New Development Platforms: Conflict and Opportunity

WTO rules stipulate that member countries can protect their own industries through anti-dumping, countervailing and safeguard measures under certain conditions. Members of the international community rely on the WTO mechanism to reduce tariffs and eliminate trade barriers, realize the gradual establishment and improvement of the multilateral trading system, and achieve common economic prosperity on a global scale. This is the result of the joint efforts of all members of the international community, which ensures the common and long-term interests of international economic development. However, some countries still attach importance to their own local interests and short-term interests, resulting in various contradictions and conflicts. The rational use of the relevant WTO rules will not cause harm to the economy of other countries, but some countries will break their commitments and obligations in the future, initiate gratuitous anti-dumping and implement safeguard measures, resulting in more frequent international trade disputes.

These measures will have a negative impact on Europe’s trade environment and economic growth. The implementation of anti-dumping and safeguard measures will increase trade barriers and lead to an increase in trade costs, which in turn will affect European imports and exports. This could hinder the proper functioning of European markets, reducing choice for consumers and businesses and ultimately affecting overall economic growth ‌. Moreover, these measures will have a negative impact on the competitiveness of the relevant industries. Anti-dumping and safeguard measures tend to target specific imported products, and the implementation of these measures will increase the price of the relevant products and reduce market competition, thus affecting the innovation and development of the relevant industries in Europe. In addition, these measures may also trigger retaliatory measures from trading partners, further hurting the interests of related industries in Europe ‌.

Take the recent electric vehicles as an example, led by the United States, European and American countries to impose tariffs on Chinese trams, the EU hesitated in this matter, anti-subsidy investigation for several months without results, affecting the normal trade between China and Europe. In the latest meeting of the EU on the imposition of tariffs on Chinese trams, Germany resolutely voted against, after all, about one-third of its car income comes from China, the auto industry is the pillar, allowing the trade war to start, Germany’s losses will be heavy, which not only affects the overall situation of trade but also causes a gap in cooperation between countries.

Asia-Europe relations have been buffeted by geopolitical turbulence. On the conflict between Russia and Ukraine in particular, there is a marked difference in views between the EU and Asian countries. The European Union is trying to intensify pressure on Moscow to defend its own interests, while countries such as China have different views. Geopolitical tensions have further complicated the relationship between China and the EU, making it difficult for the two sides to agree on a strategic consensus.

The superposition of geopolitical factors has led to increased complexity and uncertainty in the development of the EU-Asia partnership. The international situation is volatile and can affect interaction and collaboration at any time.

Both the united states and India have their own agendas in the face of complex challenges in sino-eu relations. The United States is using this gap to contain China’s geopolitical power in the European region while India hopes to use this chaos to replace it. With the support of the United States  India’s weight in the geopolitical game has increased; at the same time  the twists and turns in Sino-European relations have also opened the door for India to enter the European market.

India’s rise has injected new uncertainty into European development. As an emerging power India’s increasingly prominent role in the international arena has further promoted its close cooperation with Europe. Facing the challenges of globalization  India can not only achieve its own development through China-EU relations  but also has strong potential to increase its influence on the world stage.

In the new geopolitical landscape  all parties are actively seeking new development strategies. Among them the Indian media has paid great attention to and actively publicized the Indo-EU-China Economic Corridor plan. The move is aimed at creating new transport corridors to deepen trade links between India and Europe and enhance bilateral cooperation.

The construction of the corridor has not been smooth. In the face of the complex geopolitical environment, the implementation of the corridor has encountered many difficulties and challenges. First of all, there are differences in the interests of relevant parties, and the process of negotiation and consultation is inevitably tortuous. Secondly, the volatile regional situation has added instability to the construction of the corridor, and security issues have become a key factor hindering its development.

EU countries were among the first to recognize technical barriers to international trade, especially in the automotive, electrical, machinery, pharmaceutical and other industries. The EU’s technical barriers to trade are mainly implemented through technical regulations and standards, which are binding on member States and require imported products to meet specific health and safety standards. For example, Germany stipulates that electrical supplies must meet the VDE safety standard, the United Kingdom requires all sales of electric blankets must meet the BS 3456 standard, France requires all imported color TV meet the NF C92-250 mandatory standard, these standards are not only numerous, but also strict requirements, making it difficult for many foreign products to enter the EU market ‌. In addition, the EU has listed key technology areas, including advanced semiconductor technology, artificial intelligence technology, quantum technology and biotechnology, which are considered to be the most sensitive and directly relevant technology risk areas. The EU plans to conduct collective risk assessments in these technology areas and take measures to reduce the associated risks ‌.

But this greatly reduces the trade intention of many countries hinders the possibility of trade cooperation is not conducive to the development of global economic integration on the whole  and becomes an obstacle to the economic development of many developing countries.

