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The European Community was founded on the belief that economic integration leads to peace and economic prosperity. Trade is therefore a fundamental part of the identity of the European Union today. Given the success of the internal market in fostering the longest period of European peace in modern history, the EU considers itself an example of the benefits of trade, globalization and economic openness. International trade policy is an exclusive competence of the EU, and with the combined economic weight of its Member States behind it, the EU is one of the key players in global trade. Yet trade policy is about more than stability and growth for the EU, as it is also used to encourage poor countries to develop, foster international alliances and support fundamental values in the world. A strong believer in the World Trade Organization (WTO), the EU backs an international trading system based on rules rather than might.
The benefits of globalization and international trade have nevertheless been questioned in recent years, including within the EU. This has led it to reinvigorate its trade policy, in particular by presenting a new trade strategy and a reflection paper on harnessing globalization. The EU’s new ‘trade for all’ strategy addresses criticisms and focuses on making its trade policy more effective, transparent and values-based. In line with this strategy, the EU has pursued ongoing trade negotiations with renewed vigor and launched new trade and investment talks, resulting in state-of-the-art agreements with countries such as Canada and Japan.
The EU faces uncertain times due to major shifts in international trade, coming from both the West and the East. In response, it seeks to promote economic openness, standing up for its values and protecting its interests. For example, the EU has retaliated against US steel tariffs and continues to defend the rules-based international trading order. Contentious trading practices on the part of third countries, including China, have led the EU to modernize its trade defense instruments, prepare a new foreign investment screening mechanism and seek a reform of the WTO. The EU is likely to continue this approach in the next parliamentary term, pursuing international cooperation and new agreements, possibly also at a continental level with Africa, and striving to protect its citizens and businesses from economic harm.
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