The EU’s trade policy will enter uncharted waters in 2010, as it will have to face new challenges both internally and on the global stage, which could slow down the liberalisation process. Internally, the Commissioner designate for trade, Karel De Gucht, will have to find his own space within the new EU institutional framework introduced by the Lisbon Treaty. In the aftermath of the global economic crisis, the EU negotiator will also have to face resistance to further trade liberalisation from some member states, including Spain, and key trading partners, such as the US. Against this backdrop, the European Commission may find it difficult to advance the Doha round at the World Trade Organisation and may have to explore alternative approaches, such as bilateral free trade negotiations or ‘green’ issues in order to advance its liberalisation agenda.

ROOM FOR MANOEUVRE

The entry into force of the Lisbon Treaty opens a new era for EU trade policy. Although this policy remains the exclusive competence of the Commission, as in the past, the new commissioner’s room for manoeuvre is likely to be limited both by the new powerful High Representative, Baroness Ashton, and by the European Parliament. In the pre-Lisbon period, the commissioner in charge of trade carried considerable weight in external relations. The new trade commissioner runs the risk of being ‘overshadowed’ by the high representative, who will become the EU’s chief diplomat and public face to the world and will coordinate the work of the other commissioners in charge of development, humanitarian aid and neighbourhood policy.

Although WTO Director-General Pascal Lamy expects the EU’s trade policy to remain “as stable as the course of an oil tanker”, the goal of increasing the coherence of the Union’s external action, as stated in the new treaty, could evolve into a threat to the independence of the trade portfolio. The first half of 2010 will be a testing time, since the “Spanish Presidency will be pushing for greater policy coherence,” a Commission source told Europolitics. De Gucht will have to protect his turf and will no doubt enjoy the support of Commission President José Manuel Barroso and the most free trade-oriented member states, including Sweden, the UK and Denmark, which are wary of trade policy becoming subordinated to political objectives. The fact that Ashton had held the trade portfolio until last November will not help the former Belgian foreign minister’s cause either.

Increasing scrutiny by MEPs is another challenge that DG Trade is already preparing to meet. The Lisbon Treaty offers the European Parliament the right to veto trade agreements negotiated by the Commission. MEPs will have the chance to test their new prerogative during the Spanish Presidency, when they will be asked to give the green light to the controversial free trade agreement (FTA) negotiated with South Korea. The most ambitious bilateral FTA ever concluded by the EU is expected to be signed during the first quarter of 2010 and will then be discussed by MEPs. The Commission anticipates a tough debate, since interest groups opposed to the deal, such as European car makers, are lobbying hard to have their voices heard. The debate could delay the entry into force of the FTA, although experts doubt that the Parliament will block it in the end as the Lisbon Treaty offers only the possibility of rejecting a deal on a ‘take it or leave it’ basis.

FREE TRADE

The global post-crisis scene will bring further challenges to the EU’s trade negotiator. The financial and economic storm that hit the world economy in 2008 and 2009 has posted a challenge to the free trade liberalisation mantra, while the role of government as a key economic coordinator has been reaffirmed. Hence, the US, traditionally a supporter of free trade, has done little to advance this agenda since the arrival of the Obama administration. This new trend could deal a heavy blow to the number one priority of the EU’s trade policy: the rapid conclusion of the WTO’s Doha round of international talks. Of course, China and India may still choose to play a more pro-active role in Geneva in order to resist protectionist tendencies that are emerging in the US and Europe. In early December, the WTO’s members agreed to decide, by the first quarter of 2010, whether to conclude during the year the multilateral negotiations launched in 2001. The prospects are not promising and several experts expect another postponement, despite the pledges repeatedly made by G20 leaders.

Against this backdrop, the EU could refocus its trade strategy towards a more palatable multilateral goal: the ‘greening’ of the global economy. Following the Copenhagen climate change conference, the EU could propose the liberalisation of trade in ‘green’ goods, according to a Commission source. This idea has been floated at the UN, but much needs to be done to turn this into reality. “The key question is how do you define a ‘green’ product,” commented a Commission official.

LATIN AMERICA AND ASIA

Advancing bilateral negotiations will keep DG Trade busy during the first half of 2010. The Spanish Presidency of the EU is expected to push for rapid progress in the FTA talks with Peru and Colombia. Progress has been made during the autumn and the Commission’s negotiators believe agreements are within reach now that a settlement to the longstanding banana dispute has been found in Geneva.

Prospects for the conclusion of FTAs in Asia (with India and the ASEAN) do not look as promising. No rapid progress is in sight almost three years after the launch of the talks. “We need to find a way to inject new life into the negotiations with India,” said a Commission source. In South-East Asia, the Commission will continue to test the willingness of some ASEAN members to move ahead. This bilateral approach has so far produced little result and triggered criticism from the Asian regional bloc, which accused the EU of pursuing a ‘divide and rule’ strategy.

The new trade commissioner faces the risk of being ‘overshadowed’ by the high representative