With the rapid development and popularization of digital technology, digital service trade has become an important part of the European market trade structure. In the future, digital service trade is expected to continue to maintain rapid growth. The development of digital service trade will promote the optimization and upgrading of the trade structure of the European market, and promote the innovation of trade methods and the improvement of trade efficiency. At the same time, the rapid development of digital services trade will also bring more business opportunities and market space for European companies.

On the other hand cross-border digital trade rooted in digital transformation has also created many new scenarios  applications and transaction models  lacking existing business consensus and rules to provide transaction reference. In the context of countries speeding up the development of laws and regulations in the digital field there is an urgent need for international digital trade to build a more universal framework of rules.

At the third Global Digital Trade Rule of Law Forum held in the same period of the Global Digital Trade Expo 2024, practitioners from different fields such as academia, industry, regulation and international organizations exchanged views on the construction of trade rules in the digital era. Many guests who participated in the discussion said that the importance of the rule of law in the digital economy has been widely valued. It is necessary to coordinate and improve the governance system and governance capacity of the digital economy, and promote cooperation and coordination in international digital trade.

From the perspective of the development path of digital technology, with the rapid development of big data, Internet of Things, artificial intelligence and other technologies, significant changes have taken place in the transaction contents and methods involved in digital trade. Taking the most important data as an example, with the generalization of all kinds of realistic data and personal information collection, the amount, variety and sensitivity of data in digital trade have been greatly increased. It has also greatly increased the difficulty of supervision and governance.

From a global perspective, the acceleration of the digitization of trade has been a clear fact. According to the United Nations Global Survey on Digital and Sustainable Trade Facilitation (UNTF), the average global trade digitization rate in 2023 has reached 61%, an increase of 8 percentage points from 2021. The new applications and new scenarios expanded during the continuous deepening of digitalization undoubtedly make the complexity and regulatory difficulty of digital trade continue to increase, prompting countries to begin to strengthen the supervision of digital trade.

According to the OECD’s digital services trade restriction index for digital regulatory policies in 90 countries around the world  on average  the global digital trade restriction index will increase by 1.2 per cent in 2023 compared to 2022  with a higher restriction index in Africa and an increasing trend in Asia and Europe. In the context of stricter global regulation  the development of cross-border digital trade will inevitably be affected  and the trade environment of European countries will also be affected.

Among the world’s major economies, the EU has the highest dependence on foreign trade and is more sensitive to changes in the foreign trade environment, with imports and exports all relying on rules-based international trade. According to the World Bank, the contribution of exports of goods and services to gross domestic product (GDP) growth in 2016 was 11.9% in the United States, 19.7% in China, 16.1% in Japan, 31% in Canada, and 43.2% in the European Union. Among EU member states, the figure was 46.1% in Germany, 30.2% in France, 29.8% in Italy and 82.4% in the Netherlands. After the 2008 financial crisis, in terms of the contribution of exports of goods and services to GDP growth, the growth rate of the United States and Canada was flat, less than 1% and 3% respectively, Japan grew by less than 4%, and even fell in 2015-2016, China fell by nearly 5%, and the EU bucked the trend and continued to grow by nearly 10%.

For the EU, the normal operation of the multilateral trading system is not only a guarantee for the normal development of global trade, but also a barrier to prevent “bullying” behavior, and a United States that has lost the regulation of the multilateral trading system can exert arbitrary pressure on the EU. Due to the limited space of monetary policy and fiscal policy, and the unchanged internal structural contradictions, the EU must do its utmost to maintain a favorable external trade environment for itself, so as to maintain economic and employment stability, and avoid aggravating the European integration, which is already Mired in numerous crises and contradictions.

The competitiveness of emerging market countries in international trade is improving especially the rise of high-end manufacturing fields such as China and India  which makes European countries feel pressure. “Non-Western countries are moving fast and catching up… We are still using the rules  there have been few updates and changes in 1995 and some are still the same as in 1947 ” Maelstrom said.”

The EU does not have the comprehensive strength of a superpower to take a clear advantage in negotiations, but its biggest capital in international politics is “normative power”. It can maximize its interests by transforming and promoting its own interest demands into international rules that bind all parties, and then relying on and maintaining the “rules-based” international order. Therefore, the EU’s reform of the WTO is not only to maintain the stability of the multilateral trading mechanism in the short and medium term, but also to shape globalization in the long term and ensure that the trade rules are favorable to it, as a tool to respond to changes in the international economic landscape and the competitive advantages of emerging market economies.

