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POLICY BRIEF # 02 , 2020

Impact of the COVID -19 Crisis on EU

Trade Policy: Our Five Cents to the D ebate

Executive Summary

The resilience of the neoliberal free paradigm in the post-

COVID-19 era should not be underestimated, at least in the short term. The EU’s trade policy response has so far been compliant with philosophy and this has not faced serious challenges yet.

Ostensibly protectionist measures are explicitly framed as temporary and exceptional and have been accompanied by liberalising proposals. In the medium and long term, paradigm change may happen. However, the authors warn that such shifts may not be as romantic as envisaged by deglobalisation advocates, because also securitisation looms as a realistic and dangerous alternative.

While both deglobalisation and securitisation involve less trade, their

political underpinnings are radically different.

Keywords

Keywords here

Written by JAN ORBIE and FERDI DE VILLE

Edited by Andrew Dunn

© University Institute on Comparative Regional Integration Studies, 2020

The views expressed in this publication are those of the author and do not necessarily reflect the view of the United Nations University. Introduction facilitates protectionist sentiments and perhaps even shifts towards authoritarianism, which reminds of the interbellum period of beggar- Undoubtedly, the world will never be the same thy-neighbour . others see an after the corona crisis. Notwithstanding the opportunity to dismantle globalisation in favour dreadful events all over the world, the current of more local and more sustainable production. crisis also provides a fascinating episode for There are calls for ‘reshoring’ of critical and researchers. We refer not only to virologists but strategic industries, practices of also to social scientists who have, by default, a ‘nationalisation’, and border controls have been keen interest in political, economic and societal re-established, but it is unclear how sustainable shifts. Scholars studying the (in both senses of the word) government (EU) already have some experience with interventions will be. analysing crises. Not only are EU policies bound to change, many observers alert that the entire When aiming to come to grips with changes and European project is at stake. The scholarly continuities in EU trade policy, our starting point debate and political struggle to understand the is blunt and clear: EU trade policy is outspokenly crisis has already started. neoliberal. This is despite some emphasis on ‘harnessing’ or ‘managing globalisation’ With this policy brief, we aim to contribute our through trade and ‘sustainable’ or ‘ethical’ trade ‘five cents’ to this debate. In doing so, we focus arrangements, as well as protectionist and on the EU’s trade policy. Trade is one of the EU’s mercantilist tendencies in defence of sensitive strongest policy domains: the EU has an industries and toward economic competitors. exclusive legal competence, significant Overall, the EU has assertively (some would say, power, and strong historical track record. aggressively) pursued free trade at the Europe’s common commercial policy projects multilateral level of the World Trade the essence of the European construction, Organization (WTO) and most visibly through a which is the of market new generation of bilateral free trade integration, towards its relations with the wider agreements (FTAs) concluded with Korea, world. The future of trade, as one of the key Japan, Canada, Vietnam, the Andean dimensions of globalisation, has also been Community and many other countries in the central in the debates on the impact of the Global South. Since the end 1980s, interests, corona crisis. ideas and institutions of EU trade policy have At first glance, soundbites given and measures consistently coalesced into a neoliberal trade taken by EU trade policy representatives seem paradigm. This involves an obstinate belief that confusing. While the European Commissioner ever more and liberalisation will bring for , Phil Hogan, stresses the growth, which eventually entails peace and need for open trade and even more intensified to societies. liberalisation (especially in medical equipment), We are thus mainly interested in how this the French Minister of Finance Bruno Le Maire neoliberal paradigm might be affected by the argues in favour of “European industrial corona crisis. We also pay attention to new and sovereignty” and “legitimate protection”, and nitty-gritty EU trade policy measures, but mainly even the Dutch Trade Minister (not known for from the vantage point of whether and how protectionist inclinations) says that “it is time to these relate to changes of the EU’s free trade take a step back” and “rethink our trade deals to orientation. How might the current crisis impact take a closer look at sustainability in value on the neoliberal trade paradigm and under chains”. Some warn that the corona crisis what conditions might we see alternative

Policy Brief 2 paradigms emerging? A long procession of until a complete overhaul of existing structures pundits is announcing an entirely different has taken place? world when the corona crisis is over, but can we While it is too early to make predictions, it is expect the EU to throw its free trade recipes out high time for debating the post-corona era. of the window in order to be replaced by… Despite uncertainties, we do have some basic what? theoretical frameworks and insights from historical precedents, as will be shown in the Cent 1: We Don’t Know next two sections.

