Trade chief rushes to change EU’s foreign trade policies

In response to the collapse of the World Trade Organization talks, the European Trade Commissioner Peter Mandelson will next week (Wednesday 4 October) announce a new strategy for promoting trade abroad.

The essence of Mandelson’s response will be that free trade areas (FTAs) should be established with the EU’s biggest trading partners around the globe, as soon as possible.

By the end of the year he hopes that EU member states will have given the green light to negotiate with countries or trade blocs in Asia, Eurasia and the Americas.

Whereas previous attempts to secure FTAs were predicated on development aims, or boosting regional co-operation, Mandelson now wants market potential to be the sole criterion for establishing whether an FTA should be sought. He is promising a more "activist" approach to opening foreign markets to EU goods, services and investment. As such, the emerging markets of South America and Asia are his main focus.

He has argued that while the EU has done very well in static markets, it has not been successful enough in the rapidly growing economies of Asia.

But in this quest to open markets around the world Mandelson finds himself at something of a competitive disadvantage.

After becoming commissioner in 2004, he continued the policy established by his predecessor Pascal Lamy. Lamy, who had become chair of the WTO, argued that the EU’s focus must be on the multilateral trading system, and put a freeze on any new FTA negotiations until the conclusion of the WTO’s Doha round.

Others did not follow that rule. The WTO estimates that there are currently around 300 regional trade agreements in operation, many of which have been negotiated since the creation of the WTO in 1995.

Andreas Schneider of the Centre for European Policy Studies says: "The EU has been forced to start considering bilateral agreements with its trade partners so as to not fall behind compared to countries like the US who are now champions of bilateral free trade agreements."

The US has been working hard to create an Asia-Pacific free trade area and the free trade area of the Americas.

Elsewhere FTAs are being forged between Australia and Japan, Japan and Chile, the US and Oman, Jordan and Iraq.

China - the most important target for the EU - has already begun negotiations on FTAs with Australia, ASEAN and others.

In response to the collapse of the World Trade Organization talks, the European Trade Commissioner Peter Mandelson will next week (Wednesday 4 October) announce a new strategy for promoting trade abroad.