2024-2029 mandate: Prospective trends in EU trade policy 

The past five years have not been easy for trade policy where only deals with New Zealand, Kenya and Chile have been concluded within this mandate. The most substantial issues are from white smoke: Australia collapsed, Mexico in a stalemate, Mercosur an endless back and forth. The current push for higher standards, whether for farmers’ protection or sustainability concerns, makes it extremely hard for the EU to strike trade deals. New policies like the Deforestation Regulation and Farm to Fork will make it harder for commodity-rich countries to export to the EU.  

The von der Leyen Commission has tried to make the EU’s trade policy more “assertive.” If the US and China show ‘muscle,’ Europe cannot do less – the “geopolitical” Commission thinks. New rules attribute stronger powers to the Commission in countering economic coercion, ensuring reciprocity on third country’s procurement, and, with the voracious Foreign Subsidies Regulation ready to bite, making sure that subsidies from foreign governments do not distort competition in the EU. All of this means more barriers to foreign companies trying to access the EU market. 

In addition, how can we forget the latest declaration for strategic autonomy? Economic security and de-risking are now at the top of many policymakers’ agendas. The next Commission and Parliament, with Member States dragging their feet, will continue discussions on how to tighten the rules on export controls and on screening of both  inbound and outbound investments. Companies with a technological edge, especially of a global exposure, have been warned. 

The new mandate will also mean new chances to reignite trade negotiations that did not work out – starting with Australia and Mercosur although farmers’ opposition is here to stay. The very dynamic Indo-Pacific will also be a space to watch, as the FTAs with India, Indonesia, Philippines, and Thailand could gain momentum. From commodity traders to technology developers, trade policy is on a close watch. It is a field where global trends feel particularly overwhelming. Nevertheless, with carefully crafted messaging, there is always a chance to contribute to shaping them. 

Key files and initiatives  

  • The implementation of the Corporate Sustainability Due Diligence Directive (CSDDD), and of the Deforestation Regulation (EUDR) will mark the green elements of the EU trade policy. On CSDDD, the ball is now in the Member States’ court for the transposition of the Directive. On the Deforestation, companies will have to be ready for a wave of requirements from December 2024 onwards…unless criticism from both inside and outside the EU convinces the Commission to mitigate the regulation. 

  • How much will the Economic Security Strategy characterise the next mandate? This depends on three areas.  
    • Export control: The next Commission will try to convince the Member States to follow a more uniform approach, to prevent a patchwork of different national measures that can hinder the EU’s security posture and companies’ compliance.  
    • Reform of FDI screening: This is the only legislative proposal delivered in the Economic Security Package. A whole legislative process will start around this Regulation with the Commission trying to ensure that EU capitals properly scan incoming investments that pose security risks.  
    • Outbound investments screening: Highly contentious issue, with huge implications for Member States’ prerogatives and companies’ operations. Will the next Commission produce a legislative proposal, or will it have to settle for a mere risk assessment with the Member States? We are yet to find out.  

  • Developments in FTA negotiations will indicate the degree to which the Commission will manage to open new markets for EU exporters and achieve the (much-needed) diversification of supply chains. In principle, the multiple trade talks opened across Latin America and the Indo-Pacific can be finalised in the next 5 years, but we are all familiar with the amount of veto players in the EU.