Let’s start with an easy but important caveat: just like virologists have apparently not really had a Cent 2: Paradigm Change: clue about the virus’ implications and are A Basic Framework learning-by-doing, social scientists should also be wary about making predictions and can only We do have some conceptual tools at our hope for progressive insights (pun intended). disposal to think about change and continuity. Political scientists have proven to be particularly Based on Peter Hall’s work, scholars generally bad at forecasting the future – particularly in distinguish three ‘orders of change’ in politics. advance. We tend to overemphasise continuity First-order change or ‘policy change’ only in uneventful times and overestimate changes in involves an adjustment in the settings of existing times of crisis. Much depends also on how a instruments. Second-order change or ‘crisis’ is defined and interpreted, something ‘programme change’ refers to innovations in the about which academics typically disagree as it policy instruments themselves. Most often closely relates to their personal fundamentally, third-order change entails a true preferences and (sub)disciplines. People’s paradigmatic shift. Importantly, ‘paradigm worst fears and fiercest hopes become change’ involves a radical rejection of how we projected onto predicted change and used to think about organising society and a continuities. shift in its philosophical underpinnings. Predictions on the future course of a policy Therefore, our interest in paradigm change of domain such as commercial policy become EU trade policy involves not only measures that even more difficult as this is inevitably pursue free trade and export-led growth entangled with wider domestic and somehow differently, but more fundamentally international developments. EU trade policy whether its neoliberal foundations (the belief changes would be contingent on how the that free trade is desirable as it maximizes well- economic recession will be addressed, on being and every deviation from that principle whether the crisis leads to more conflict or should be strictly exceptional and conditional) cooperation between countries in Europe and may be eroded or even replaced. worldwide, on domestic political changes all Moreover, the drivers of paradigm change are over the world, and many other (f)actors. also well known. From existing studies, three What makes it even more difficult is that analysts conditions for change can be identified. First, use different benchmarks to evaluate change. the extent to which a crisis is seen as seriously What constitutes meaningful change? Do we undermining existing beliefs. Rather than notice relevant policy shifts when instruments ‘objective’ causes, it is important to understand are modified to cope with the new situation, or the perceived roots of the crisis – which are do we refrain from talking about real change typically manifold and hence open for political

3 Policy Brief debate. What exactly is this a crisis of, and But first, it needs to be stressed that despite therefore how should it be tackled? Second, some superficial indications of the contrary, the whether alternative paradigms are readily current free trade paradigm is not likely to go available and considered to be legitimate. Does away anytime soon. the slogan used by Margaret Thatcher that “There Is No Alternative” (TINA) still hold today? Third, how much the crisis has shaken up Cent 3: Neoliberalism is existing power structures. Established forces Resilient and Re-inventive might be obligated to give up on their privileges, but they may also retain their Paradigm change is rare. Based on precedents, positions and even use the opportunity to it seems premature to announce it during times strengthen their power. Who wins and loses of crises. Despite manifold predictions of a new from the crisis and possible alternatives? Keynesian and anti-neoliberal era, the Asian and global financial disruption of 1997-1999 and the American and European banking crisis of 2008- 2009, have not involved significant change. For some, these crises have damaged the legitimacy of the neoliberal paradigm, but overall, the EU has reverted to ‘business as usual’ policies. Moreover, crises might even reinforce neoliberal policies and beliefs, depending on how they are interpreted, on what beliefs are dominant, and on who is in power (see the three conditions above). As we will see below, this is a feasible scenario. Figure 1: Paradigms and drivers of change Paradigms are no fixed objects that can be Hence, we need to evaluate how the corona overthrown with a single well-aimed shot. They crisis would be perceived from a trade are dynamic and inventive in readjusting perspective, how it affects our thinking on EU themselves through crises. Such creative external trade, and whether it has impacted on reinvention (rather than destruction) typically power relations inside and outside the EU. This involves new policy measures and experiments framework (Figure 1), which we have also that are sometimes portrayed as radical explored in relation to the EU’s trade policy departures from previous, delegitimised response to the euro crisis and the current practices – which adds to their legitimacy. challenges in EU development policy, makes it Paradigms are continuously being stretched easier to structure and critically assess the and transformed, without touching the impacts of the corona crisis on EU trade policy. underlying ‘third-order’ beliefs. One strategy in It helps not only to put putative changes into this regard is to co-opt concepts from critical perspective (policy shifts are not always as corners, such as ‘sustainability’, ‘participation’, radical as they are presented!) but also to foster ‘partnership’, ‘fairness’, ‘’, alternative imaginaries of what trade policy ‘resilience’, ‘inclusion’, ‘participation’, could be (what is out-of-the box?). While it ‘governance’ and ‘multi-stakeholderism’, and remains difficult to know what such alternatives soon perhaps ‘strategic security’ or might be, we will below elaborate on two ‘deglobalisation’. Once radical concepts are candidates: securitisation and deglobalisation. stripped of their political meaning and subtly

