Europe seeks to set global trade rules after Trump steps back

BRUSSELS: If Donald Trump’s ditching of a US-led trade alliance with Pacific Rim nations wasn’t a gift to the European Union, then it must be the next best thing.

The president’s decision on his first day in office effectively pulled the United States out of the race to frame global trade rules.

With Washington preoccupied by an attempt to renegotiate its existing NAFTA treaty with Canada and Mexico, the EU has an opportunity to become the top setter of common business standards in a series of new deals.

Still the world’s biggest trading bloc, the EU is recovering its selfconfidence after a long economic crisis and Britain’s vote to leave the union.

Now it has much of Asia and Latin America in its sights for trade treaties, while a far-reaching pact with Canada will already enter force in September.

Japan turned to the Brussels this month to seal a deal on creating the world’s biggest open economic area, after being dumped by Trump’s scrapping of the 12-nation Trans-Pacific Partnership (TPP) free-trade accord in January.

EU trade chief Cecilia Malmstrom – who until Trump’s election had been struggling to persuade Tokyo to agree tough trade-offs – acknowledges the change of

I do not regard President Trump as a gift maybe, but it is true that many countries have started to look around more broadly. Cecilia Malmstrom, EU trade chief

fortunes.

“I do not regard President Trump as a gift maybe, but it is true that many countries have started to look around more broadly,” she told Reuters.

“Other countries feel that they need to look out for new friends and other allies, so yes, it has increased interest in cooperation with Europe and with others.”

Import tariffs are already low between developed economies, so negotiations now focus more on agreeing common standards.

The aim is to make it easier and cheaper for firms to do business in differing markets, avoiding the need to tailor-make products to meet varying local rules, be they for cars or cheese.

While China is seeking greater influence, the battle has largely been between US and EU standards as a template for deals governing how goods and services are bought and sold.

Beijing may yet rival Europe provided it embraces a rules-based global trade order in the years to come, economists say. But in the meantime, the EU is pushing to conclude deals this year not only with Japan, but also Mexico and the Mercosur group led by Brazil and Argentina, while pressing ahead with Australia, New Zealand and Asian countries including Malaysia – also left high and dry by the TPP collapse – and Indonesia.

Europe is still struggling with low economic growth and high unemployment, and the EU’s share of global trade in goods and services has fallen to 16.8 per cent in 2016 from 18.8 per cent a decade earlier, according to EU data.

Unless the EU can reverse the trend, it risks losing its top spot when Britain – the world’s fifth biggest economy – departs in 2019.

The US share of global trade was 15.0 per cent last year and China’s was 13.4 per cent.

So Brussels is pinning its hopes on a boost from new treaties, even though these take time to negotiate and win legislative approval – especially in a bloc which will still have at least 27 member states after Brexit.