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Common Commercial Policy defends rules-based world trade

The European Union has a Common Commercial Policy whereby EU member states have authorised the European Commission to negotiate their trade relations with third countries. Now, the crisis in the World Trade Organization (WTO), the rise in protectionism and unilateral trade measures are challenging the existing system. The EU and its member states defend rules-based world trade, including the WTO’s binding dispute settlement mechanism. At the same time, however, the WTO needs to be reformed.

In recent years, the EU has concluded significant trade agreements, and new ones are being negotiated. As the country holding the Presidency of the Council of the EU, Finland considers it important that contractual obligations are respected. This will benefit both consumers and businesses in the EU.

Multilateral trading system facing difficulties

Unilateral trade measures and the rise in protectionism have caused difficulties for the WTO. The most acute issue is the reform of the dispute settlement system and keeping the system functional.

The dispute settlement mechanism threatens to crumble as the United States has blocked appointments at the WTO Appellate Body for the past three years. Despite intensive consultations, the impasse has not been resolved. The EU will continue to support the multilateral system, but will proceed simultaneously to safeguard its own commercial interests with regard to the temporary solution replacing the Appellate Body.

WTO rules are in need of reform. The EU has made proposals to improve the efficiency of the work carried out by the WTO Committees. So far, WTO member states have not been able to reform the multilateral trade agreements, most of which were signed in the 1980s, to reflect the realities of today’s trading environment.

Tensions in EU-US trade relations

Trade relations between the EU and the United States are currently characterised by tensions coloured by steel and aluminium tariffs and disputes over aircraft subsidies. The Finnish Presidency stresses the need to find a negotiated solution to the aircraft subsidies.

Finland considers it important that, despite tensions, the EU continue to work towards a positive transatlantic agenda through concrete collaborative projects. At the same time, however, the EU must adhere to its principles and be prepared to defend its interests within the framework of WTO rules.

Free trade agreements boost trade

The EU’s trade agreement network is the largest in the world. The EU has free trade agreements in place with more than 70 trading partners, and new agreements are being negotiated.

In recent years, the EU has concluded significant trade agreements with Japan and Canada, for example. Another important milestone is the political agreement reached in June on a free trade agreement between the EU and four Mercosur states.

The effective implementation of free trade agreements has become an important priority in recent years. The European Commission publishes annual reports on the implementation of free trade agreements. The latest report, published in October 2019, deals with implementation work carried out in 2018.

Trade agreements increase the dialogue between the EU and its partners. For instance, the agreements lead to the establishment of various cooperation bodies. As a result of discussions in these bodies, the partner countries have removed a number of barriers to trade. During its Presidency of the Council of the EU, Finland has stressed that, despite the progress made, the Commission, EU member states and relevant stakeholders should continue to intensify the implementation of trade agreements.

Inquiries

Pasi-Heikki Vaaranmaa, Counsellor, Ministry for Foreign Affairs, tel. +358 295 351 700