Policy Brief 4 moulded with neoliberal logics, they can be trade minister equally emphasised that the idea used in a technocratic way. of strategic reshoring “makes sense only if it is limited to certain very specific sectors such as The “strange non-death of neoliberalism“ has steel”. Similarly, the chairman of the been observed before. In relation to the euro International Trade Committee of the European crisis, protectionism was seen as the problem Parliament, Bernd Lange, qualified that “just-in and more free trade as a solution, which made time production will be reduced a little bit”. the EU even reinforce its free trade orientation. While far-reaching and permanent reshoring While critical observers and activists saw the might entail deglobalisation, the EU’s response crisis as clear evidence of the failure of the so far has been much more modest: growth-led economic paradigm, the impressive compromising a bit on efficiency to guarantee range of measures taken seemed only of first- supply of a confined number of products. In and second-order extent. In terms of trade, the addition, EU trade policymakers have even reinforced its highlighted that the strengthening of the WTO, efforts in negotiating trade liberalisation including the creation of an interim appeals agreements with strong economies such as mechanism, the so-called ‘Multi-Party Interim Canada, Japan and the US. Arbitration Arrangement’, is all the more Applied to today’s EU trade policy, the concrete important “to help us recover from this crisis”. measures and proposals that we have heard so The same applies to European export far clearly signal continuity more than anything restrictions. While initially there were many else. Despite calls that we may witness a new concerns about export restrictions of some EU Keynesian moment or even an overthrowing of member states like Germany, the European capitalism, nothing close to paradigm change Commission quickly took the initiative to seems to be happening so far. Two points are Europeanize an export authorisation regime in important to emphasise in this regard. First, mid-March, which would be further narrowed there has been much talk about ‘reshoring’ the down to a limited number of products by end- production of ‘strategic’ industries to Europe. April. EU Trade Commissioner Phil Hogan This is not surprising given the inadequate stressed that these are emergency measures supply of medical and pharmaceutical that should be “targeted, proportionate, products. However, there are so far no transparent and temporary” – adding that no indications that this would go beyond a limited export restrictions should be applied in the agri- number of ‘critical products’ such as protective food sector; and on 16 April he reiterated that workwear, ventilators and other medical “a full reshoring of European industries would equipment. It would be premature to see this as be impossible“. Also the chairman of the the hallmark of a new industrial policy (in fact, trade committee and the the EU had already adopted a ‘new’ industrial Croatian President of the Council of EU Trade policy following the euro crisis which turned out Ministers nuanced the need for reshoring. The to be old in new bottles). Former Trade latter stated that “our immediate challenge is to Commissioner was quick to keep trade flows open”. warn that the list of “critical industries” should not be interpreted too widely and to mention an Second, some measures intensify the free trade anecdote whereby the French once designated logic rather than deviating from it. We may yoghurt as a strategic industry (anecdotes and indeed see EU trade policy going beyond the stereotypes about the French are always helpful status quo by pursuing ever more liberalisation. to warn against supposedly protectionist Early April 2020, the European Commission tendencies). An influential MEP and former