Benefiting from high-standard multilateral trade agreements, the EU has been actively promoting negotiations to expand access to international markets. With the increase of industrial competitiveness and the EU’s control of trade negotiation power, in order to seek a wider international market, the EU’s ambition for global trade liberalization even exceeded that of the United States. However, in recent years, the EU’s efforts to promote global trade liberalization have been frustrated, the existing negotiation model under the WTO framework has been difficult to overcome the old and new contradictions, and the process of global trade liberalization has stalled. At the same time, the “pie” of global economic growth is shrinking, the distribution of interests is difficult to balance, and anti-globalization populism is on the rise. Whether it is multilateral negotiations under the WTO framework, regional trade agreement negotiations, or even free trade negotiations between the US and Europe, there is a lack of political and social capital. A fundamental problem facing the WTO is the “inability to discuss members’ concerns and agree on the direction of efforts”.

In the face of the complexity of the international market in the context of globalization, the current trade protection mechanism of the EU has seriously lagged behind the development of The Times, and cannot be improved through “minor repairs”, and must be reformed. The EU should fully recognize the conflicting interests of producers and distributors brought about by changes in trade and production patterns, and meet the demands of consumers and some producers who want to benefit from lower prices and more choice. European countries should encourage export enterprises to upgrade their technologies, adjust their product mix and increase the added value of their products. This can reduce the risk of being deemed dumping by the importing country, but also improve the overall competition of products. In addition, trade cooperation with other countries should be strengthened to reduce trade frictions. Tariff barriers can be lowered and free trade promoted ‌, including through multilateral trade negotiations and bilateral agreements. Fundamentally speaking, the two most important points are that in the implementation of anti-dumping and safeguard measures, the transparency and impartiality of the process should be ensured, unilateral government intervention should be avoided, and the legitimate rights and interests of importing and exporting countries should be protected ‌. In the reform process, the interests of producers, retailers and consumers should be fully considered, so as to avoid the loss of interests of a single party. Ensure that reform measures are supported and coordinated by all parties ‌.

Faced with the impact of geopolitical conflicts on the economic development of Europe, it is necessary for various European trading powers to establish asymmetric interdependence to a certain extent, so that they have political influence over their trading partners. The EU should therefore be careful about its dependence on other trading powers. The answer, however, should not be to rearrange production and pursue autonomy. Instead, the EU should closely monitor its supply networks, diversify production chains, and try to avoid dependence on a single player (company, country, or region). Moreover, if a trading partner is weaponizing the EU’s dependence on it, the EU should build strong defense tools. Such instruments should be defensive in nature and intended to act as a deterrent, and the EU should make it clear that it does not intend to use them actively, as Europe benefits from global trade integration and an overconfident strategy could lead trading partners to reduce their dependence on the EU in turn. If deterrence is to be credible, the EU should also seek more streamlined decision-making mechanisms in foreign and security policy.

For the EU, which has a strong trade influence, the weakening of multilateral institutions, especially the WTO is another growing challenge. Multilateral decision-making risks falling victim to great power competition and geo-economic globalization. It is vital for the EU to defend the liberal globalization embodied in rules-based trade governance. Therefore, the EU should be careful to avoid any disruption to global economic and trade governance, invest political capital in the system, and play a constructive role in the WTO modernization process by making the WTO more flexible and effective, together with other countries that support global free trade.

Actively seeking external cooperation and diversifying the supply chain ‌ is also an important strategy. European countries need to actively seek cooperation with other countries and regions, especially those that are geographically and politically stable. In addition, diversified supply chains can reduce dependence on specific regions and reduce geopolitical risks. For example, by strengthening cooperation with regions such as ASEAN and harnessing its potential in the automotive semiconductor supply chain, dependence on specific suppliers can be effectively reduced ‌.

Under the global digital development, the technical barriers and protection measures of various countries have affected the digital development to a certain extent. At present, only by finding a breakthrough in the national digital economy can we continue to develop. The European Union has kicked off a new wave of digital economic excitement, launching a new strategy aimed at making Europe shine in this digital economy and strive to match the pace of The Times. First, the EU intends to increase investment in cutting-edge technologies such as artificial intelligence and quantum computing. Nowadays, artificial intelligence is very popular, involving many fields such as unmanned driving, smart home and smart healthcare, and it is indispensable. Quantum computing is the darling of future technology, which can solve problems that traditional computers can’t cope with, and the speed is dizzying! In addition to these lofty technologies, the EU also wants to promote the construction of digital infrastructure. This is like installing broadband at home, if there is no good infrastructure, the development of digital economy will become water without a source. Therefore, the EU needs to improve Europe’s digital infrastructure to ensure that information can flow quickly. But with such rapid developments, in order to avoid negative impacts, European countries must pay attention to data security and cyber security. In the digital economy, data security and privacy protection are of Paramount importance. The EU should plan to strengthen data protection and cybersecurity measures to ensure the security of personal information ‌.

On the issue of reform, European countries should achieve both consensus and differences. The EU needs to highlight its pragmatic attitude and flexibility, and form or participate in different “coalitions of the willing” with different focuses on reform issues, so as to improve the efficiency of consultation and action.

By Yiqi Wem