Policy Brief: Moving Beyond Neoliberalism in EU Trade Policy

EU trade policy finds itself at a crossroads: after three decades of neoliberal dominance in the design of economic and trade policy, recent changes in the international system have led to a dramatic rupture of the liberal international order. 

Our policy brief argues that nostalgia for the good old days of hyper-globalisation and the liberal international order is neither warranted nor helpful. Authors Werner Raza and Bernhard Tröster from the Austrian Foundation for Development Research call on progressive policymakers to adapt to a new reality, in which political-economic competition between the great powers is likely to increase and trade policy is used for promoting national security objectives, including by extracting concessions from other countries. 

Six guiding principles for a new trade policy strategy

EU trade policy will have to be realigned and made to serve an economic policy strategy that is no longer focused on supporting export-led growth but based on the concept of defensive regionalism. Such an economic model wants to leverage domestic sources of growth, in particular by stepping up investment in the green and digital transformation, and combine this with extending the European social model. 

It uses trade policy to promote the security of the supply of critical goods, increase the EU’s economic resilience and promote international cooperation. Our policy brief proposes six guiding principles to support such a new trade policy agenda.

The EU should spearhead a discussion about a new and more balanced global trade order with respect to international economic governance issues. By deepening the sustainable trade agenda in cooperation with trade partners and helping trade partners to implement their own green transformation processes, the EU could regain international recognition and help to promote a more cooperative post-neoliberal international system.