5 Policy Brief decided to temporarily waive import tariffs of with suppliers in the Global South, for instance medical devices, and protective equipment, the garment industry in . While the from third countries. Similar initiatives to initial focus on European health and economic facilitate trade in products that are essential to concerns is understandable, it remains to be fight COVID-19 are taken at the levels of the seen how the EU or the member states might WTO and the World Customs Organization. At deal with companies that cancel orders and fail the virtual G20 summit on 30 March 2020, Trade to pay for products that have already been Commissioner Phil Hogan strongly argued to made. The EU could take initiatives in this “remove all restrictive measures on imports, respect. For instance, EU member states could notably on the side, that were introduced transpose the Unfair Trading Practices directive before the pandemic, and set a moratorium on more swiftly and extend it beyond agri-food new unilateral tariffs”, and to “eliminate all tariffs protects to include and garments. on COVID-19 related products”. In the same Budgetary support to European enterprises in context, he urged the WTO members to the context of the crisis could also be made urgently work on the development of conditional on honouring fair trade international rules on digital trade. Also Bernd commitments. It seems that EU trade policy Lange and the European Parliament ask for the makers have not yet communicated on this swift conclusion of an e-commerce agreement dimension of the crisis. Following the EU’s at the level of the WTO. Phil Hogan summarised neoliberal and ‘hands off’ approach to fair trade, his speech by arguing for “greater competition such ethical concerns remain the responsibility and the removal of unjustified barriers.” On 16 of companies, while the EU typically provides April, the Commissioner reiterated this call and rather than changing trade argued for a “plurilateral agreement that would structures. Early April, the EU announced the lead to a level playing field, including the creation of a €5 million emergence cash fund for possible permanent liberalisation of tariffs on garment workers in . The European medical equipment”. Parliament does mention the interests of Southern countries, namely by emphasising that Remarkably, in response to the COVID-19 crisis these would benefit from more open the European Commission also announced its international trade. intention to speed up talks with a far-reaching free with the United States. A In terms of co-optation of (formerly) critical Commission spokesperson clarified that “efforts concepts, EU trade policymakers at an informal to improve transatlantic regulatory cooperation Meeting of EU Trade Ministers on 16 April include areas very relevant for the fight against emphasise that supply chains should become the coronavirus outbreak, such as medical “resilient” and “sustainable”. Afterward, the devices and pharmaceuticals, including Dutch Trade Minister Sigrid Kaag explicitly vaccines”. If that works out, the crisis would stated that EU trade deals should become more facilitate the finalisation of an agreement that “sustainable” and “inclusive”. Previous research was in its previous form (the Transatlantic Trade shows that the emergency of “resilience” and and Investment Partnership, TTIP) highly “sustainability” concepts in EU trade discourse contested for its undemocratic and liberalising can be quite compatible with neoliberalism. nature. The European Parliament’s international To be sure, there are signs of stronger trade chair, in contrast, stated that “the United government intervention through trade. Mid- States are out of the game at the moment”. April the European Commission proposed a Meanwhile, several European brands and new export authorisation measure for certain retailers have failed to honour their contracts items of personal protective equipment.

Policy Brief 6 However, these are temporary, confined to Lange argues for “due diligence” legislation and specific products, and successfully aimed to making sure that the global supply chains are prevent export restrictions within the EU and “really fair”. In a resolution, also the European guarantee the internal market. The Commission Parliament states to be “convinced that also published guidelines on screening of corporate and environmental due incoming foreign direct investment, aimed to diligence are necessary conditions in order to avoid “predatory” take-overs of weakened and prevent and mitigate future crises and ensure strategic European firms such as sustainable value chains”. Again, however, this pharmaceutical enterprises developing a is in line with previous demands and the free vaccine. However, this merely concerns trade and growth model is not questioned. legislation that was approved already in 2019. In sum, what we have seen and heard on EU And while many analysts have quoted the policy measures so far suggests continuity, with French Minister Le Maire’s statement about some first-order change. Interventions have “economic sovereignty”, “reorganisation of been relatively limited and embedded within a value chains” and “legitimate protectionism”, free trade discourse. It should also be noted that they often fail to notice the explicit statement even the neoliberal night-watchman state would that the protection of strategic industries will not not exclude firm government intervention concern a major shift towards economic during times of emergency. Proponents of this intervention and that any nationalisation would vision have recognised that in the very acute be temporary. As noticed by Le Maire himself, phase of the crisis, “we are all Keynesians”, but the position is quite consistent with French are already calling for a return to ‘normal’ as approaches to political economy at the EU level quickly as possible. Meanwhile, there have been over the past years. More generally, it should be initiatives for further liberalisation and noticed that French calls for protectionism seem strengthening of the WTO. Ongoing to be a typical ingredient of economic crises – negotiations of free trade agreements with see also the global financial crisis of 1997-1999 Australia and New Zealand – which arguably do and the eurocrisis of 2008-2011 – and should not contribute to shorter supply-chains or therefore be taken with a grain of salt. It is also reshoring ambitions – have not been clear that the French government does not questioned by the main trade policymakers in argue for alternative production models the Commission, Council and Parliament. On 28 involving less . April, the Commission concluded an ambitious Overall, it would be premature, to say the least, trade agreement with . to see Le Maire as the vanguard of the

deglobalisation paradigm. Similar disclaimers apply to the Dutch Trade Minister’s plea for rethinking EU trade deals to make them more sustainable and inclusive: these concepts have in recent years been successfully combined with a neoliberal trade course (see above) and the Minister clearly adds that the Netherlands remains an “open trade country”, that Europe should keep faith in “global trade and global value chains”, and that the Commission should take up initiatives that are “based on the rules of the ”. Similarly, Bernd

