezuela, with Bolivia currently in the process of joining. Venezuela’s membership has been suspended since 2017, however.

By eliminating bilateral tariffs, both sides plan to build export capacity and create a combined market of 780 million people. Some sectors, in particular the meat industry, will not be fully opened up, however.

According to Politico, the agreement faces difficulties on issues like protection of the Amazon rainforest and various concessions to South American companies.

The current window to sign a deal will soon close, with Argentina heading to the polls in October and the EU holding its own parliamentary election next year.

Singapore digital deal

The EU and Singapore have announced a new partnership to strengthen cooperation on digital technology and to facilitate the free flow of goods and services via a ‘digital economy’.

Both sides have agreed to work together on critical areas such as semiconductors, data exchange and the digital transformation of businesses and public services. 

The Singapore digital deal is the third signed with key partners in Asia, following on from Japan and South Korea, with a fourth potentially in the offing. 

On Monday (6 February), the EU and India agreed to a new Trade and Technology councils, ahead of a ministerial meeting planned for later in the year.

Australia deal

MEPs have called on the EU to conclude a trade deal with Australia as a priority to help strengthen the bloc economically, ensure supplies of critical raw materials and revive its commitment to free trade.

Writing in the EU Observer, MEPs Catharina Rinzema and Morten Løkkegaard have said working together could also reduce dependency on China and Russia.

The MEPs go onto claim that removing trade barriers between the EU and Australia could increase bilateral trade in goods and services by a third.

One stumbling block, reports Bloomberg, is the EU’s desire to keep geographical indications linking products to specific regions, such as Champagne and Parma ham.

Migration watch

The EU is considering using trade policy to punish countries that refuse to take back migrants as part of a crackdown on migration, diplomats told The National.

Officials have refused to name countries that could be a target of the measures – which include trade tariffs – but state that that there is consensus for a more hard-line approach.

Governments like Sweden, the Netherlands and Austria are interested in making the moves for the benefit of their domestic populations, reports Politico.

Some in the EU want to use the Generalized Scheme of Preference – which allows developing countries to export goods to the EU at low or no tariffs – as a lever against migration. 

Warning on regulation

The EC is also considering a reaction to UK prime minister Rishi Sunak’s plans to scrap thousands of retained-EU laws by the end of this year.

As reported previously by the IOE&IT Daily Update, there is concern within the EU that the UK plans to lower standards in areas that were agreed in the EU-UK Trade and Cooperation Agreement, such as workers’ rights.

The EC is reported to be considering retaliatory measures, including tariffs on UK goods, raising fears over a trade dispute.