The European Commission has set out a new trade policy strategy for the EU that will support “achieving its domestic and external policy objectives and promote greater sustainability,” in line with its commitment to fully implement the SDGs. The Commission emphasizes the importance of trade policy in COVID-19 recovery and in green, digital transformations needed to build a “more resilient Europe in the world.”

In a ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions,’ titled, ‘Trade Policy Review: An Open, Sustainable and Assertive Trade Policy,’ the Commission reflects on recent global trends, including increasing global uncertainty and growing unilateralism. The Commission places sustainability at the heart of the new trade strategy, and supports transformation towards a climate-neutral economy. The strategy aims to strengthen the capacity of trade to support both a climate and a digital transition by contributing to the objectives of the European Green Deal and removing trade barriers in the digital economy.

To achieve its objectives in the medium term, the Commission will focus on six areas:

• reform the World Trade Organization (WTO);
• support the green transition and promote responsible and sustainable value chains;
• support the digital transition and trade in services;
• strengthen the EU’s regulatory impact;
• strengthen the EU’s partnerships with neighboring, enlargement countries and Africa; and
• strengthen the EU’s focus on implementation and enforcement of trade agreements, and ensure a level playing field.

The strategy features headline actions focused on achieving each of these key areas. For instance, on enforcement of trade agreements and ensuring a level playing field, the EU will adopt a “tougher, more assertive approach towards implementation and enforcement of its trade agreements” to fight unfair trade and address sustainability concerns. The EU argues such an approach is necessary to ensure its agreements deliver benefits for its citizens, farmers, and workers.

The strategy prioritizes major WTO reform across all of the WTO’s functions. Reform priorities include commitments on climate and trade, new rules on digital trade, restoring the WTO’s system for binding dispute settlement, and reinforced rules to address competitive distortions. An annex to the strategy document outlines the EU’s priorities for WTO reform alongside recommended headline actions.

On supporting the digital transition and trade in services, the strategy states that “combatting climate change and environmental degradation is the EU’s top priority.” Over the next decade, the Commission will ensure that trade tools accompany and support a global transition towards a climate-neutral economy, including by promoting circular, responsible, and sustainable value chains, accelerating investments in clean energy, and promoting mandatory due diligence, including to ensure that forced labor “does not find a place in the value chains of EU companies.” The strategy recognizes multilateral, bilateral, and autonomous actions will be need to make this vision a reality, and elaborates on planned actions, including bilateral trade agreements to facilitate trade in green technologies, goods, services, and investments. The Commission will also seek commitments from the Group of 20 (G20) on climate neutrality, biodiversity, sustainable food policy, and pollution and the circular economy.

Executive Vice-President and Commissioner for Trade Valdis Dombrovskis underscored the importance of open, rules-based trade to restore growth and job creation in the post-COVID-19 economy. He further stressed that trade policy “must fully support the green and digital transformations of our economy and lead global efforts to reform the WTO.” Dombrovskis said trade must also provide “the tools to defend ourselves when we face unfair trade practices.”

The Commission held a public consultation on its strategy, and received more than 400 submissions by a wide range of stakeholders. The Commission also held public events in almost every EU member State, and engaged with the European Parliament, EU governments, business, civil society, and the public. [Publication: Trade Policy Review: An Open, Sustainable and Assertive Trade Policy] [Annex] [European Commission Press Release] [SDG Knowledge Hub Story on EU’s Climate Adaptation Strategy]