7 Policy Brief

Table 1: What’s the problem? Causes, solutions, and EU trade policy

In order to understand this status quo, we refer to any interested company”. As said above, to the three conditions above. The perception another response has been to abolish tariffs for of the crisis seems particularly important. In the imports of medical equipment, which will, ongoing discursive struggle on the nature of the according to EU Commissioner for Economy crisis – the causes and solutions – those Paolo Gentiloni “help (European health advocating the status quo point at three causes. workers) to receive the equipment they need to First, the crisis as a quirk of nature (indeed, a protect themselves and continue saving lives”. virus). It is an externality that requires technical Reshoring should be limited to a specific solutions and emergency measures. There is number of products. In this regard Bernd Lange hence no need for structural changes. Second, refers not only to the fact that the price of there is a problem of insufficient capacity to products might increase as a consequence of produce equipment to fight COVID-19 and reshoring, but also to the harmful impact of insufficient strategic reserves of such products. reshoring production on developing countries The best ‘guarantee’ to solve this is through “the that rely on of and other products global integration of supply chains”. Hence the to Europe. Third, the export restrictions that problem lies with the supply side, which should some EU member states and other countries be adjusted; and the maximum that have imposed on critical equipment are framed governments can do is “encourage all as the problem – not the solution. They are manufacturers” to increase capacity, not by framed as instances of ‘coronationalism’ that investing in these industries but by “making endanger the European project. Thus again, the standards for medical supplies freely available solution is more free trade. As argued by the

Policy Brief 8 Simon Evenett, director of Global Trade Alert Nevertheless, there are alternative views in the and influential free trade advocate: trade making and the current crisis might strengthen barriers put “countless lives at risk” whereas them. We have shown above that the EU is open trade can help in “fighting the pandemic” stretching the neoliberal paradigm rather than as well as the “future economic fallout”. replacing it with something else. However, if stretched too far its legitimacy may be Whether this narrative would be successful, undermined. The next section warns that in depends also on whether alternative paradigms addition to deglobalisation, also securitisation are available and accepted by those who might be a candidate for paradigm change. occupy power positions. Although the neoliberal paradigm may once more lose some of its feathers, and EU policymakers may be less Cent 4: The Alternative May convinced this time, compared to the time of the euro crisis, that free trade is the solution to Not Be Romantic the crisis, it remains hard to find challenging paradigms that are comprehensive and that Progressive thinkers and activists arguing for receive wide support. Indeed, it seems that deglobalisation surely have a point that There “There Is No Alternative” (TINA). The myth that Are Many Alternatives Ready and Available we all have benefited from free trade (‘win-win’) (TAMARA) that have been developed before after the second , which was caused the outbreak of the corona crisis. There have by protectionism in the 1930s, remains been plenty of calls for degrowth, postgrowth, intuitively appealing. Against this background, postdevelopment, foundational economy, numerous observers have warned against economy of the common good, circular and ‘coronationalism’ related to protective trade other doughnut economies. Thought exercises measures. on progressive, emancipatory and transformative alternatives have received a It is also a powerful narrative. Not only export growing popularity – and for good reasons. competitive businesses in the ‘North’ benefit Experiments with more sustainable food chains, from free trade but also ‘emerging’ (or alternative energy arrangements and banking emerged) economies such as have a systems have been mushrooming, particularly strong interest in pursuing free trade. Despite at the local level. Such initiatives may be less second-order variations, also states such as prominent in news reporting on the crisis, but China, Brazil, and South Africa have they are happening on the ground. The embraced the growth-based paradigm. Within deglobalisation scenario involves the the EU, Business Europe, the biggest EU lobby disintegration of global value chains. It aims for group of corporations, and the pharmaceutical more local and sustainable trade flows, and industry associations have explicitly demanded hence also less trade overall. However, that to “to maintain open trade and efficient supply does not exclude solidarity at the international chains, both within the EU and with the EU’s level. Radical reforms of the trading partners” and to “manifest the EU’s should address social and ecological injustices, leadership role in defending an open and rules- for instance by reforming international based global trading system”. Influential think institutions such as the WTO and the World tanks also highlight the need to avoid trade Bank, guaranteeing fair taxation of multinational restrictions and promote liberalisation to companies, providing debt relief for highly address this crisis. This is a message that very indebted countries, re-establishing capital much resonates with the European Commission’s response as stipulated above.

