After Russia’s invasion: The EU must strengthen cooperation with democracies

Once more, Europe faces dark times. In gross violation of international law, a major European power has invaded its smaller neighbour. It is not only an attack on Ukraine, but on peace, security, and democracy throughout Europe.

The response by the EU and our like-minded partners has been to support Ukraine and impose sanctions on Russia. Sanctions are necessary and show that this type of serious violation of international law has very high costs for the country that commits them. Ultimately, there is a choice between being a part of the civilized community of nations or not.

Before Russia’s invasion of Ukraine, strategic trade cooperation between open economies faced an uphill battle. The US withdrawal from the Transpacific and Transatlantic Partnership negotiations, the EU’s inability to wrap up trade agreements with strategic partners, and Britain’s exit from the EU are all examples of how democratic countries failed to use trade policy for strategic purposes. Hopefully, this era will now come to an end.

How EU trade policy adjusts to this crisis will have a major impact on our future

Instead, the EU must plan for a trade policy that responds to the new geopolitical reality. How EU trade policy adjusts to this crisis will have a major impact on our future. In the same way that the EU and its partners coordinate economic sanctions closely to counter Russia’s aggression, we should work to promote economic integration with our like-minded partners. All countries that support basic international rules and norms should be invited to join. The GATT – forerunner to the WTO – was set up to promote economic integration among western allies after World War II. In our time, the EU could apply a similar strategy to bolster prosperity, security and resilience via trade.

Under such an overarching strategy, the following measures might be undertaken:

• Move to establish a deep and comprehensive trade partnership with the US. The appropriate negotiation structure is already in place in the shape of the Trade and Technology Council (TTC). The EU and the US could just give the TTC an additional mandate to negotiate the liberalization of trade in goods. Similarly, a new working group could negotiate trade in services beyond what is already being discussed in the TTC.
• The EU’s free trade agreement with Argentina, Brazil, Paraguay and Uruguay (Mercosur) should enter into force as soon as possible. All EU countries should also finally ratify the EU-Canada Comprehensive Economic and Trade Agreement (CETA).
• Negotiations for free trade agreements with Australia, New Zealand and Indonesia should be concluded, as should the modernization of EU agreements with Mexico and Chile.
• In line with the ambition to deepen cooperation with like-minded countries globally and to diversify EU trade flows, options for a deepened EU partnership with current members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) should be explored.
• Since many EU firms are now looking for alternative production sites within or close to the EU because of the war and sanctions, the EU enlargement process should receive a new push as soon as possible.
• The EU's internal market needs to be strengthened and protected from fragmentation. European integration must accelerate, and the four freedoms be extended to more areas of the economy. During times of crisis or war, the EU's internal market is crucial to our resilience.

With measures like these, the EU would improve resilience, diversify imports, and strengthen industrial productivity by giving EU firms access to key inputs and technology. While EU trade is now blocked in one end, the strategy would open EU export opportunities in several other directions.

Ultimately, economic integration with our like-minded partners contributes to a more prosperous and peaceful world. Hopefully, Russia will one day join that world.

Anders Ahnlid
Director-General