9 Policy Brief controls against speculative capital, and indeed (formerly) radical concepts are hollowed out. legitimate brakes on global trade. The proof of the doughnut is in the eating. The problem may not be the substance of the On a structural level, the failure of the ‘west’ to proposed alternatives, but rather the lack of a address the current crisis may catalyse the clear and single model (condition 2) that ‘dewesternisation’ and even the ‘decolonisation’ receives wide acceptance with those in power of the world. This involves a material shift in (condition 3). When the world shifted to power, for instance through the renegotiation of Keynesianism in the late 1940s, this not only EU trade agreements with African countries and followed the of a second world war but the strengthening of the African Free Trade also the general acceptance of the ideas of John Agreement, as argued by David Mwambari. At Maynard Keynes, which had been elaborated the same time, as noted by Olivia Rutazibwa, it and even partly applied in the 1930s. The turn involves an epistemic shift of the “geopolitics of to neoliberalism in the late 1970s and 1980s knowledge” whereby “western superiority” followed not only a decade of stagflation but receives a blow and “alternative (anti-colonial) also 30 years of advocacy of alternative solidarities” emerge. In terms of alternatives to economic ideas by Milton Friedman, Friedrich neoliberal globalisation, it will be important to Hayek and their followers. Unfortunately, follow-up on whether the corona crisis advocates of deglobalisation have not yet effectively shakes up global power structures reached such a prominent status, and certainly and how exactly new powers stand towards the not with those in power. There also seems free trade dogma. disagreement between progressive thinkers It is also unclear how successful deglobalisation about the role of economic growth (versus advocates will be in interpreting the current degrowth?) and whether the WTO should be crisis for their agenda (condition 1; see Table 1). reformed or replaced by a more legitimate When it comes to the cause of the epidemic, two institution. issues have been stressed. First, the growing To be sure, deglobalisation alternatives are in a number of zoonotic diseases (such as Ebola, stronger position than they were during the swine flu, and COVID-19) stems from the crisis of 2008. Activists can rely on previous increased expansion of humans in previously experience, networks and expertise. Relating to undistorted ecosystems. Equally, critics have trade policy contestation, there is experience pointed to links between zoonotic epidemics with the ‘Seattle to Brussels Network’ and the and the growth of industrial farming. The ‘Alternative Trade Mandate’. There are already consequence of this analysis is that humans meaningful changes following the should find a new balance with ecosystems, as ‘coronashock’, such as the city of Amsterdam environmentalists have been arguing for embracing Kate Raworth’s doughnut model at decades. Or concretely, that people should shift city level, and a recent (the to plant-based eating. Specifically relating to EU newspaper of the global financial elite) editorial trade policy, there have already been calls from arguing that formerly utopian ideas such as a some members of the European Parliament and “wealth taxes” should now be taken seriously. environmental groups to ban wildlife trade. French President Emanuel Macron pleaded for Given the amount of legal and illegal trade of a “massive debt cancellation for African exotic animals in the EU, a new zoonotic disease countries”. Let’s see if such initiatives are the could as well have emerged in Europe instead harbinger of paradigm change or rather of China, they argue. Second, globalisation has another co-optation strategy whereby made it easier for viruses to quickly spread all over the world. The current crisis exposes the

Policy Brief 10 vulnerability of world-wide transaction flows. turns into a crisis of food security and also Worldwide trade and mobility have made our damages the EU system of food supply. societies extremely vulnerable for the spread of European civil society organisations claim that diseases, while global value chains have the current crisis shows the need for an exposed our dependency on key equipment ambitious ‘Farm to Fork’ EU food strategy; such as masks or ventilators and have made us although a food crisis could be interpreted as generally vulnerable for distortions that may evidence for the need of even more free trade. occur unexpectedly in the ‘just-in-time’ delivery So far, open trade has been the dominant EU model that characterise these value chains. As discourse in reaction to the crisis, as explained with the climate crisis, the COVID-19 episode above. European trade policymakers have not once again illustrates that our obsession with fundamentally questioned global value chains – economic growth leads to unsustainable except that for specific products reshoring back outcomes. It also reinforces inequalities within to Europe has been advanced and it has been and between societies. Interestingly, not only argued that global value chains need to the ascribed causes of the crisis but also the become ‘resilient’, ‘sustainable’ and ‘inclusive’. current response is being interpreted as Instead, there are indications of the trade something that can favour this agenda. By measures that might herald another paradigm, putting a break on globalisation, we are now namely securitisation. There are indeed also not forced to cope with negative growth, to attractive alternatives (TAANAA). Under the reconsider local production, to break global more dangerous ‘securitisation’ paradigm, value chains, and to strengthen solidarity nation-states (or perhaps the EU as a whole) between people. As the fair trade movement pursue first and foremost their security and puts it, the crisis provides an “opportunity to sovereignty in what they consider a Hobbesian radically rethink the unsustainable and unequal world where people and countries are in a global growth model and replace it with an continuous struggle for survival. This basically emphasis on well-being, sustainability and corresponds with what International Relations equity”. Strengthened by evidence that the scholars, cynically, call the ‘realist’ school. lockdown societies have shown exceptional Liberal values such as freedom of speech and solidarity between people and changed our international interdependence become views on work-life balance and the need of a subordinated to the overriding goal of security. healthy life, this scenario would advocate a The securitisation paradigm involves a high radical restructuring of the global economy suspicion towards anything ‘foreign’ and ever- towards more local and sustainable units. In this changing coalitions of allies and enemies at the scenario, degrowth is likely while social and international level. The corona crisis is then ecological concerns drive trade (and other) above all a security threat, even a state of war, policies. Inevitably, this involves the that needs to be combatted with all available marginalisation of trade policy in the armoury of forces and at the expense of liberal democratic the EU and/or the renegotiation of bilateral and values. multilateral trade agreements into arrangements that foster sustainable trade. How would these movements then interpret the corona crisis for their own benefit? Two points It is too early to assess how convincing this can be suggested (see Table 1). First, problem definition would be, and as argued ‘foreigners’ would be blamed for the virus. above whether it will manage to present a clear There is anecdotal evidence of rising hostility alternative and powerful paradigm. It is more against Chinese nationals in the beginning of likely to become successful if the corona crisis the corona crisis, and Asian hostility against

11 Policy Brief Europeans in the subsequent phase. In public for their own agenda, as we have seen in debates, the fact that the virus (‘again’) came Hungary. Also mainstream politicians in Europe from China has confirmed latent racist – for instance, French President Emmanuel stereotypes about the habits of Chinese people Macron – have frequently used war-related (“eating wild animals”) or even confirming terminologies to justify the fight against corona. conspiracy theories (“it was a biological weapon Interestingly, the perceived danger of strategic produced in a Chinese lab”). US President companies losing control to China was not only Donald Trump’s framing in terms of the ‘China discussed around the (virtual) meeting tables of virus’ or ‘Wuhan virus’ fits in this context. Trade Ministers: also the NATO Defence Second, liberal values may be framed as Ministers discussed the issue on 15 April 2020. obstacles against the security of the state and its In other words, the three conditions for people. In this regard, authoritarian states such paradigm change in this direction are partly as China or Vietnam could serve as an example fulfilled. of how a health crisis should be addressed. When it comes to EU trade policy and external Those countries that take most pride in their relations in general, securitisation tendencies liberal superiority and initially assumed that the have already been noticed in recent years. corona crisis could be averted without strong Scholars have pointed out that the EU’s government intervention – the United States neoliberal agenda also tends to shift towards and the – have proven to be securitisation). Some have coined the new trend hopelessly naïve. As noted by a Chinese of geopoliticisation of EU trade policy. It may diplomat, ‘some western countries are starting also fit within the ambition of Commission to lose confidence in liberal ’. President Ursula von der Leyen to become a In this scenario, trade policy loses its relatively ‘geopolitical Commission’. The ‘hardening’ of autonomous position in the EU’s institutions. the EU’s commercial policy can be seen most Trade instruments become geostrategic tools of notably towards China, which was recently the EU’s foreign and security policy. Although labelled an ‘systemic rival’ by the European economic growth continues to be important, it Commission. In the context of the corona crisis, is no longer a panacea. Instead of pursuing free the Commission decided to publish guidelines trade under the assumption that – eventually – on screening of incoming investments, which everyone will benefit, trade policy henceforth might entail a stronger approach than what was discriminates specific countries depending on agreed in 2019. While the Commission whether they are allies or enemies. continues to argue in favour of ‘open trade’ and Institutionally, trade policy would be transferred ‘open investment’, some member states are from the European Commission to the clearly keener on protecting national and/or European External Action Service (EEAS) or European markets. even back to the member states. Undoubtedly, we are far from a full-fledged This scenario may (hopefully) seem unlikely. securitisation and any indications should be However, it resonates with anti-liberal, radical interpreted cautiously. Our main point is that if right-wing forces that have been emerging in a true paradigm shift would happen, the Europe (and elsewhere) over the past decades. progressive deglobalisation scenario is not the In other words, the securitisation scenario is only candidate, and we should keep an eye on already being written as an alternative the alternative of securitisation. Pursuing the paradigm against the ‘liberal’ and end of neoliberalism carries the danger to throw ‘cosmopolitan’ elites. Moreover, authoritarian the baby out with the bathwater – or the liberal regimes are already effectively using the crisis

Policy Brief 12 values of western with the ‘new’ Conclusion radical agenda of the 1980s to deregulate, privatise and liberalise at the expense of The EU’s trade policy response to the corona collective interests. In addition to watching crisis has so far been in line with the reaction to closely how things evolve, concrete actions of the euro crisis: export restrictions should be individuals and groups also matter as limited and temporary, open trade is essential highlighted below. for guaranteeing medical equipment, more liberalisation will be part of the solution and may Cent 5: Agency Matters eventually be necessary to recover from the economic fallout. While the problem is framed People make a difference. None of the changes in terms of technicalities (health system or continuities are fully determined by some functioning and productive capacity of key logic that is outside human behaviour. All three industries), solutions comply with the EU’s conditions for change - the perception and strong belief in the benefits of free trade and interpretation of the crisis, the construction of remain at first- or second-order levels. alternative paradigms, and shifting power We have suggested that the neoliberal relations – implies a struggle between people. paradigm remains powerful and displays On EU trade policy, we have seen that the scope resilience, despite the emergence of of conflict has radically enlarged since the alternatives such as deglobalisation (the ‘battle of Seattle’ in 1999, the campaign against progressive scenario that involves radical the Economic Partnership Agreements in 2007- democracy) and securitisation (the conservative 2008 and most famously the protests against scenario involving anti- and the free trade agreements with the US and authoritarianism). The latter should not be Canada. The genie is out of the bottle and trade underestimated. Recently, policy will be at the centre of any debate on the warned that if Europe does not manage to ‘tame future of the EU. globalisation’ and address inequalities that are That said, structures are adaptable and resilient. exacerbated through the COVID-19 crisis, Just like it took Friedman, Hayek and other further victories of right-winged populist parties members of the Mont Pelerin Society several can be expected. decades to create, defend and disseminate There is no doubt that the neoliberal free trade their ideas before they became dominant in the paradigm will continue to be challenged and 1980s, so can we see that today people from eventually replaced. It is however highly diverse corners are ‘bricolaging’ alternative speculative when and how this will happen – and ideas against neoliberalism. The anti-TTIP what role the COVID-19 might plays in this campaigns have been relatively successful regard. Going back to our initial remark: it is because they draw on networks and expertise complicated. First, the paradigms are ideal that activists and researchers had started to typical and still sketchy. Thinking about build in the end 1990s during the protests alternative paradigms by definition involves an against the WTO. While a crisis can hit hard and exploration of the unthinkable. We have fast, paradigm change is likely to be a matter of indications of deglobalisation and generations. How this evolves depends on how securitisation, but their contours remain vague. millions of individuals and groups challenge There may also be alternatives that we have not existing ideas and structures. considered. It would be easier to analyse whether trade policy initiatives taken in the

13 Policy Brief current crisis make the EU slightly more protectionist or liberalised. While it is important

to map such first- and second-order changes, it is equally crucial to perform some academic distancing and understand how these measures relate to paradigm change. This requires much more in-depth research that relies on different disciplines.

Second, we may witness the confluence of different paradigms. Societal changes typically involve the implicit or explicit cooperation of

strange bedfellows. Sticking to the trichotomy, we could identify three coalitions. First, neoliberalism and securitisation proponents

have in common that they don’t fundamentally question the holy grail of economic growth. Both are wary about emancipatory politics that aim to address social and ecological injustices. Indeed, also in the context of the EU, scholars have pointed to the ‘authoritarian’ nature of neoliberalism. Second, the securitisation and deglobalisation advocates obviously share an

aversion to the current political and economic elites. Both are also open to more

protectionism, and hence less free trade. Here too, we could find indications in arguments

against dependency on global value chains, and in favour of reshoring and even

nationalisation of strategic industries. Third, the neoliberal and deglobalisation scenarios share common roots in liberal philosophies. Although these play out differently, commonalities might become visible through shared opposition to authoritarian movements. Hence, the trichotomy is not a trilemma but rather a device to reflect on possible paradigm change, thereby transcending the oft-made distinction between free trade versus protectionism. Which paradigm will reign in the future may well depend on how successful these alliances turn out to be.

Policy Brief 14 www.cris.unu.edu

The United Nations University Institute on Comparative Regional Integration Studies (UNU-CRIS) is a research and training institute of the United Nations University whose mission is “to generate policy-relevant knowledge about new forms of governance and cooperation on the regional and global level, about patterns of and decision- making.”

About the Authors

Jan Orbie is Associate Professor in the Department of Political Science at Ghent University. [email protected] / @janorbie Ferdi De Ville is Assistant Professor at the Centre for EU Studies. [email protected] / @FerdiDeVille

Acknowledgements

We are grateful to Deborah Martens, Patrick Holden, Niels Gheyle, Jonathan Matthysen and Diana Potjomkina for useful feedback on earlier versions. All remaining errors are our own.